A U.S. Treasury report on the asset management and insurance industries recommended that the regulatory framework is aligned with President Trump’s February 2017 executive order, Core Principles for Regulating the U.S. Financial System.
The core principles outlined by the president call for regulations that empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth; prevent taxpayer-funded bailouts; and foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry. The principles also seek to enable American companies to be competitive with foreign firms in domestic and foreign markets; advance American interests in international financial regulatory negotiations and meetings; make regulation efficient, effective, and appropriately tailored; and restore public accountability within Federal financial regulatory agencies and rationalize the Federal financial regulatory framework.
The American Insurance Association (AIA) acting CEO and general counsel Stef Zielezienski praised the Treasury report.
“We appreciate the department’s efforts to use this report to lay a solid foundation for increased reform and engagement on many key public policy issues,” Zielezienski said.
Specifically, AIA was pleased to see the report cite several policy priorities, including urging a shift away from an entity-based approach to an activities-based framework for domestic and global systemic risk assessments of insurers and a re-commitment to a unified U.S. voice on international matters, including a workable group capital initiative for U.S.-based insurance groups with international operations.
American Council of Life Insurers (ACLI) President and CEO Dirk Kempthorne also commended the Treasury report.
“While ACLI is reviewing the entirety of the report, we are encouraged by the emphasis on efficient regulation and government processes,” Kempthorne said.
He said the report recognized that designating individual insurers for stricter federal rules is not the best approach for mitigating risks. Kempthorne also concurred that the full implementation of the fiduciary rule should be delayed until the relevant issues are evaluated and addressed. Federal agencies should coordinate with state insurance regulators to achieve consistent standards of conduct across product lines, he added.
Further, Kempthorne backed the idea that the National Association of Registered Agents and Brokers Reform Act of 2015 should be implemented, which will facilitate insurance licensing across state lines. He also said states should be the primary regulators of the life insurance industry.