United States: U.S. Treasury Department Releases Report Which May Provide A Preview Of The Trump Administration's Agenda For The Regulation Of The Insurance Industry

Last Updated: December 28 2017
Article by Roland Goss

On October 26, 2017, the U.S. Department of the Treasury has released a report entitled "A Financial System that Creates Economic Opportunities: Asset Management and Insurance" (the "Report").1 The Report is the third of four reports to be issued by the Treasury in response to Executive Order 137722 of February 3, 2017. The Executive Order states that the reports are to discuss the extent to which existing laws, treaties, regulations, guidance, reporting, and recordkeeping requirements, and other Government policies promote the Core Principles, and what actions have been taken, and are currently being taken, to promote and support the Core Principles. That report, and all subsequent reports, shall identify any laws, treaties, regulations, guidance, reporting, and recordkeeping requirements, and other Government policies, that inhibit Federal regulation of the United States financial system in a manner consistent with the Core Principles.3

The reports are envisioned to provide a work plan and policy guidance for both legislative and executive agency action with respect to specific industries. This Report discusses the asset management4  and insurance industries.5 This article discusses the Report's recommendations with respect to the insurance industry.


The "Core Principles" which form the basis for the evaluation contained in the Report are found in Section 1 of the Executive Order:

  1. to empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth;
  2. to prevent taxpayer-funded bailouts;
  3. to 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;
  4. to enable American companies to be competitive with foreign firms in domestic and foreign markets;
  5. to advance American interests in international financial regulatory negotiations and meetings;
  6. to make regulation efficient, effective, and appropriately tailored; and
  7. to restore public accountability within Federal financial regulatory agencies and rationalize the Federal financial regulatory framework.

Based upon Treasury's review of the regulatory framework, the Report identifies, in a high level summary fashion, the following "significant opportunities for reform," consistent with the Core Principles, that have particular applicability to the insurance industry:

  1. ensuring appropriate evaluation of systemic risk and solvency;
  2. promoting efficient regulation and rationalizing the regulatory framework to decrease regulatory burdens and maximize product and service offerings;
  3. rationalizing U.S. engagement in international forums to promote the U.S. asset management and insurance industries, and encourage firm competitiveness; and
  4. enhancing consumer access to a variety of relevant products and services. 6

The Report generally affirms and attempts to build upon the state-based regulation of the insurance industry, seeks to promote a vibrant and financially healthy industry, and promote U.S. interests in the international insurance market and with non-U.S. insurance supervisors.

Recommendations with Respect to the Insurance Industry

Appendix B to the Report contains the Report's regulatory and legislative recommendations. It includes many recommendations with respect to the insurance industry, which are organized into the following subject areas: systemic risk (2 recommendations); preserving solvency – capital initiatives (2 recommendations); preserving solvency – liquidity initiatives (1 recommendation); role of state and federal regulation (5 recommendations); terrorism risk insurance program (3 recommendations); insurer data security (1 recommendation); insurer cyber threats (1 recommendation); product approval and speed to market (2 recommendations); producer licensing and appointments (2 recommendations); regulatory structures and issues of duplication, overlap, and fragmentation (2 recommendations); multilateral work on insurance (5 recommendations); advancing American competitiveness abroad (2 recommendations); insurer investment in infrastructure (1 recommendation); and retirement security (2 recommendations).7

Some of the Report's specific insurance-related recommendations relate to the direct writing of insurance. Following are the recommendations which may be of the most relevance to, or have the most impact upon, the reinsurance sector:

  1. systemic risk:
  • move away from the entity-based system risk evaluations of insurance companies and towards an activities-based approach that would identify business activities that have higher systemic risk characteristics;
  • support the International Association of Insurance Supervisors ("IAIS") in its focus on an activities-based approach; and
  • support the improvement of the IAIS's methodology for identifying global systemically important insurers.
  1. preserving solvency – capital initiatives:
  • Domestically - harmonize the group capital initiatives of the NAIC, the states, and the Federal Reserve to reduce duplicative regulatory burdens for insurers; and
  • Internationally - recommend that the IAIS: (1) in developing its Insurance Capital Standard ("ICS"), "recognize the diverse approaches to solvency" by various regulators to ensure that the business model of U.S. insurance companies and the state-based insurance regulatory system of the U.S. are accommodated; and (2) postpone the next version of the ICS to allow further consultation with IAIS members and stakeholders on the development of an ICS that is implementable in all major insurance markets.
  1. preserving solvency – liquidity initiatives:
  • Domestically – encourage states, the NAIC, and the Federal Reserve to continue work on addressing potential liquidity risk in the insurance industry; and
  • Internationally – the Federal Insurance Office ("FIO") will advocate for the improvement of international liquidity management and planning standards.
  1. role of state and federal regulation:
  • Increase the transparency of the FIO's activities and engage with state regulators more regularly and consistently;
  • Coordinate data requests, data report format, and examinations between state regulators, the NAIC, and the Federal Reserve; and
  • Clarify the Dodd-Frank business of insurance exception to ensure that the Consumer Financial Protection Bureau does not engage in the oversight of activities as to which state insurance departments are engaged.
  1. terrorism risk insurance program:
  • take steps to encourage private insurers to participate in the market for terrorism insurance; and
  • simplify and reduce inconsistent data calls in this area.
  1. insurer data security: recommend that states adopt the NAIC Insurance Data Security Model Law and, if uniform requirements are not adopted in five years, pass federal legislation setting forth data security and data security breach notification standards specific to insurers, with state insurance regulators to enforce such standards.
  2. insurer cyber threats:
  • encourage the sharing of information within the insurance industry regarding issues related to cybersecurity; and
  • the FIO shall establish a working group to assess cybersecurity challenges for the insurance sector and issue cybersecurity recommendations to companies and state insurance regulators.
  1. regulatory structures and issues of duplication, overlap, and fragmentation:
  • federal agencies and entities shall establish formal mechanisms to promote coordination and communication with respect to insurance-related issues; and
  • states should be consulted and afforded the opportunity to provide input when the business of insurance is implicated at the federal level, with the FIO leading the coordination with respect to such issues.
  1. multilateral work on insurance:
  • the work of the Financial Stability Board should be limited to global financial stability, with any insurance-related issues tailored to the insurance industry and utilizing the expertise of the IAIS when appropriate;
  • the structure of the IAIS should reflect geographical balance in its representation and committee leadership;
  • the decision-making of the IAIS should be more transparent, and should include better coordination with its stakeholders, including U.S. state insurance regulators;
  • the FIO shall engage at the IAIS to: (1) advocate for the U.S. state-based insurance regulatory structure, the interests of U.S. companies and consumers, and the growth of the broader U.S. economy; (2) coordinate and present the U.S. position on issues of interest with a unified voice; and (3) promote greater transparency in international standard-setting forums; and
  • U.S. representatives at the IAIS should advance positions that best represent the interests of the U.S. insurance sector, consumers, the state-based regulatory system, and the U.S. economy.
  1. advancing American competitiveness abroad:
  • engage in bilateral and multilateral discussions concerning the access to insurance markets, and encourage the IAIS to evaluate whether market access restrictions are consistent with the IAIS's core principles; and
  • the FIO will coordinate the implementation of the Covered Agreement with state insurance regulators and pertinent federal stakeholders, and will explore whether to enter into similar agreements with other foreign jurisdictions, with a post-Brexit U.K. being mentioned in some discussions.
  1. insurer investment in infrastructure: state insurance regulators and the NAIC should evaluate potential steps to encourage revising Risk-Based Capital charges to encourage high-quality infrastructure investments as opposed to general equity investments with more volatile returns.

While some of these recommendations can be accomplished through executive action or through executive agencies, many will require the cooperation of Congress, state regulators, or other bodies outside of the President's control, making it unclear how successful President Trump will be in implementing the recommendations of the Report.


1 The Report is available at https://www.treasury.gov/press-center/news/Pages/A-Financial-System-That-Creates-Economic-Opportunities---Asset-Management-and-Insurance.aspx .

2 Executive Order 13772: Presidential Executive Order on Core Principles for Regulating the United States Financial System (Feb. 3, 2017), available at https://www.whitehouse.gov/the-press-office/2017/02/03/presidential-executive-order-core-principles-regulating-united-states.

3 Report Section 2.

4 The Report describes the asset management industry as encompassing the management by professional asset managers of assets on behalf of investors, businesses, and other institutions using different types of funds and other investment structures. Report at 4-5.

5 The Report describes the insurance industry generally as including property, casualty, life, and health insurance, without mentioning reinsurance. Report at 5.

6 Report at 6.

7 Report at 158-63.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions