The two large legislative overhauls of financial regulation in the past two decades, the Gramm-Leach-Bliley Act of 1999 (GLBA) and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank), expanded the federal role in insurance, but the states continued as the primary regulators of insurance following these acts. The act gave enhanced systemic risk regulatory authority to the Federal Reserve and to a new Financial Stability Oversight Council (FSOC), including some oversight authority over insurers. The Dodd-Frank Act also included measures affecting the states' oversight of surplus lines insurance and reinsurance and the creation of a new Federal Insurance Office (FIO) within the Department of the Treasury. Legislation in the 114th Congress

Insurance regulatory issues before the 114 th Congress include
overseeing the implementation of, and possible amendments to, the Dodd-Frank Act, including specific legislation, such as H.R. 1478 / S. 798 , and provisions in S. 1484 / S. 1910 , which would limit the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) authority over insurers and H.R. 26 / P.L. 114-1 , which attempts to streamline the state regulation of insurance producer licensing; and responding to international developments, such as the changes to the European Union's regulatory scheme known as Solvency II and the development of international standards by the International Association of Insurance Supervisors (IAIS). Legislation addressing U.S. involvement in the IAIS includes S. 1086 , H.R. 5143 and H.R. In addition to the insurance-focused Title IV, Title III addresses the designation of nonbank financial companies as systemically important, which has been a major concern of insurers since Dodd-Frank. It would also increase public disclosure requirements surrounding the designation process. 2141)

H.R. 6436)

H.R. P.L. The international standard setting by the IAIS and the G-SII designations have raised concerns in Congress, particularly with regard to the effect these efforts might have on the competitiveness of U.S. insurers and possible weakening of the U.S. regulatory system. In the past, this requirement generally was for a 100% collateral deposit. State Regulatory Modernization Efforts

Following the passage of GLBA, state insurance regulators working through the NAIC embarked on a regulatory modernization program. Since the financial crisis, the NAIC has undertaken another round of regulatory changes. Enterprise risk management . Such proposals for increased federal involvement usually spurred a series of regulatory reform efforts at the individual state level and by state groups, such as the National Association of Insurance Commissioners (NAIC) and the National Conference of Insurance Legislators (NCOIL). Another state reform largely implemented in the late 1980s and early 1990s was the introduction of state insurance guaranty funds. Some insurance companies believe that in the post-GLBA environment, state regulation places them at a competitive disadvantage in the marketplace. This crisis overlaid a range of new issues and arguments to the previously existing debate on insurance regulatory reforms. The financial crisis grew largely from sectors of the financial industry that had previously been perceived as presenting little systemic risk, including insurers. The 111 th Congress responded to the financial crisis with the Dodd-Frank Wall Street Reform and Consumer Protection Act, which enacted broad financial regulatory reform as detailed above. 4557 would have amended the Federal Deposit Insurance Act to declare that any regulation, order, or other action of the Board of Governors of the Federal Reserve System requiring a bank holding company to provide funds or other assets to a subsidiary depository institution shall not be effective nor enforceable with respect to an entity that is a savings and loan holding company that is also an insurance company, an affiliate of an insured depository institution that is an insurance company, or any other company that is an insurance company and that directly or indirectly controls an insured depository institution if (1) such funds or assets are to be provided by the entity and (2) the state insurance authority for the insurance company determines that such an action would have a materially adverse effect on the entity's financial condition. First, it called for the creation of a federal insurance regulator to oversee an optional federal charter for insurers as well as federal licensing for agents and brokers.
The individual states have been the primary regulators of insurance since 1868. Following the 1945 McCarran-Ferguson Act, this system has operated with the explicit blessing of Congress, but has also been subject to periodic scrutiny and suggestions that the time may have come for Congress to reclaim the regulatory authority it granted to the states. In the late 1980s and early 1990s, congressional scrutiny was largely driven by the increasing complexities of the insurance business and concern over whether the states were up to the task of ensuring consumer protections, particularly insurer solvency.
Immediately prior to the 2007-2009 financial crisis, congressional attention on insurance regulation focused on the inefficiencies in the state regulatory system. A major catalyst was the aftermath of the Gramm-Leach-Bliley Act of 1999 (GLBA), which overhauled the regulatory structure for banks and securities firms, but left the insurance sector largely untouched. Many larger insurers, and their trade associations, had previously defended state regulation but considered themselves at a competitive disadvantage in the post-GLBA regulatory structure. Various pieces of insurance regulatory reform legislation were introduced, including bills establishing a broad federal charter for insurance as well as narrower, more targeted bills.
The financial crisis refocused the debate surrounding insurance regulatory reform. Unlike many financial crises in the past, insurers played a large role in this crisis. In particular, the failure of the insurer American International Group (AIG) spotlighted sources of risk that had gone unrecognized. The need for a systemic risk regulator for the entire financial system was a common thread in many of the post-crisis financial regulatory reform proposals. The Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203), enacted following the crisis, gave enhanced systemic risk regulatory authority to the Federal Reserve and to a new Financial Stability Oversight Council (FSOC). Three insurers have since been designated as Systemically Important Financial Institutions (SIFIs) although one of these designations has been overturned in federal court. The Dodd-Frank Act also included measures affecting the states' oversight of surplus lines insurance and reinsurance and the creation of a new Federal Insurance Office (FIO) within the Department of the Treasury.
The states, particularly working through the National Association of Insurance Commissioners (NAIC), have generally not been idle following congressional attention. They reacted quickly to GLBA requirements that related to insurance agent licensing and to the changes enacted in Dodd-Frank, including engaging with the FSOC and FIO. The regulatory initiatives undertaken by the NAIC since the financial crisis include increased oversight of holding companies and new enterprise risk management requirements. Because enactment by the state legislature is necessary before the NAIC's suggested legal changes can take effect in that state, the process typically does not move rapidly.
Among the insurance regulatory issues addressed by legislation in the 114th Congress are the licensing of insurance agents and brokers (H.R. 26/P.L. 114-1), the degree of the authority of the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) over insurers (H.R. 1478/S. 798), and international insurance standards (S. 1086, H.R. 2141, H.R. 5143, and H.R. 6436). S. 1484/S. 1910 and H.R. 5983, broader bills addressing financial regulation, also include provisions on the latter two topics and would modify the SIFI designation process. In addition, other international issues have been of concern to Congress, such as the European Union's Solvency II project to overhaul the European insurance regulatory system and the U.S. state requirements on non-U.S. insurers for reinsurance collateral.