Frederick Pomerantz

All articles by Frederick Pomerantz

 

EU and U.S. Negotiators Reach Covered Agreement

On January 13, 2017, former U.S. Treasury Secretary Jacob Lew and former U.S Trade Representative Michael Froman notified Congressional leaders that U.S. negotiators reached a covered agreement with EU officials entitled “Bilateral Agreement between the European Union and the United States of America On Prudential Measures Regarding Insurance and Reinsurance” (Covered Agreement). The covered agreement covers three main areas of prudential insurance supervision: 1) group supervision; 2) reinsurance; and 3) exchange of information between supervisory authorities. The U.S. Treasury Department
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NYDFS Issues Updated Cybersecurity Regulation

The New York Department of Financial Services (NYDFS) recently issued an updated version of its proposed cybersecurity regulation, “Cybersecurity Requirements For Financial Services Companies” (23 NYCRR 500). The updated proposed regulation reflects several of the comments offered during the initial public notice and comment period that concluded on November 14, 2016. Some of the most noteworthy changes in the revision are as follows: Section 500.04 — NYDFS clarified that while a Covered Entity must designate a qualified individual to perform
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Cease and Desist: Is This the Beginning of the End for Concierge Medicine Practices?

A small but growing trend to regulate the practice of “concierge medicine” (or “retainer medicine”) could significantly impact the healthcare and insurance industries. On October 11, 2016, the State of Washington Insurance Commissioner issued a Cease and Desist Order against a dental practice in that state, David Ford, DDS dba David Ford Dental. The order obliges the dental practice to immediately cease and desist from: Engaging in or transacting the unauthorized business of insurance or acting as an unregistered health
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What Would the Insurance Provisions of Dodd-Frank Look Like Under the Trump Administration?

The incoming Trump Administration has already signaled its intent to repeal, or at the very least reform, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). To date, President-elect Trump has not signaled what changes he would make with respect to the insurance provisions of Dodd-Frank.  However, there is a bill in Congress that provides at least some insight as to what these changes might look like. In September 2016, Congressman Jed Hensarling (R-TX), Chairman of the House Financial
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Comments on NYSDFS Cybersecurity Regulation Begin Pouring In

On September 28, 2016, the New York State Department of Financial Services (DFS) released for comment a proposed new regulation entitled Cybersecurity Requirements for Financial Services Companies (23 N.Y.C.R.R. Part 500). Various industry groups have offered comments and expressed concerns about some of its requirements. These concerns include the costs of compliance and the scope of entities regulated by the proposed rule. Among the organizations offering comments are the Excess Lines Association of New York (ELANY) and the American Association
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Just Down the Hall — D.C. Appeals Court Hears Appeal Over MetLife’s SIFI Status

On March 30, 2016, Judge Rosemary M. Collyer of the U.S. District Court for the District of Columbia stripped MetLife of its designation as a nonbank systemically important financial institution (nonbank SIFI). She held that the designation was arbitrary and capricious as the Financial Stability Oversight Council (FSOC) failed to follow proper administrative procedures during the evaluation process. Just over a week later, FSOC walked down the hall of the U.S. Courthouse at 333 Constitution Avenue, NW and filed its
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Leaders of Major House Committee Wade into Equivalency Discussions

On August 17, 2016, the Chairman and Ranking Member of the House Ways and Means Committee waded into the ongoing discussions between U.S. and EU leaders regarding equivalency with the EU’s Solvency II and negotiation of a covered agreement. Chairman Kevin Brady and Ranking Member Sander Levin sent a letter to U.S. Treasury Secretary Jacob Lew and United States Trade Representative (USTR) Michael Froman expressing concern that Solvency II “unfairly discriminates against U.S. insurance and reinsurance (“(re)insurance”) business.” EU regulators
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Change in Court Rules Could Increase Legal Costs of Connecticut-Licensed Insurers Appearing Before Commissioner

The State of Connecticut recently revised Section 2-16 of the Connecticut Superior Court Rules to require that an attorney not admitted in the State of Connecticut be admitted pro hac vice prior to appearing on behalf of a client before the Connecticut Insurance Department or any other state or municipal government agency. As with any pro hac vice admission in Connecticut, out-of-state attorneys will also be required to retain local counsel as a condition of any appearance. This represents a
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NYDFS Issues Circular Letters Pertaining to Coverage for Women’s Health Issues

In the last four months, the New York State Department of Financial Services (NYDFS) has issued three letters relating to coverage issues associated with women’s health. First, on April 25, 2016, NYDFS issued Insurance Circular Letter No. 1 (2016) to remind insurers that federal law “requires group health plans and issuers offering group or individual health insurance coverage to provide, with no copayment, coinsurance or deductible, preventive services that have a rating of ‘A’ or ‘B’ in the current recommendations
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And Then There Were Two — GE Capital No Longer a Nonbank SIFI

GE Capital is no longer a nonbank SIFI. The Financial Stability Oversight Council (FSOC) formally announced on June 29, 2016 that it voted unanimously on June 28, 2016 to rescind the designation. In conjunction with the vote, FSOC released a 23-page opinion outlining the basis for its decision. In short, FSOC determined that GE “executed significant divestitures, transformed its funding model, and implemented a corporate reorganization.” It determined that “these and other changes at GE . . . have significantly
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Federal Reserve Takes Steps on Capital Standards for Nonbank SIFIs

The passage of the Dodd-Frank Act led to an increased role for federal financial regulators in regulating insurance companies. While insurance companies are still primarily regulated at the state level, certain insurance companies also qualify for federal regulation. For example, Dodd-Frank explicitly requires that the Federal Reserve Board (FRB) regulate all financial institutions designated as systemically important financial institutions (nonbank SIFIs) by the Financial Stability Oversight Council (FSOC). Currently, FSOC has designated two insurance companies as nonbank SIFIs: Prudential and
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Federal Judge Overturns MetLife’s SIFI Designation

In a first-of-its-kind decision, U.S. District Judge Rosemary M. Collyer of the U.S. District Court for the District of Columbia granted MetLife’s motion to remove the non-bank SIFI designation imposed by the Financial Stability Oversight Council (FSOC). This is a highly significant case, as it represents the first time a SIFI-designated company has challenged the designation. However, the order and opinion are currently under seal, possibly due to the inclusion of confidential and proprietary information on both sides. The parties
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Supreme Court in Transition: What Happens to the ACA Case?

On Saturday, February 13, 2016, United States Supreme Court Justice Antonin Scalia, the longest serving justice on the Supreme Court, died in his sleep while on a hunting trip in Texas. One of the big questions now is what happens to the cases currently before the Court, especially those cases that were largely expected to be decided 5-4 while Justice Scalia was alive. Among those high profile cases is another one on the Affordable Care Act (ACA), Geneva College v.
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U.S. District Judge Explores the SIFI Designation Process

For the first time since the passage of Dodd-Frank, a U.S. District Judge is exploring the process by which the Financial Stability Oversight Council (FSOC) designates non-bank financial institutions as systemically important financial institutions (nonbank SIFIs). On February 10, 2016, U.S. District Judge Rosemary Collyer of the U.S. District Court for the District of Columbia heard arguments in the matter of MetLife v. FSOC. In January 2015, MetLife filed a lawsuit challenging the FSOC’s designation of MetLife as a nonbank
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Ohio Brings Certificates of Insurance Closer to Home

Ohio recently passed House Bill 259, a law that aims to ensure that certificates of insurance accurately reflect the policies they represent. In the past, certificates that did not accurately reflect the insurance policy caused coverage disputes. The new measure attempts to cure this defect and gives the Ohio insurance regulator more jurisdiction to ensure that the certificate accurately reflects the policy — with one stated aim to protect agents and policyholders against insurance fraud. In passing this law, Ohio joins 24
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New York Governor Andrew Cuomo Nominates New DFS Superintendent

Governor Andrew Cuomo has nominated Maria T. Vullo as the new Superintendent of the Department of Financial Services. If confirmed by the New York State Senate, she would replace Benjamin Lawsky who resigned as Superintendent in June 2015. Ms. Vullo, an experienced litigator, is currently of counsel at Paul Weiss in its New York City office. She has over 25 years of litigation experience at the trial and appellate levels including at the United States Supreme Court and in U.S.
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NYDFS Has New Acting Superintendent

New York State Governor Andrew Cuomo recently named Shirin Emami as Acting Superintendent of the New York Department of Financial Services (NYDFS). She is the second acting superintendent since the resignation of Benjamin Lawsky, who left NYDFS in June 2015 for a private-sector position specializing in cyber security research and consulting. Ms. Emami replaces Anthony Albanese, who also left for the private sector. Prior to her appointment, Ms. Emami served as both the Executive Deputy Superintendent and the General Counsel
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NYDFS Notifies Federal Regulators of New Potential Cyber Security Regulations

On November 9, 2015, the New York State Department of Financial Services (NYDFS) sent a memorandum entitled Potential New NYDFS Cyber Security Regulation Requirements to several federal and state financial services regulators, including banking, securities and insurance regulatory, administrative and supervisory  bodies. These potential regulations are based on results of two sets of surveys of financial entities about their “cyber security programs, costs and future plans.” NYDFS surveyed 150 banks and 43 insurance companies. The results of the May 2014 banking
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Controversial Cybersecurity Information Sharing Act Passes Senate, Will Likely Become Law

This post originally appeared on Goldberg Segalla’s Data Privacy and Security blog.  On October 27, 2015, the United States Senate passed S.754, the Cybersecurity Information Sharing Act (CISA or the Act) 74-21. Without requiring such information sharing, CISA would create a system for federal agencies to receive threat information from private companies in real time. However, the bill is not without controversy. As we discussed in August the Department of Homeland Security raised concerns in July and August that the
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Reminder to Eligible Excess Line Insurers with Policyholders in the State of New York — Minimum Surplus Requirement Increases for Excess Line Insurers

A Twelfth Amendment to New York’s Insurance Regulation 41 was promulgated by the Department of Financial Services after the President signed the Nonadmitted and Reinsurance Reform Act (NRRA), which was Title V, Section I in the Dodd-Frank Wall Street Reform and Consumer Protection Act, 15 U.SC. 8201. This amendment adopted most of the provisions of the NRRA on or about April 18, 2011. Like New York, most states incorporated, as amendments to their statutes or regulations, the provision in the
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NAIC and CSIS Host Cyber Risk Conference

This post first appeared on Goldberg Segalla’s Data Privacy & Security blog. On September 10, 2015, the National Association of Insurance Commissioners (NAIC) and the Center for Strategic and International Studies (CSIS) hosted a conference entitled “Managing Cyber Risk and the Role of Insurance.” Over three hundred individuals attended, including more than 30 insurance regulators, senior representatives from the U.S. Departments of Treasury and Homeland Security, and representatives from the private sector. The primary focus of the conference was to explore
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Not If, But When: Another Health Insurer Hacked

In mid-September, it was reported that hackers hit another set of health insurance companies. In this case, the hackers hit The Lifetime Healthcare Companies and its affiliates including Excellus BlueCross BlueShield, Univera Healthcare, and The MedAmerica Companies. A full list of plans affected can be found on the press release outlining the details of the attack. Hackers took information on approximately 10 millions customers including seven million from Excellus and three million from associated entities. Company IT officials first discovered the intrusion
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Let the (Employee) Beware: New Shift in DOJ Policy Places Emphasis on Individual Accountability

On September 9, 2015, the Deputy Attorney General (DAG), Sally Quillian Yates, issued a memo to senior leadership at the U.S. Department of Justice (DOJ) entitled “Individual Accountability for Corporate Wrongdoing.” In this memo, the DAG highlighted a new emphasis on not just holding corporations/entities responsible for corporate wrong-doing but also holding individual employees/officers responsible for any illegal activities. This new emphasis applies in both civil and criminal matters. The memo notes: One of the most effective ways to combat
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War Games Still Relevant in the 21st Century as Demonstrated by Business Blackout Report

“I don’t believe any system is totally secure.”  Matthew Broderick’s character in the 1983 classic movie War Games makes this very astute observation about information security shortly before he slips in a back door of a computer system called Joshua and nearly causes a nuclear holocaust. Thus far, most breaches are centered on gathering data and information. But what if the intent were more sinister and more widespread than just a single company? What would be the impact? These are
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NY Unfair Claims Settlement Practices Bill Dies With Close of Legislative Session

The 2015 Legislative Session in New York came to a close in the wee hours of June 26. Among the bills introduced this session was S-4049/A-0257 amending the New York Insurance Law with respect to unfair claims settlement practices. Specifically, the bill, if enacted, would have established “a civil private cause of action by a policyholder who has suffered unfair claim settlement practices by an insurer.” Current law allows policy holders with these grievances against their insurers to file a
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Court Issues Decision in “20 Percent of Something is Better Than 100 Percent of Nothing” Case

Judge Thomas C. Wheeler of the U.S. Federal Court of Claims has issued a decision in one of the most watched cases directly tied with the government response to the 2008 financial crisis.  In Starr International Company, Inc. v. The United States, Starr International challenged the bailout of AIG in which the federal government took shareholder equity and management control. Prior to the crisis, Starr (whose controlling shareholder is former AIG executive Hank Greenberg) was a major shareholder in AIG.
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FSOC Replies to MetLife Lawsuit Challenging Nonbank SIFI Status

In early 2015, MetLife filed a lawsuit challenging its designation as a nonbank systemically important financial institution (nonbank SIFI). On May 11, 2015, the Financial Stability Oversight Council (FSOC) filed a redacted motion to dismiss (or in the alternative a motion for summary judgment) in response to MetLife’s lawsuit. One of MetLife’s key arguments in its complaint is that FSOC’s designation was arbitrary and capricious. FSOC argues in its motion to dismiss, dated May 11, 2015, that its decision to
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Inquiry Signals Further Federal Regulation of Annuity Product Sales Likely

Late last week, Senator Elizabeth Warren, Ranking Member of the U.S. Senate Subcommittee on Economic Policy, sent a letter to 15 of the top writers of annuity products, including AIG Companies, Allianz Life Insurance Company of North America, AXA, Lincoln Financial Group, New York Life Insurance Company, and MetLife, seeking information about the manner in which these companies compensate their insurance agents for the sale of these products. Warren emphasized that sales made to those close to retirement were of
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New York Department of Financial Services Superintendent Continues Criticism of “Shadow Insurance” Transactions in Letter to U.S. Senate Committee

New York Department of Financial Services (DFS) Superintendent Benjamin Lawsky continued his attack against the use of so-called “shadow insurance” in an April 27, 2015 letter to the Honorable Sherrod Brown, Ranking Member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs. In the letter, Lawsky called on regulators to initiate measures to address this “textbook example of regulatory arbitrage in order to protect the efficacy of our state-based system of regulation” and hopes to stimulate a national
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NAIC Adopts Cybersecurity Regulatory Guidance

On Thursday, April 16, 2015, the Cybersecurity Task Force of the National Association of Insurance Commissioners (NAIC) adopted the “Principles for Effective Cybersecurity Insurance Regulatory Guidance.” Monica J. Lindeen, the NAIC President and Montana Commissioner of Securities and Insurance noted that these 12 principles “will serve as the foundation for protection of sensitive consumer information held by insurers as well as insurance producers and guide regulators who oversee the insurance industry.” The press release announcing the adoption notes: The document
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Policyholders Join Regulators in Casting Light on Shadow Insurance

The issue of “shadow insurance” has been the subject of increasing regulatory and governmental scrutiny. Policyholders are now joining the effort via five class action lawsuits against three different insurance companies, MetLife, AXA Equitable and Lincoln National, for their use of shadow insurance. Shadow insurance usually refers to an insurance company’s attempt to re-allocate reserve and collateral funds.  The New York State Department of Financial Services describes shadow insurance as follows: In a typical shadow insurance transaction, an insurance company
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New York Amends Controversial Provisions of Replacement Regulation

After almost two decades, the New York Department of Financial Services (DFS) has approved amendments to New York Insurance Regulation 60, which will now permit insurance agents to immediately bind coverage where an existing life insurance policy or annuity contract is being replaced. The Third Amendment to Regulation 60, effective April 21, 2015, will allow insurers to begin underwriting new applicants on an expedited basis and will make buying insurance over the internet more feasible. Insurance agents and insurers will
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NY Dept. of Financial Services Requests Detailed Cyber Security Reports From Insurers

Cyber security is clearly one of the highest priorities — if not the top concern — for regulators in 2015. Late last month, the New York Department of Financial Services (DFS) sent more than 160 licensed insurers a New York Insurance Law Section 308 Letter seeking a detailed report regarding their cyber security practices and procedures. The Section 308 Letter — to which there is now less than three weeks to respond — also provides greater insight into the scope
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NAIC Seeks Comment on Proposed Principles for Effective Cybersecurity Insurance Regulatory Guidance

The NAIC has released a draft of its proposed Principles for Effective Cybersecurity Insurance Regulatory Guidance, developed by the Cybersecurity (EX) Task Force. According to the NAIC, “it has become clear that it is vital for insurance regulators to provide effective cybersecurity guidance regarding the protection of the insurance sector’s data security and infrastructure. The insurance regulators commend insurance companies for conducting a review of their cybersecurity policies, regulations, and guidance with the goal of strengthening the insurance sector’s defense
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Massachusetts Proposes Amendments to Its Annuity Suitability Regulation

Massachusetts has proposed amendments to its Consumer Protection in Annuity Transactions Regulation with the intent of improving consumers’ understanding of annuity products for which recommendations have been made. The newly revised Massachusetts regulation conforms it to the 2010 revisions made by the National Association of Insurance Commissioners (NAIC) to the Suitability in Annuity Transactions Model Regulation. The 2010 revision of this model regulation addressed several issues, including producer training and insurer responsibility for ensuring the suitability of annuity purchases, regardless
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New York Department of Financial Services Seeks Stronger Cyber Hacking Defenses From Insurers

On February 4, 2015, Anthem Inc. disclosed that as many as 80 million customers’ sensitive personal information may have been compromised by criminal hackers. As a timely coincidence, but prompted in part by the breach, on February 8, the New York Department of Financial Services (DFS) issued its Report on Cyber Security in the Insurance Sector (DFS Report). DFS also announced its intention to take measures to ensure that insurers have strong cyber hacking defenses in place. The measures to
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Cyber Breaches Prompt Government Action

The recent data breach at health insurer Anthem has sparked new legislation in Connecticut.   During the breach, at least 80 million records were stolen.  According to NBC News, among the 80 million victims, tens of millions of American children had their Social Security numbers, dates of birth, and health care ID numbers stolen.  In response, Connecticut state legislators are proposing legislation that would require health insurance companies to encrypt their customers’ data.   Connecticut’s proposed legislation is similar to recent legislation
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Insurance Doomsday Averted – TRIA Extension Passes Congress

Under the cloud of the tragic terrorist attack in France, the U.S. Congress passed H.R. 26, an extension to the Terrorism Risk Insurance Act (TRIA).  The House passed it overwhelmingly by a vote of 416-5.  The Senate passed it by a vote of 93-4.  This despite a rider which amends Dodd-Frank. Among its provisions, the bill extends the program for six years and gradually increases the trigger from $100 million to $200 million in increments of $20 million over the
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Federal Insurance Office Issues Reinsurance Report

Among other provisions, Title V of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) authorizes the Federal Insurance Office (the FIO) to monitor all aspects of the insurance industry, including reinsurance. {Dodd-Frank Act, §§ 501-502; 31 U.S.C. § 313 (c)(1)(A) (2010)}. On December 31, 2014, pursuant to Title V of the Dodd-Frank Act, the FIO issued its report on reinsurance entitled “The Breadth and Scope of the Global Reinsurance Market and the Critical Role Such Market Plays in
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TRIA – When the Ball Drops, No Need to Panic But…

At exactly 12:00 a.m. on January 1, 2015, the New Year will be celebrated amidst ball drops and renditions of “Auld Lang Syne.”  However, amidst the celebrations, the Terrorism Risk Insurance Act (TRIA) will expire.  While there is a very real possibility that Congress will pass legislation renewing it in some form when the 114th Congress convenes in January 2015, insurance companies and their insureds are already feeling the anticipated effects of the non-renewal and planning for the future. Most
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Where are You TRIA

Politicos and industry alike are echoing the sentiments of Cindy Lou Who when she sings “Where are you, Christmas?” in the popular movie “How the Grinch Stole Christmas” except in this case, the question is, “Where are you TRIA?” As the current Terrorism Risk Insurance Act (TRIA) approaches its expiration date of  December 31, 2014, there are questions swirling about whether it will ultimately be renewed and whether the levels and conditions of coverage will be so diluted as to
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Californians – “Insurance on My Mind”

California voters had insurance on their minds during the mid-term elections with at least two insurance-related questions on the ballot. The first was Proposition 45, entitled the “Healthcare Insurance. Rate Changes. Initiative Statute.”  If approved, this initiative would have required the state’s Insurance Commissioner to approve any rate increases for individual and small group health insurance plans before those rate hikes took effect.  If the state’s Insurance Commissioner determined that a rate hike was unreasonable or excessive, the commissioner could
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Too Big To Fail? MetLife To Fight Federal Agency’s Designation of the Insurer as a ‘Systemically Important Financial Institution’

In the wake of the 2008 financial crisis, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). After Americans quickly learned that financial institutions previously thought “too big to fail” could, in fact, fail, Dodd-Frank equipped the Federal Reserve with unprecedented regulatory power to ensure safeguards were in place to prevent a similar crisis in the future. Dodd-Frank established the Financial Stability Oversight Council (FSOC), a government organization which has the authority to designate financial institutions as
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NAIC Launches “Protecting the Future” to Highlight the Benefits of State-based Insurance Regulation and Issues RFP for Outside Consultant

On July 16, 2014, the National Association of Insurance Commissioners (NAIC) announced it was launching an educational initiative called “Protecting the Future” to educate the public and other insurance supervisory bodies on the benefits of the U.S. state-based system of insurance regulation.  This program is being “deployed in Washington, D.C.; Brussels, the capital of the European Union; and in Basel, Switzerland, the seat of the Financial Stability Board (FSB) for the G-20.” The announcement notes that “[o]f the 50 largest
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