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Insurance Regulation and the Dodd-Frank Act

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  • Scott E. Harrington

Abstract

This paper discusses a number of key issues regarding implementation by the Financial Stability Oversight Council (FSOC) and the Federal Insurance Office (FIO) of the Dodd-Frank Act’s provisions affecting insurance. The paper emphasizes the fundamental differences between insurance and banking, including much lower potential for systemic risk and substantial market discipline in insurance, and how those differences favor solvency regulation and guaranty systems that reflect the distinctive features of each sector. The FSOC and FIO should carefully consider those differences in their analyses of possibly systemically important insurance companies and in the FIO’s study and report to Congress on insurance regulation. Particular attention should be paid to the relatively low systemic risk and relatively strong market discipline in insurance compared with banking.

Suggested Citation

  • Scott E. Harrington, 2011. "Insurance Regulation and the Dodd-Frank Act," NFI Policy Briefs 2011-PB-01, Indiana State University, Scott College of Business, Networks Financial Institute.
    • Handle: RePEc:nfi:nfipbs:2011-pb-01
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    File URL: http://www.indstate.edu/business/sites/business.indstate.edu/files/Docs/2011-PB-01_Harrington.pdf
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    References listed on IDEAS

    as
    1. Claudio Borio & William Curt Hunter & George G. Kaufman & Kostas Tsatsaronis (ed.), 2004. "Market Discipline Across Countries and Industries," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262025752, December.
    2. João A. C. Santos, 2000. "Bank capital regulation in contemporary banking theory: a review of the literature," BIS Working Papers 90, Bank for International Settlements.
    3. Rolf Nebel, 2002. "The Case for Liberal Reinsurance Regulation," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 27(1), pages 113-121, January.
    4. Scott Harrington, 2006. "Federal Chartering of Insurance Companies: Options and Alternatives for Transforming Insurance Regulation," NFI Policy Briefs 2006-PB-02, Indiana State University, Scott College of Business, Networks Financial Institute.
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    Cited by:

    1. Eling, Martin & Pankoke, David, 2012. "Systemic Risk in the Insurance Sector – What Do We Know?," Working Papers on Finance 1222, University of St. Gallen, School of Finance.
    2. John A. Tatom & Terrie Troxel, 2011. "A Report to the Federal Insurance Office," NFI Policy Briefs 2011-PB-07, Indiana State University, Scott College of Business, Networks Financial Institute.
    3. Dewenter, Kathryn L. & Riddick, Leigh A., 2018. "What's the value of a TBTF guaranty? Evidence from the G-SII designation for insurance companies✰," Journal of Banking & Finance, Elsevier, vol. 91(C), pages 70-85.
    4. Eling, Martin & Pankoke, David, 2013. "Basis Risk, Procylicality, and Systemic Risk in the Solvency II Equity Risk Module," Working Papers on Finance 1306, University of St. Gallen, School of Finance.
    5. Chen, Pei-Fen & Lin, Chun-Wei & Lee, Chien-Chiang, 2019. "Financial crises, globalization, and insurer performance: Some international evidence," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 835-856.

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