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After clearing its all-important filibuster hurdle, the U.S. Senate approved the bill that will establish a Federal Insurance Office and make a few other insurance market changes. The long-debated financial reform bill -- Congress' answer to the economic crisis -- won this last vote and heads now to the White House for a final signature.
Steering inevitably into the U.S. law books, what will be known as the Dodd-Frank Act leaves the insurance industry largely untouched while it lays out major new regulations and oversight for the rest of the U.S. financial sector.
"There were some fears that insurance would be swept into everything else, and it didn't happen," said Steve Bartlett, president and chief executive officer of the Financial Services Roundtable. He said the industry will now have to keep an eye on how the new regulations around its edges might end up having indirect impacts. "The insurance industry is wise and mature enough to know that they just need to watch the environment that's around them."
The primary insurance provision is the establishment of the insurance office, which doesn't have a regulatory role, but -- according to Leigh Ann Pusey, president and CEO of the American Insurance Association -- "will make a substantial contribution toward broadening and deepening our nation's understanding of the critical role of insurance in our financial system."
The pending law also includes a surplus-line reform section that the National Association of Professional Surplus Lines Offices has been trying to get enacted for more than a decade. "With the legislation now approved by Congress, we look to the states to implement its provisions in the way Congress intends and bring about, on a nationwide basis, the anticipated efficiencies in surplus lines regulation and tax payment mechanisms the legislation promises," NAPSLO President Marshall Kath said in a statement.
When it came up for its final vote, the Senate passed the bill 60-39, with the support of a few Republicans. Just before the vote, Senate Majority Leader Harry Reid said this effort is "about making sure that there is not a next time."
"Getting here hasn't been easy. Wall Street doesn't like this bill," Reid said. "Why would they want us to change the system they rigged?" He added that "their cronies in Washington don't like it, either."
Because the House had already passed the same bill, the only further requirement before financial reform becomes the law of the land is a White House signing ceremony. Of course, the pending enactment of this wide-reaching bill is only the start of the actual rule-making process to be conducted by federal regulators.
"It is important to note that this is still only the midpoint for financial services reform," said David A. Sampson, president and CEO of the Property Casualty Insurers Association of America, in a statement. "We have a long road ahead of us as we move into the rule development phase."
"With some 250 new regulations to be implemented by 11 different federal agencies, the stage is now set for an intense rule-making process that will be AIA's top priority," Pusey said in a statement. "We need to remain vigilant to ensure that the low-risk nature of the property and casualty industry continues to be recognized during the implementation phase."
(Jesse A. Hamilton, Washington bureau manager: Jesse.Hamilton@ambest.com)