Baribeau

Question 1

Identify 2 entities dodd-frank created (besides granting regulatory authority to FED)

Answer 1

Federal Insurance Office

Financial Stability Oversight Council

Question 2

Functions of Federal insurance Office (FIO) (created by dodd-frank) (2)

Answer 2

1. monitor insurance industry
2. identify state regulation gaps

Question 3

Functions of Financial Stability Oversight Council (FSOC) (created by Dodd-Frank) (2)

Answer 3

1. Monitors all financial service markets (including insurance indusry)
2. Identify financial stability risks

Question 4

Federal Insurance Office areas of responsibilities CRITI

Answer 4

Collect insurance industry data

Report to congress on insurance industry

Improvements – (suggest insurance regulation improvements)

TRIA (administer terrorism insurance act)

International (negotiate international agreements)

Question 5

Federal Insurance Office functions (5)

Answer 5

1. Provide insurance information to fed govt
2. Make federal policy (on insurance matters)
3. Consult w/ states (on insurance matters)
4. Identify insurance activity that can cause crisis
5. Monitor availably/affordability of auto insurance

Question 6

Types of insurers fed govt may regulate under Dodd-Frank (2)

Answer 6

1. Systematically Important Financial Institutions (SIFI) – any important insurer)
2. insurers w/ banks

Question 7

Required insurer actions under Dodd-Frank (4)

Answer 7

Liquidity requirements

capital requirements

stress tests

plan in case of insolvency

Question 8

Why is SIFI designation controversial? (4)

Systematically important financial institutions

Answer 8

1. no prescribed process for assigning designation
2. more regulation is burdensome
3. banks & insurers have different business models
4. Insurers did not cause great recession

Question 9

Why including insurer in Dodd-Frank is unfair

Answer 9

1. AIG division that failed was banking (not insurance)
2. AIG division (banking) that failed was already under fed supervision
3. AIG insurance was stable

Question 10

IMPORTANT - potential effects of Dodd-Frank w/ actuarial concerns (4)

Answer 10

1. Dual regulation – (federal on top of state)
2. Capital requirements - (large required increases)
3. Standardization - (forced standard forms & rates decrease competition)
4. Bank regulation spillover - (increased compliance costs for insurers w/ banks)