Dodd Frank and Other US Legislation Impacting Captives
Captive Insurance US Legislative Initiative Updates & News
Captive Impact of the Dodd-Frank Act Passed in Summer of 2010, by CaptiveExperts.com staff (June 2011)
During the summer of 2010 the Dodd-Frank Act passed without much public awareness. It is a part of the string of new US legislative initiatives resulting from the global financial crisis and renewed efforts to improve regulation, transparency and stability of the financial industry and related institutions.
While the Dodd-Frank Act specifically does not preempt state insurance laws and regulations, it is a step toward federal regulation of insurance. The European Union is ahead of the US in this regard and its Solvency II initiatives will bring increased uniformity across EU member countries/states.
The highlights of the Dodd-Frank Act are summarized below:
encourage a movement towards uniformity of state regulation to improve global competitiveness of US insurance companies
created the Financial Stability and Oversight Council, empowered to extend Federal Reserve regulations to non-bank financial institutions
created the Federal Insurance Office, with information gathering power to improve transparency by increasing reporting requirements on insurance companies
The impact on captives in the future of the movement represented by the Dodd-Frank Act is similar to the impact of Solvency II implementation on European Union impacted captives; the cost of operational compliance of captive's will increase. From a planning and strategy perspective, domicile selection and design of captives are more important now than ever. Evaluation of restructuring and/or re-domiciling many smaller existing captives to protect expected benefits is indicated.
