Insurance News

Financial reform law helps U.S. insurers, reinsurers

Posted on: July 26, 2010

The Dodd-Frank Wall Street Reform and Consumer Protection Act could help U.S. insurers and reinsurers ?maintain their competitive positions in the global marketplace,? according to an analysis released Thursday by Standard & Poor’s Corp.

S&P cites the creation of a Federal Insurance Office within the Treasury Department as an example. S&P notes that the office will represent the United States in the International Assn. of Insurance Supervisors and aid in negotiating international agreements.

?This could constructively address a concern that some regulatory parties within the international community raised as they evaluate the level of supervisory equivalency to be placed on the U.S. system of national insurance regulation,? said S&P.

S&P said this would be of value to U.S. reinsurers that would be ?particularly vulnerable? to higher operational costs and lower profit margins if the U.S. regulatory system failed to gain full equivalency recognition.

S&P also notes that some insurers have used securitizations and derivatives as a means of managing risks, and said that the new law ?only marginally affects? such activities.

The rating agency said it does not expect the law, which President Barack Obama signed Wednesday, to have an immediate credit impact on its ratings of U.S. insurers and reinsurers.

Copyright © 2010 Crain Communications, Inc.

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