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Flashcards in G5. Mayer Brown Deck (13):

3 responsibilities of the FIO:

1. Collecting information
2. Monitoring the insurance industry
3. Making recommendations on improving/ modernizing insurance regulation


How is the Dodd-Frank Act a first step in the direction of federal involvement in insurance regulation:

It requires the Federal Reserve Board regulate large insurers that have been recognized as being systematically significant.


2 things that the Director of the FIO must make a written finding about before issuing a subpoena to obtain information:

1. information is required
2. already coordinated with the relevant agencies


Briefly explain the information collection requirements that the FIO may impose on the insurers:

It can require any insurer or an affiliate to submit specific data/ information to the FIO.


When does the Dodd-Frank Act authorize the FIO to preempt state measures:

If the FIO believes the state measures:
-Are inconsistent with covered agreements, or
-Would result in less favorable treatment of insurers domiciled in foreign jurisdictions that are subject to covered agreements, compared to insurers that are admitted in the state


Describe "covered agreements":

Agreements between the US and foreign nations that allow non US insurers to operate in the US, subject to the prudential measures that would provide protection comparable to the level of protection provided by state regulation.


To what extent can the FIO preempt state law:

Only to the extent that it conflicts with the subject matter of the relevant international agreement.


What does the FIO need to do before it preempts state law:

- Issue a notice of potential inconsistency to the state regulator
-Notify and consult with the USTR
-Advise the House Financial Services Committee (HFSC) and Senate Committee on Banking, Housing and Urban Affairs (SBC)
-Issue a notice in the Federal Register
-Give interested parties an opportunity to comment
-Establish a reasonable time for the notice to become effective


If the insurance purchaser meets the definition of an exempt commercial purchaser, in what cases does the surplus lines broker not have to satisfy the state requirement to conduct a due diligence search for admitted insurance:

-The broker has informed the purchaser that the insurance may or may not be available in the admitted market
-The purchaser had subsequently requested the non-admitted coverage in writing


What areas governed by state laws are exempt from the preemption:

-Sales practices
-Coverage requirements
-Application of state antitrust laws or state capital or insolvency requirements (unless the requirement results in less favorable treatment of a non US insurer)


What are the requirements for the Dodd-Frank provision where other states can not deny credit for reinsurance if the home state has recognized credit:

If the home state of the ceding insurer is NAIC accredited, or has financial solvency standards similar to those mandated by the NAIC


Criteria to classify an insurer as an "exempt commercial purchaser":

-Insurance Purchaser who employs a qualified risk manager to negotiate insurance coverage
-Has paid over $100K in P&C premiums in the past 12 months
-Meets at least one of the following criteria: net worth at least $20M/ annual revenue at least $50M/ over 500 employees, or a member of a group with over 1K employees/ not for profit organization/ public entity with budgeted expenditures of at least $30M/ municipality with population of at least 50K


Dodd-Frank extends influence of Fed in insurance regulation

-Authorizes fed gov't to negotiate international agreements
-Only home state of insured in non-admitted market may impose a premium tax
-Compels states to adopt uniform rules and procedures for non admitted
-Placement in non admitted only regulated by insured's home state
States can proceed with reinsurance collateral reforms if accredited
-Insures/reinsurers that use derivatives could be subjected to central clearing/trading requirements