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Insurance industry wants more time to consider Fed capital rule proposal

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Insurance industry wants more time to consider Fed capital rule proposal

The insuranceindustry, apparently overwhelmed with supervisory standard comment periods and fieldtesting, has asked for an extension from the Federal Reserve Board for respondingto its proposed framework for capital requirements for the non-systemically riskyinsurers it regulates.

Executivesfor the American Council of Life Insurers and the American Insurance Associationrequested an additional 45 days, or a minimum of 30 days, beyond the comment deadlineof Aug. 17 on the Fed's advance notice of proposedrulemaking on capital requirements for the insurers it regulates as thrift holdingcompanies. Insurance companies in this group include larger insurers such as ,as well as smaller companies including ModernWoodmen of America. The groups made the request in a July 6 letterto the Fed.

The Fedunveiled two sets of capitalproposals for insurers in its stable on June 3. The other set is for so-called enhancedprudential standards for systemically important insurance companies. These companiesdeemed too risky to fail are now PrudentialFinancial Inc. and AmericanInternational Group Inc. after MetLifeInc. won itscourt battle in April to remove its designation, which the administration is nowappealing. Both sets areadvance notice proposals, which present a more theoretical framework than an actualnotice of proposed rulemaking, with the same deadline. The one for insurers organizedas thrifts takes a softer, more state-based-like approach to capital rules thanthe proposal for the systemic giants.

The tradeassociations argued that since there are "multiple regulatory initiatives"on the industry's front burner, it is "veryconcerned that the current deadline for comments on the ANPR will not accommodatethe need for this level of feedback and input."

The tradegroups told the Fed that they are already working on responding to other regulatoryproposals, such as those from the Fed for the systemically important insurers andanother on a proposed rulemaking regarding incentive-based compensation arrangements.The latter proposal comment period has a deadline of July 22, the trades pointedout. Moreover, they noted, the International Association of Insurance Supervisors' second consultation on it insurance capital standardproposal will have more than 200 questions attached, with a deadline for responsesin early October 2016. Add to this list the fact that ACLI and AIA member companiesare IAIS field-testing volunteers, which means they are undergoing "a timeand resource consuming period of quantitative field testing this summer," thetrades said in urging the Fed to extend the comment period.

A Fedrepresentative said only that the Fed had received the letter. TheAIA said through a spokesman thatit has not yet heard back from the Fed. An ACLI spokesman said he was unaware of any other requests foran extended comment period or federal regulatory delays.

Sourcessuggested that the Fed is open to an expanded timetable.