Insurance Industry

Although the banking industry was at the very center of the financial meltdown, a number of large insurance companies were adversely impacted by the crisis. As a result of certain regulatory reforms in 1999, the insurance industry became far more intertwined with the banking system. This resulted in, among other developments, the emergence of diversified financial holding companies (some of which may be subject to systemic risk regulation). Unlike the banking industry, however, the insurance industry has been regulated almost exclusively at the state level. The gradual transformation of various sectors within the insurance industry into national and even international businesses, along with the lingering effects of the financial crisis, led Congress to reconsider a potential role for the US government in regulating the insurance industry. While the reforms in the legislation are relatively modest in that regard, they are still noteworthy.