As 2011 is nearly upon us, there are a couple of important events that will likely happen in the first month of the new year.
Expect, finally, for an appointment to be announced by Treasury Secretary Timothy Geithner for the key position of director of the Federal Office of Insurance
. The FIO, as you’ll remember, was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, marking the federal government’s entry into insurance regulation. As this new agency springs to life in earnest in 2011, it will initially serve to monitor, collect and report on the industry without the authority to act unilaterally. It remains to be seen how far Congress may seek to expand the FIO’s authority as the year progresses, and it’s difficult to say at this point whether the FIO will emerge as a powerful regulatory body. But whoever is appointed to the position of director of the FIO, you can bet, will have plenty to do with how aggressive the agency becomes.
Perhaps of even greater interest to our readers will be the Securities and Exchange Commission’s report — mandated by the Dodd-Frank Act — to Congress on possible omissions and gaps in the current system for regulating sellers of investments. The content of this report could lead to significant standard of care changes that the SEC could enact as it implements the Dodd-Frank Act.
Specifically, the SEC could move to impose a universal fiduciary standard
, which would replace the current, less-stringent suitability standard applied to insurance agents. Many think it’s a foregone conclusion that a universal fiduciary standard is coming, while others vow to continue to lobby against it. If it happens, many insurance agents will see a great deal of changes in the way they run their practices.
So enjoy that New Year’s Eve party and some football on New Year’s Day, but come Jan. 3, it’s time to resume paying attention to what could be a dramatically changing regulatory landscape.