The Dodd-Frank Wall Street Reform and Consumer Protection act could benefit insurers and reinsurers, helping them "maintain their competitive positions in the global marketplace," according to recent analysis released by Standard & Poor's Corp.
S&P notes that the newly created Federal Insurance Office within the Treasury Department will serve to represent the U.S. in the International Assn. of Insurance Supervisors and will assist 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," S&P said.
U.S. reinsurers, in particular, could benefit, as they would be vulnerable to increased operational costs and lower profit margins should the U.S. regulatory system fail to gain full equivalency recognition, according to the analysis.
S&P also said that it does not expect the newly signed law to have an immediate effect on the ratings of U.S. insurers and reinsurers.