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Maine insurance superintendent tapped to join FSOC

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Maine insurance superintendent tapped to join FSOC

Eric Cioppa, superintendent of the Maine Bureau of Insurance, has been appointed to a two-year term as the state insurance commissioner representative on the Financial Stability Oversight Council.

Mr. Cioppa also serves as president-elect of the National Association of Insurance Commissioners and will represent state insurance regulators’ interests on the council, according to a statement by the NAIC released Tuesday.

“Given the importance of FSOC’s work in protecting the financial sector from systemic risk, we are fortunate to have someone of Eric’s caliber willing to take on this responsibility,” Julie Mix McPeak, NAIC president and Tennessee commissioner of commerce and insurance, said in the statement.

Mr. Cioppa will replace Peter Hartt, director of New Jersey’s insurance division, whose term expired Sept. 17.

The 15-member FSOC has held the responsibility of evaluating companies and had designated four nonbank institutions as systemically important financial institutions since the financial crisis. Institutions designated as SIFIs are subject to stricter oversight and stricter capital requirements.

“The potential for systemic risk in the insurance sector is such a departure from other financial products, requiring specialized expertise to identify, and, if necessary, mitigate,” Mr. Cioppa said in the statement.

But the U.S. Treasury Department last year recommended a different approach to evaluating the potential risks posed by nonbank financial companies rather than the current method that has led to several major insurers being tagged as “too big to fail.” A U.S. House of Representatives bill also introduced in 2017 to eliminate the ability to SIFI designation for insurers was seen as largely positive for the insurance industry, according to experts.

In January, MetLife Inc. and the FSOC jointly asked a federal appeals court to dismiss the litigation regarding the insurer’s designation as a systemically important financial institution. The insurer won a court challenge against the designation in March 2016 — a decision the government had been appealing until that joint appeal was filed.

This left Newark, New Jersey-based Prudential Financial Inc. as the remaining nonbank SIFI, and its tag is currently being evaluated by the FSOC.

 

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