Congress is starting to pay serious attention to the workings of the Financial Stability Oversight Council regarding its treatment of insurers, as was evident a few days ago when a Senate Banking Committee panel held a hearing on the subject.

That's certainly to be welcomed. While it's not as if Congress has been ignoring the work of the council, legislators of both parties now seem particularly interested in correcting what they — and insurers — see as flaws in the system.

As things stand now, the FSOC has the power to designate nonbank financial institutions, including insurers, as systemically important financial institutions, or SIFIs. SIFIs are subject to heightened regulatory oversight by the Board of Governors of the Federal Reserve, which could add to their costs of doing business and place them at a competitive disadvantage vis-a-vis their peers.

Thus far, only three insurers — American International Group Inc., MetLife Inc. and Prudential Financial Inc. — have received the SIFI designation. MetLife is actively fighting it. But there's no guarantee that others won't fall into the FSOC's regulatory web as well.

Property/casualty and life insurers alike have argued since the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 created the council that they shouldn't be subjected to what they regard as bank-centric regulations. The businesses of banks and insurers aren't the same, they say. And during the Senate hearing, Securities, Insurance and Investment Subcommittee Chairman Mike Crapo, R-Idaho, said bluntly “Banking and insurance present different risk profiles.”

And, of course, insurers are already subject to state regulation. Subjecting them to dual regulation, particularly if one set of regulations appears better suited to banks than underwriters, doesn't make much sense.

One of the biggest problems — and a rather Kafkaesque one at that — is that once a financial institution is designated a SIFI, there's no clear way for it to emerge from the designation. As insurers put it, there's no “off-ramp.” Instead, an insurer with a SIFI designation is doomed to circle endlessly on the regulatory equivalent of the Washington Beltway.

To have an off-ramp, though, also means that the entity wanting to escape SIFI status needs to know how it became a SIFI in the first place. Like its international counterparts, the FSOC can be opaque. Once again, lawmakers and insurers alike have complained that the council has been insufficiently transparent, an assessment that was shared by a 2014 U.S. Government Accountability Office report.

“The lack of full transparency has resulted in questions about the process and may hinder accountability and public and market confidence in the process,” the GAO said.

The operations of the FSOC as regards insurance can certainly be improved. Fortunately, Congress appears quite willing to provide a roadmap with clearly marked off-ramps to reach that destination.