A discussion draft of proposed regulatory reform legislation would require the Financial Stability Oversight Council to be more transparent as it determines whether a non-bank financial institution such as an insurer presents a systemic risk to the nation’s economy.

Insurers have long argued that they do not present a systemic risk, and therefore should not be designated as “systemically important financial institutions” subject to heightened regulatory oversight by the Federal Reserve. Thus far, three insurers — American International Group Inc., MetLife Inc. and Prudential Financial Inc. — have received the SIFI designation. MetLife is fighting the designation in court.

Insurers have also complained that the designation process lacks both adequate transparency and a so-called “off ramp” to allow insurers designated as SIFIs to shed that designation.

The discussion draft of the Financial Regulatory Improvement Act of 2015, which was posted on the Senate Banking Committee’s website on Tuesday, would establish new requirements for FSOC during the designation process. This includes requiring FSOC to present the nonbank financial institution a detailed explanation of why it is designating it as a SIFI.

This draft also would amend the current reevaluation process for a designated nonbank financial company. The company would have an opportunity to submit materials (including a remedial plan) and to meet with representatives of FSOC during FSOC’s annual reevaluation of such company’s designation. “Afterwards, FSOC has to vote on whether to rescind such company’s designation, and if FSOC does not vote to rescind, provide the company with meaningful information about why it should continue to be designated,” according to the discussion draft. FSOC would also have to tell the company why any remedial plan submitted is unsatisfactory, and what the company can do to no longer be designated,the draft said.

In addition, at least once every five years, the company would be entitled to a hearing with FSOC members to contest its designation, and afterwards, FSOC will vote on whether to renew the designation of the company.

“If FSOC does not vote to renew the designation, the previous designation will be rescinded,” said the draft.