Some property & casualty insurance companies are concerned with the final ruling regarding how it will determined which nonbank institutions present a systemic risk and are therefore subject to additional federal regulation.  The criteria are as follows:

1.    Must have over $50 billion in consolidated assets and meet one of three additional criteria: Having $30 in gross notional credit default swaps, having $3.5 billion in derative liabilities and having $20 billion in total outstanding debt.

2.    The Financial Stability Oversight Council will then use a specific framework to determine which companies fall into that category. 
3.    Those companies that are ruled to be in that category will then be subject to additional scrutiny by the Federal Reserve Board of Governors.

It is the third step that has some insurers concerned because it is so similar to rules for nonbank financial institutions.  As we all know, the insurance industry is a unique one; it has  its own accounting rules, for instance.  There is concern that the rules are not complete and are not precise enough for the insurance industry.  And of course, overlapping regulation with the states is a concern, as well as the additional expenses to be incurred with compliance.

In a story from comes the following:  “There's always going to be concerns when you're talking about a federal agency or group having the authority to impose itself on a private company,” said Jim Grande, senior vp in the National Assn. of Mutual Insurance Cos.' Washington office. “We would have preferred that FSOC exclude property/casualty companies from being able to be systemically significant.”
He also said the Federal Insurance Office's role in the process should be better defined. FIO can recommend to the FSOC that an insurer be designated as systemically significant, he said. “What we don't know is if FIO is bound by all of the same criteria and rules FSOC is.

There were also concerns about duplication with international rules as well.  Still there was at least some cautious optimism expressed as well:
“I think it will be a wait-and-see” situation, said J. Stephen Zielezienski, senior vp and general counsel of the American Insurance Assn. in Washington. “There were a couple adjustments to the metrics. We're pretty comfortable—if in Stage 1 you apply those metrics to regulated property/casualty insurers, you're not likely to get any that trigger those plus-one metrics.”

It’s clear the financial meltdown or near financial meltdown of 2007 will be affecting markets and industries for years to come.