1

STATEMENT OF THOMAS E. WORKMAN

THE COUNCIL’S INDEPENDENT MEMBER WITH INSURANCE EXPERTISE

November 3, 2023

Thank you, Madam Secretary. I will vote for the two proposals before 

us today. That said, I want to offer a few remarks about the change 

regarding ac�vi�es and en��es, about cost-benefit analysis in the 

determina�on process, and about the importance of the Council 

con�nuing to work closely with state insurance regulators.

Madam Secretary, as you stated at our April mee�ng, “The Council does 

not broadly priori�ze one type of tool over another. Rather, we plainly 

examine a risk—and design our response to address the risk we are 

seeking to mi�gate.”

In the Proposed Analy�c Framework, it states: “The ac�ons the Council 

may take depend on the nature of the vulnerability[:]

[F]or example, vulnerabili�es origina�ng from ac�vi�es that may be 

widely conducted in a par�cular sector or market over which a regulator 

has adequate exis�ng authority may be addressed through an ac�vitybased or industry-wide response[.]

[I]n contrast, in cases where the financial system relies on the 

ongoing financial ac�vi�es of a small number of en��es, such that the 

impairment of one of the en��es could threaten financial stability, or 

where a par�cular financial company’s material financial distress or 

ac�vi�es could pose a threat to financial stability, an en�ty-based ac�on 

may be appropriate.”

As for cost-benefit, consistent with the logic of making all the tools 

available to “plainly examine a risk—and design our response,” I believe 
2

conduc�ng a cost-benefit analysis can be an important tool in the 

analy�cal process prior to making a determina�on. Cost-benefit is a 

tool that is well-recognized in federal and state statutory, regulatory, 

and case law, and I believe it is generally understood by the public as a 

way to make efficient use of government and private resources. 

In light of the significant aten�on given cost-benefit analysis in the 

comments received, I suggest that going forward thought be given, as a 

mater of policy, to having the Council deem the cost of designa�on to 

be an appropriate risk-related factor. It may be difficult to calculate the 

benefit of a designa�on in a given case, but it could well provide 

valuable informa�on as to the cost it would impose on the designee.

Turning to the third element of my remarks, I want to emphasize that 

the insurance sector has a strong, sophis�cated state regulatory system.

In fact, we have two leaders of the Na�onal Associa�on of Insurance 

Commissioners on this Council. In the Guidance Preamble, it states: 

“The Council appreciates the exper�se and experience of primary 

financial regulators, . . . Under the Final Guidance, the Council will 

maintain its previous commitment to engaging extensively with exis�ng 

regulators.” In that regard, I am certain the NAIC will likewise con�nue 

to engage fully with the Council in resolving poten�al risks to financial 

stability in the U.S. insurance sector.

Finally, I want to again express my apprecia�on for the fine work of staff 

in developing the Proposals before us today.’’

Thanks again, Madam Secretary.

Thomas E. Workman

Independent Member

Financial Stability Oversight Council