Insurers offer several lines, or types, of insurance to consumers and others, including life, health, annuity, and P/C products. The U.S. life/health and P/C industries reported approximately $583 billion and $481 billion of aggregate net written premiums in 2013, respectively. These insurers have two primary sources of revenue: premiums (from selling insurance products) and investment income. Both life and P/C insurers earn income from premiums they collect but, because of differences in potential claims, their investment strategies generally differ. For instance, life insurance companies typically have longer-term liabilities than P/C insurers, so life insurance companies invest more heavily in longer-term assets, such as high-grade corporate bonds with 30-year maturities. P/C insurers, however, tend to have shorter-term liabilities and tend to invest in a mix of lower-risk, conservative investments such as government and municipal bonds, higher-grade corporate bonds, short-term securities, and cash. The United States is the world’s largest insurance market by premium volume. In 2014, the United States had a total of roughly $1.16 trillion in premium volume. FSB has designated three U.S. insurance groups as G- SIIs and, according to our analysis, nine additional U.S.-based insurance groups generally meet the criteria for becoming IAIGs. Table 1 shows the relative sizes of these companies, based on total assets, compared with other U.S. companies with insurance subsidiaries. Insurers in the United States are regulated primarily by state insurance regulators, but FIO, the Federal Reserve, and FSOC also play roles. State insurance regulators: State insurance regulators are responsible for enforcing state insurance laws and regulations. State regulators license agents, review insurance products and premium rates, and examine insurers’ financial solvency and market conduct. NAIC is the voluntary association of the heads of insurance departments from the 50 states, the District of Columbia, and five U.S. territories. While NAIC does not regulate insurers, according to NAIC officials, it does provide services designed to make certain interactions between insurers and regulators more efficient. According to NAIC, these services include providing detailed insurance data to help regulators analyze insurance sales and practices; maintaining a range of databases useful to regulators; and coordinating regulatory efforts by providing guidance, model laws and regulations, and information-sharing tools. Generally, a model act or law is meant as a guide for subsequent legislation by states. State legislatures may adopt model acts in whole or in part, they may modify them to fit their needs, or they may opt not to adopt them. FIO: FIO was established by the Dodd-Frank Act. Although FIO is not a regulator or supervisor, it has the statutory authority to represent the United States at IAIS, as appropriate, and to coordinate federal efforts and develop federal policy on prudential aspects of international insurance matters. FIO also monitors certain aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that could contribute to a systemic crisis in the insurance industry or the U.S. financial system. FSOC: FSOC is authorized to determine that a nonbank financial company shall be subject to Federal Reserve supervision and enhanced prudential standards if FSOC determines that the company’s material financial distress—or the nature, scope, size, scale, concentration, interconnectedness, or mix of its activities— could pose a threat to U.S. financial stability. As of March 2015, FSOC had designated American International Group, Inc. (AIG), General Electric Capital Corporation, Inc., MetLife, Inc., and Prudential Financial, Inc. for Federal Reserve supervision and enhanced prudential standards. The Federal Reserve: The Federal Reserve supervises holding companies that may own insurance companies on a consolidated basis if the holding companies are either savings and loan holding companies or nonbank financial companies designated by FSOC for Federal Reserve supervision and enhanced prudential standards. Insurance supervision in the United States is generally at the legal entity level, rather than the holding company or group level, in cases where a company owns one or more insurance companies. That is, state insurance regulators are authorized to supervise individual insurance companies, but lack the legal authority to directly supervise a company that might own an insurer, or to supervise a noninsurance affiliate or any affiliate domiciled and operating outside of the state. However, NAIC officials noted that states that have adopted NAIC’s Insurance Holding Company System Regulatory Act can serve as the group-wide supervisor for an insurance firm that includes noninsurance affiliates, obtain reports and information directly from a noninsurer holding company or affiliate of an insurer, and approve or reject intercompany transactions between the holding company and insurers. State regulators also require insurance companies to maintain specific levels of capital. NAIC’s Risk-Based Capital for Insurers Model Act applies to life and P/C insurance companies. Most U.S. insurance jurisdictions have adopted statutes, regulations, or bulletins that are substantially similar to this model law, according to NAIC, as enactment of this model law is required for a state to be accredited by NAIC. Under this model law, state insurance regulators determine the minimum amount of capital appropriate for a reporting entity (i.e., insurers) to support their overall business operations, taking into consideration their size and risk profile. The model law also provides the thresholds for regulatory intervention when an insurer is financially troubled. Risk-based capital standards aim to require a company with a higher amount of risk to hold a higher amount of capital. Generally, the risk-based capital formulas focus on risk related to (1) assets held by an insurer, (2) insurance policies written by the insurer, and (3) other factors affecting the insurer. A separate risk-based capital formula exists for each of the primary insurance types that focus on the material risks common to each type. For example, risk-based capital for life insurers includes interest rate risk, because of the material risk of losses from changes in interest rate levels on the long-term investments that these insurers generally hold. In addition to capital requirements, regulators use other tools to supervise insurers. For example, supervisory colleges facilitate oversight of IAIGs. U.S. state insurance regulators both participate in and convene supervisory colleges. State insurance commissioners may participate in a supervisory college with other regulators charged with supervision of such insurers or their affiliates, including other state, federal, and international regulatory agencies. Insurers operating in multiple jurisdictions may maintain multiple accounting records in order to satisfy domestic regulatory reporting requirements. U.S. insurers that issue publicly traded securities report financial holdings information to the Securities and Exchange Commission using U.S. Generally Accepted Accounting Principles (GAAP). Additionally, U.S. insurers are required to report their financial holdings on an individual legal entity basis to their state of domicile regulators using Statutory Accounting Principles. Some jurisdictions in the European Union may require insurers to report regulatory requirements using International Financial Reporting Standards, or the valuation system used in Europe’s insurance regulatory rules under Solvency II following its implementation. Finally, some foreign jurisdictions may require reporting with valuation standards in alignment with those developed by the International Accounting standards Board. In response to the 2007-2009 financial crisis, the Group of Twenty (G20) forum—representing 19 countries (including the United States) and the European Union—positioned itself as the main international forum for reforming financial regulations. In 2008, the G20 leaders committed to implementing a broad range of reforms designed to strengthen financial markets and regulatory regimes. To implement their reforms, the G20 leaders generally have called on their national authorities—finance ministries, central banks, and regulators—and international bodies, including FSB and standard-setting bodies such as IAIS. Established by the G20 in 2009, FSB is the international body that coordinates the work of national financial authorities and international standard-setting bodies in the interest of global financial stability. According to FSB, it seeks to support the multilateral agenda for strengthening financial systems and the stability of international financial markets. Its mandate includes reviewing the policy development work of the international standard-setting bodies that jurisdictions use to establish rules or policies through, for example, legislation or regulation. FSB has developed a framework intended to reduce the probably and impact of failure of systemically important financial institutions (SIFI). In 2013 and 2014, FSB also worked with IAIS and national authorities to identify and designate nine insurers as G-SIIs, which will be subject to a set of G-SII policy measures developed by IAIS consistent with FSB’s general SIFI framework. FSB member institutions include national finance ministries, financial regulatory authorities, and central banks, as well as international standard-setting bodies, such as IAIS. U.S. FSB members include the Federal Reserve, the Securities and Exchange Commission, and Department of the Treasury (Treasury)—which serve on the FSB’s Steering Committee and Plenary, FSB’s decision-making body—and other banking regulators (see fig. 1). IAIS is the international standard-setting body responsible for developing and assisting in the implementation of principles, standards, and other supporting material for the supervision of the insurance sector. Established in 1994, IAIS’s mission is to promote effective and globally consistent supervision of the insurance industry in order to develop and maintain fair, safe, and stable insurance markets, and to contribute to global financial stability. It operates by consensus, and its members include insurance supervisors and regulators from more than 200 jurisdictions in approximately 140 countries. According to NAIC, these members account for 97 percent of the world’s insurance premiums. As noted above, FIO has statutory authority to represent the United States at IAIS. In addition, the Federal Reserve and NAIC are also members.