The White House and Congressional Christmas trees are up, but with 70 degree weather in Washington—and without a government shutdown threat—it’s hard to believe it’s the holiday season. It’s harder still to believe that just two short months ago Washington was mired in a GOP leadership fight that threatened to shut down Congress.
Instead of grinding to a halt, the legislative branch recovered from the intraparty skirmish to pass several major pieces of legislation, including an increase to the statutory debt limit, a two-year budget agreement, a five-year transportation bill, a renewal to the Export-Import Bank charter and a rewrite of federal education policy.
Congress also passed a fiscal-year 2016 omnibus that included the Policyholder Protection Act (PPA) and language that reaffirms the state-based regulatory system of insurance and expresses the importance of establishing a domestic capital standard for federally regulated insurers before any international standards for these insurers are adopted. The PPA, a PCI priority for this session, clarifies and corrects several ambiguities and loopholes in the Dodd-Frank Act, preserves the authority of state insurance regulators to protect insurance policyholders, and prevents federal banking regulators from abusing funds set aside to pay policyholder claims to rescue a failing affiliated bank. The omnibus also included the Cybersecurity Information Sharing Act of 2015, which provides for greater cyber-threat data sharing between the government and the private sector and provides liability protection to companies that voluntarily share information with the government.
Finally, Congress also passed a tax extenders bill that makes permanent a provision that exempts active insurance company income for insurance companies operating abroad from the definition of subpart F income. Lawmakers also extended a provision that allows insurance companies to redeploy active foreign income without being taxed under subpart F for five years. These provisions will allow international insurance companies to defer income earned abroad.
During the first session of the 114th Congress, which began with reauthorization of the Terrorism Risk Insurance Act, Congress cleared major reforms that will open up its schedule for the second session. That’s an important marker because the end of the first session isn’t halftime for the 114th Congress—it’s the end of the third quarter.
With Election 2016 on the horizon, Congress simply won’t have as much time next year to get its work done. The Iowa caucuses are 43 days away, and House and Senate members are planning to be away from Washington for large parts of 2016. Indeed, the August recess is scheduled to be the longest in 30 years. (Both chambers are in recess from July 16 through Sept. 5.) The Senate plans to be in session just 43 days following the summer recess, while the House has just 33 session days on its calendar.
Congress has a lot to contend with during that narrow window, and Republican leaders have committed themselves to action. For example, in brief remarks last week, Speaker Paul Ryan, R-Wis., said he has asked his members to “bring their ideas” to the table so the House can get started quickly in 2016 on a pro-growth and pro-reform agenda. Speaker Ryan said, “We need to aim higher than just trying to meet deadlines. We need to treat this like the generational defining moment that it really is, so that we can give the people of this country a real choice. That is what 2016 is going to be all about…”
In remarks to reporters last week, House Financial Services Committee (HFSC) Chairman Jeb Hensarling, R-Texas, also pledged to focus on more Dodd-Frank reforms in 2016. According to The Hill, Hensarling said his reforms would focus on “too big to fail” and the designation of nonbank financial institutions as systemically important financial institutions (SIFIs). Hensarling said, “There’s no secret here that we do not believe in the entire SIFI regime…I don’t believe in SIFIs. I don’t believe in unicorns.”
Next year will also be an important year for National Flood Insurance Program reauthorization. The NFIP does not expire until Sept. 30, 2017, but PCI expects the House Financial Services Committee and the Senate Banking Committee to hold several hearings on reauthorization in 2016. PCI will use these hearings to argue for an NFIP reauthorization bill that includes language to increase the ability to infuse private capital into the marketplace. PCI will also work off Capitol Hill to generate support for quick reauthorization, and those efforts started this month at a meeting with FEMA leadership and 60 flood stakeholders from across the insurance, banking, lending, housing spectrum to identify priorities for reauthorization, including ways to expand private insurer participation in flood risk management. PCI also continues to lead and coordinate negotiations on compromise text of the Ross-Murphy House legislation that clarifies the acceptability of private flood insurance to satisfy the NFIP’s mandatory purchase requirement.
Congress could also finish up data breach legislation next year. On Dec. 9, the HFSC passed H.R. 2205, the Data Security Act of 2015, by a vote of 49-9. The bill, introduced by Rep. Randy Neugebauer, R-Texas, creates a uniform national data breach standard, enforced by the states. Before the hearing, PCI and the National Association of Mutual Insurance Companies (NAMIC) sent a joint letter to HFSC Chairman Hensarling and Ranking Member Maxine Waters, D-Calif., that expressed support for the bill but also noted PCI’s concern about so-called “harm” trigger language. (Read the full letter here.)
The second session of the 114th Congress begins on Jan. 5, 2016 in the House and on Jan. 11, 2016 in the Senate. President Barack Obama will give his final State of the Union address on Jan. 12.
PCI looks forward to an eventful fourth quarter. We wish you a joyous holiday season with your loved ones.