The US Federal Reserve has made a tentative step toward imposing tougher capital requirements on insurers, inviting comment on a proposal for a two-tier regime designed to shield the financial system from another Lehman-like shock.

Under the proposal, endorsed by the Fed’s board on Friday afternoon, American International Group and Prudential Financial, the huge insurance conglomerate, would face more stringent rules, while the dozen insurance firms under supervision by the Fed due to their banking activities – the likes of State Farm Mutual Automobile Insurance and Nationwide Mutual Insurance – would be subject to lighter capital requirements linked to existing state-based standards, writes Ben McLannahan in New York.