Jim McTague of Barron’s uses his latest “D.C. Current” column to detail insurance companies’ concerns about an unanticipated consequence of the Dodd-Frank financial regulations.

U.S. insurance companies are engaged in an intense rumble with the Federal Reserve and regulators from the European Union over higher global capital standards. A loss could result in lower profits for insurers, including U.S. companies with no international business. The insurers fear they are being sold out to the EU by the Fed, which they claim has exploited the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to tighten its regulatory grip on them.

No specific Dodd-Frank provision was designed to reform insurance regulation. The measure, however, did call for the U.S. central bank to regulate “systemically important financial institutions,” or Sifis, plus insurers organized as bank- or thrift-holding companies. As a result, the Federal Reserve has become the solvency authority for about a third of the U.S. life-insurance sector and a quarter of the property-casualty insurance sector, according to the Bipartisan Policy Center in Washington.

Global insurance standards purportedly apply only to insurance companies with substantial overseas business. But it’s probable that the standard eventually would be imposed on everyone else, says Scott Gilliam, vice president of government relations at Cincinnati Insurance, a subsidiary of Cincinnati Financial (ticker: CINF).

INSURERS HAVE TRIED TO INSURE themselves against such a crisis. They annually are among the most generous contributors to members of Congress, which they’ve urged to take their side.

Congress does, in fact, appear to be rallying for them, albeit cautiously. A Senate bill aimed at correcting Dodd-Frank excesses contains a section asserting the need for congressional oversight of the negotiations on global capital standards, now under way between the EU and a U.S. negotiating team comprised of representatives from the Fed, Treasury’s Federal Insurance Office, and the National Association of Insurance Commissioners. In theory, all three would have to sign off on a capital agreement with the European Union. Some insurers, however, are paranoid about the Fed undercutting everyone else in what they view as an empire-building exercise aimed at making it one of the world’s primary international financial regulators.