WASHINGTON, Feb. 3 (LID) – The recently created Federal Insurance Office (FIO) within the U.S. Department of Treasury has missed its deadline to report to Congress on how best to improve oversight of the insurance industry.
Title V of the Wall Street Reform and Consumer Protection Act of 2009 (Pub.L. 111-203), which created the FIO, called for the study to be submitted to Congress no later than 18 months after the date the so-called Dodd-Frank Act took effect.
For the report, the office sought public comment on how to modernize and improve the U.S. insurance regulatory framework, which currently is overseen by state regulators. Specifically, in a notice in the Federal Register, the office sought comments on such topics as systemic risk regulation, capital allocation standards and regulatory uniformity among the states.
FIO lacks regulatory powers; it is charged with, among other functions, identifying potential regulatory gaps, monitoring the affordability and availability of insurance in under-served areas and helping to develop federal policy on international insurance issues.
FIO Director Michael McRaith has said more than 150 comment letters have been submitted to the FIO.
The National Association of Insurance and Financial Advisors (NAIFA), for instance, said FIO could be “a needed source of expertise on the insurance industry within the federal government.”
NAIFA President Robert Miller, in a statement, reiterated the organization’s support of state insurance regulation but said there are areas “where the status quo must change.”
“We believe the FIO can play an important part in efforts to educate, coordinate, modernize and reform regulations,” he said.
The National Risk Retention Association (NRRA) has urged changes in federal law to better protect the operations of risk retention groups. NRRA General Counsel Robert Myers, Jr. said there is a record of states “encroaching” on RRG operating authority granted by the Liability Risk Retention Act of 1986 (LRRA; Pub. L. 99-563),
For its part, Consumer Watchdog said the group would oppose any federal interference in insurance regulation that would undermine strong consumer protections in the states.
“There is plenty of room to improve consumer protection for insurance customers across the nation, but FIO must recognize that no consumer should be forced to give up existing consumer protections just because insurance laws in some states lag behind,” Carmen Balber, the group’s Washington director, said in a statement.
Meanwhile, the libertarian-leaning Heartland Institute suggested FIO examine state-level regulations on rate-making and underwriting in property and casualty insurance, as well as the accumulation of risk in residual markets and state-run insurers and reinsurers in states where rates have been suppressed.
“We note that when states were granted authority under the McCarran-Ferguson Act to have sole regulatory authority over the business of insurance, virtually all insurance rates and forms were established collectively by industry-owned rating bureaus, which raised the specter of anticompetitive collusion,” the Chicago-based think tank wrote.