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PCI Says FIO Needs to be Pulled Back

The proposed Federal Insurance Office (FIO) (H.R. 2609) being debated in the House Financial Services Committee is an overly broad, expansive proposal that needs many...
November 11, 2009

The proposed Federal Insurance Office (FIO) (H.R. 2609) being debated in the House Financial Services Committee is an overly broad, expansive proposal that needs many changes, according to the Property Casualty Insurers of America (PCI). A commentary by Janice M. Abraham, Chair of PCI's Board of Governors, details the differences between the FIO proposal and a previous bill to create an Insurance Information Office (OII).

Abraham says the FIO has no balancing of accountability, mandate, or mission. She also notes that FIO supporters say they are not creating a new federal regulatory agency, but the draft legislation indicates otherwise.

"The FIO proposal would grant the federal insurance office a broad scope of powers that goes beyond the more limited and focused scope of the OII proposal. For example, the FIO would have the authority to 'monitor all aspects of the insurance industry. . .' and to 'perform such other related duties and authorities as may be assigned to the Secretary.' This gives the Secretary of Treasury discretion to delve into any insurance issue that can be said to relate in any way to any of the functions of the FIO." The letter also notes that the bill would give the FIO subpoena power.

'Mission Creep'

"The intent of the initial proposals was to coordinate federal and international insurance policy," notes PCI. "However the recent drafts create a potential for regulatory mission creep over time. We believe Congress should take care to ensure that the FIO's mission and powers are limited to addressing gaps in federal and international policymaking coordination."

"We're not broke, we didn't cause the current financial crisis, and we don't need new federal oversight or regulations," Abraham writes. "The property casualty insurance industry has a proven track record of protecting consumers and financial soundness through the state-based system. Adding federal regulations to existing state regulations will duplicate efforts, make the system less efficient, and may ultimately increase costs for consumers."

"It is crucial, as we seek to streamline insurance regulation in America, that we get it right," states the PCI letter. "It is completely unnecessary to fix the one segment of the financial services industry that has been a model of responsibility and fiscal soundness during an otherwise dismal economic time."