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NAIC President Says Treasury Blocking State Regulators' Access to Information

Iowa Insurance Commissioner and National Association of Insurance Commissioners (NAIC) President Susan Voss says the Treasury is standing in the way of allowing Missouri Insurance...
February 22, 2011

Iowa Insurance Commissioner and National Association of Insurance Commissioners (NAIC) President Susan Voss says the Treasury is standing in the way of allowing Missouri Insurance Director John Huff, the only insurance expert named to the newly formed Financial Stability Oversight Council (FSOC), to use his own staff or most of the experts at the NAIC for his work for the council. According to Voss, the Treasury is preventing Huff from sharing information with other state regulators, his own staff in Missouri and all but three members of the NAIC staff, who have signed confidentiality agreements. She says experts in derivatives, insurer investment portfolios, solvency standards and other topics should also be privy to the workings of the council.

Treasury has taken the position that Huff only represents Missouri and has blocked him from sharing essential and confidential information with other regulators and all but three NAIC employees.

Voss and Huff, along with four other state insurance regulators, sent a letter to Treasury Secretary Timothy Geithner saying that without NAIC expertise, the council "will be notably devoid of the expertise and information necessary to reach fully informed conclusions about insurance companies and insurance regulations." There are three spots still to be filled on the stability council's 18-member panel, and two of them are seats set aside for insurance experts.

"Congress delegated the choice of the appropriate regulator to a decision of all the state insurance regulators clearly indicates that this FSOC member was intended to represent the state insurance regulatory system, and not merely one state's insurance department," Voss and other NAIC leaders, including Huff, said in their letter. Or, as Voss said in an interview, "I know it's the 'Show-Me' state, but show me more than just Missouri."

Treasury is showing a lack of respect to the state officials that regulate nearly all insurance activity in the United States, Voss said. The FSOC is preparing to make decisions without the participation of insurance experts. Federal officials have not responded to the NAIC's concerns, she said.

The chairman of the House Committee on Financial Services, U.S. Rep. Spencer Bachus (R., Ala.), was among the signatories on a letter to Geithner that expressed concern about the unfilled positions and said Huff should be able to "utilize state regulatory resources to the extent he deems necessary to carry out his responsibilities...just as the other members of the Council have ample staff support available to them."

Click here to read Regulator Raises Alarm Over Lack of Insurance Expertise (FOX Business News 2/15/11)

What It Means to Agents: Treasury officials are apparently seeking to thwart the involvement of state insurance regulators in the FSOC panel that has been mandated by Congress. It is another indication why funding for a study of the "benefits" of federal insurance regulation should be stripped by Congress from Treasury's new Federal Insurance Office (FIO).