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FIO Receives 150 Comment Letters; McRaith Says FIO Won’t “Sit Idly By”

Federal Insurance Office (FIO) Director Michael McRaith said he has received close to 150 comment letters from the industry with recommendations on how to improve the regulatory system
January 17, 2012

Federal Insurance Office (FIO) Director Michael McRaith said he has received close to 150 comment letters from the industry with recommendations on how to improve the regulatory system. McRaith noted during a speech last week at the Property/Casualty Insurance Joint Industry Forum that the FIO also held dozens of meetings with industry participants in the past few months. PIA National filed formal comments with the FIO and met with McRaith at his request to discuss PIA’s views on insurance regulation. McRaith says there is a great deal of difference of opinions regarding marketplace and prudential oversight. The FIO report is scheduled to be released this month.

During his speech, McRaith reiterated the FIO is not looking to duplicate state regulation nor increase paperwork burdens for insurers. He reiterated that the FIO is not a regulator and that states will maintain control over regulations. However, if you carefully read the text of McRaith’s remarks, you can discern hints of possible overreach in the near future.

McRaith said: “Another key responsibility of the FIO is to ‘monitor all aspects of the insurance industry.’ Of course, different people have offered different views of what monitoring will look like and what constitutes an ‘aspect’ of the insurance industry. Circumstances will largely influence our focus at times, but it definitely does not mean that FIO will sit idly by while the world spins. FIO is poised to be flexible enough not only to be responsive to current events affecting the insurance industry, but also to take the lead in facilitating dialogue and direction regarding the insurance sector both nationally and internationally. FIO will be increasingly well-suited to be engaged and assertive…” [our emphasis added]

What It Means to Agents: What needs to be monitored is the FIO, to ensure that it does not attempt to break out of its Congressionally-mandated restraints and assume the role of insurance regulator. Saying that the definition of words such as “monitor” and “aspect” are open to interpretation is like saying, “That depends on what the definition of ‘is’ is.”

It is disquieting to hear that the FIO is “poised” to “take the lead in facilitating” “direction” of the insurance sector “nationally” and will be “increasingly well suited to be engaged and assertive.” Really?  The risk here is that FIO may be poised to try to expand its authority by asserting authority it has not been granted. This is not an uncommon gambit in Washington, D.C.

PIA Comments to FIO (filed 12/19/11)

Read more on FIO's position of its authority: FIO Hears Industry Arguments on Regulation (National Underwriter 12/21/11)