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PIA Continues to Fight Against Insurance Czar in CHOICE Act

The Financial CHOICE Act, the Republican alternative to the Dodd-Frank Wall Street Reform and Consumer Protection Act, was introduced in the House last week and had a markup before the Financial Services Committee on Tuesday May 2...
May 2, 2017

The Financial CHOICE Act, the Republican alternative to the Dodd-Frank Wall Street Reform and Consumer Protection Act, was introduced in the House last week and had a markup before the Financial Services Committee on Tuesday May 2. Intended as legislation to rein in what is called the regulatory excesses of Dodd-Frank, the CHOICE Act contains a provision that lays the groundwork for creation of a federal insurance czar.

The provision in question merges the Federal Insurance Office (FIO) with the independent member with insurance expertise on the Financial Stability Oversight Council (FSOC), to create the Office of Independent Insurance Advocate. The Insurance Advocate would have more status and power than the FIO. The director of the new office would be a Senate-confirmed presidential appointee with a six-year term. The new office would have its own budget and would be able to hire its own employees, including attorneys, analysts, and economists.

Perhaps most significantly, although the new position would be housed in the Treasury Department, the Secretary of the Treasury would be prohibited by statute from taking any action to “delay or prevent the issuance of any rule or the promulgation of any regulation by the Independent Insurance Advocate” or from intervening “in any manner.”

PIA—which previously called for the total elimination of the FIO—has been advocating strongly against creation of the Office of Independent Insurance Advocate. We have issued a press release and submitted testimony arguing that creation of the office runs counter to the purpose of the CHOICE Act, which is to reduce, not increase, federal regulation. The National Association of Insurance Commissioners (NAIC) has also testified against the proposal, as has  the National Association of Mutual Insurance Companies (NAMIC), which said, “We no longer believe the FIO is even necessary and we support eliminating the office without replacing it.”

“CHOICE is supposed to rein in an unneeded federal bureaucracy, not create a new one with even more power over the private sector,” writes Jon Gentile, vice president of government relations for PIA National, in an upcoming opinion article for the National Underwriter. “If one were to draft a proposal to extend the reach of the federal government over the insurance industry, this provision of the CHOICE Act would fit the bill.”

“Fortunately, there is still time for lawmakers who believe in reducing, rather than greatly increasing, federal regulation to consign both the existing Federal Insurance Office and the prospective Office of Independent Insurance Advocate to the nearest trash can,” Gentile says.