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FIO Releases a Report, But It’s Not the Long-Awaited One

One day before the director of the Federal Insurance Office (FIO) testified before Congress, the FIO released one of many congressionally mandated reports that are more than a year overdue...
June 18, 2013

One day before the director of the Federal Insurance Office (FIO) testified before Congress, the FIO released one of many congressionally-mandated reports that are more than a year overdue.

FIO’s “Annual Report on the Insurance Industry” is not the delayed modernization report mandated by the Dodd-Frank Act. It is merely an annual report to the president and Congress on the condition of the domestic insurance industry. The National Association of Insurance Commissioners (NAIC) had no comment on it.

What everybody is really waiting for is the FIO’s report on insurance regulatory modernization, which was mandated by Dodd-Frank. There is considerable apprehension about this report, because the questions asked by the FIO belied a clear bias toward federalization of insurance regulation. FIO Director Michael McRaith said this report – overdue since January 2012 – would be out “soon.” PIA heard from reliable sources that the report was about to be issued in March, but it was pulled back shortly after newly-installed NAIC CEO Ben Nelson, in a speech to the National Conference of Insurance Legislators (NCOIL), said that the FIO needed to do “the job it was intended to do, but not our job.” Nelson restated that the FIO is not a regulator, and then added, “I think they’re beginning to understand that.”

To provide a measure of balance that we expect will be lacking in the FIO report, last year PIA worked with then Insurance Subcommittee Chairwoman Judy Biggert (R-IL) and Rep. Steve Stivers (R-OH) on requesting a study from the Government Accountability Office (GAO) that looks into the benefits of the state insurance regulatory structure. The study was accepted and is due out from the GAO soon. This GAO report could be released at the end of June; however, the release date can be postponed up to 30 days. The GAO is timely with its reports, unlike the FIO, which has several congressionally-mandated reports more than a year overdue.

What It Means to Agents: PIA supports state regulation of insurance and opposes federal encroachment. We share the concerns of many of our industry colleagues that the FIO might attempt to use its report as the basis for a power grab, to propose that the federal government take over some or all insurance regulatory functions from the states. We are hopeful that the strong stance taken by NAIC CEO Ben Nelson may help to avert this.

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