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FACI Discusses Cyber, Auto Affordability, International Standards

On November 6, 2014, the Federal Advisory Committee on Insurance, an advisory body to the Federal Insurance Office, met in Washington, D.C...
November 13, 2014

On November 6, 2014, the Federal Advisory Committee on Insurance (FACI), an advisory body to the Federal Insurance Office (FIO), met in Washington, D.C. The committee heard from the National Institute of Standards and Technology (NIST) on the current status of a cybersecurity framework being developed pursuant to a 2013 Presidential Order. NIST is working with multiple stakeholders globally, including the insurance industry, to develop the framework. Zurich N.A. also presented to the committee on the underwriting challenges for insurers who provide cyber insurance, such as difficulties in understanding the full scope of exposure and the lack of actuarial data.

The Consumer Federation of America (CFA) told the committee that there are serious concerns whether auto insurance is affordable for low and moderate income Americans. The CFA urged the FIO to more aggressively collect data to monitor affordability. In April 2014, the FIO released a request for comment relating to its authority to monitor the affordability of auto insurance. Birny Birnbaum, the Chair of FACI's subcommittee on auto insurance affordability, supported CFA's request.

The FIO, the Federal Reserve and state insurance commissioners are working collectively on a U.S. capital standards proposal to address the unique needs of the U.S. insurance market in forthcoming international capital standards. FIO Director Michael McRaith stated that any international standards must be capable of being implemented without disrupting the U.S. market. FACI is also creating a subcommittee to examine domestic prudential issues and look at where there may be gaps in state insurance regulation. The subcommittee will be chaired by Ted Mathas of New York Life.

Questions regarding FACI can be directed to Jennifer Webb, PIA National counsel & director of regulatory affairs at jennwe@pianet.org.

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