The insurance industry's interests on the Financial StabilityOversight Council (FSOC) are "inadequately represented" because ofthe council's policies, the National Association of InsuranceCommissioners (NAIC) told a congressional panel.

The Treasury Department has taken "a very narrow and, in myopinion and the NAIC's opinion, incorrect view" of the provisionestablishing the FSOC in the Dodd-Frank law, John Huff, director ofinsurance in Missouri and a non-voting member of the FSOC, said intestimony before the Oversight and Investigations Subcommittee ofthe House Financial Services Committee.

Specifically, he said he has been restricted from consultingwith his fellow state insurance regulators on matters before theFSOC. He contended that the restrictions contradict "congressionalintent and the deference accorded to state insurance regulators inthe explicit language" of Dodd-Frank itself.

"Quite simply, FSOC should want—and the U.S. taxpayers shoulddemand—all the regulatory resources and expertise that theirregulators can provide to FSOC's important work in protecting theU.S. financial system," he said.

He said the issue is so important that he and Terri Vaughan,NAIC CEO, "sent a public letter to [Treasury Secretary TimothyGeithner] asking for him to rectify this issue."

He said the NAIC has yet to receive a written reply, but thatsome accommodations have been made to date, although he declined todisclose what they were.

Rep. Randy Neugebauer, R-Texas, chairman of the oversight panel,charged at the hearing that the FSOC is proceeding to designatecertain nonbank financial firms as "systemically important" withoutany representative at the federal level "who truly understands thebusiness of insurance."

Neugebauer added, "On top of that, Director John Huff, who isthe only insurance expert [non-voting] currently participating onthe FSOC, has publicly declared his frustration with his ability tomeaningfully participate and provide the regulatory perspective ofthe insurance sector in these critical discussions."

Neugebauer said Huff has "even offered additional NAIC staff tosupport the work of FSOC at no additional cost to the U.S.taxpayers. Unfortunately, his complaints and generous offer havebeen ignored by the chairman of the council [Geithner]."

Matt Brady, a spokesman for the National Association of MutualInsurance Cos., commenting on Huff's testimony, says, "We shareCommissioner Huff's concern that important decisions are being madeby the FSOC without a sufficient understanding of the insuranceindustry."

"In creating the FSOC, Congress clearly intended for someonewith a thorough understanding of those differences to have a voice,and a vote, in the FSOC's decision-making."