NU Online News Service, Oct. 25, 2:44 p.m.EDT

In his first public appearance since being named FederalInsurance Office director, Michael McRaith sought to alleviateconcerns among those in the industry by saying the states wouldremain the functional regulators of insurance, and that FIO datarequests would not be duplicative.

McRaith says the FIO will consult and work closely with thestate-insurance departments, which remain the functionalregulators, and will request information only if the information isnot already available from public sources, a federal agency, or astate regulator.

He said he will also coordinate with the Office of FinancialResearch to reduce reporting burdens by avoiding unnecessary orredundant data requests.

"My aspiration is to develop a foundation of interaction betweenthe FIO and state regulators, to establish customs and practicesthat best serve the United States, our economy, the insuranceindustry and consumers," McRaith says.

He made his comments in testimony before the Subcommittee onInsurance, Housing and Community Opportunity of the House FinancialServices Committee.

It was his first public comments since he took over the post inMay after several years as Illinois insurance director. The FIO wascreated under the Dodd-Frank financial services reform law. It ishoused in the Treasury Department and reports directly to theTreasury secretary.

Its job is to monitor all aspects of the insurance industry,including identifying issues or gaps in the regulation of insurersthat could contribute to a systemic crisis in the insuranceindustry or the United States financial system.

McRaith says the Treasury had announced in May that it wouldestablish a Federal Advisory Committee on Insurance to provide theFIO with advice on issues related to the responsibilities of theoffice.

He says the advisory panel will be comprised of 15 members, andapproximately half would be state-insurance regulators.

He says there have been more than 100 applications for committeemembership, and that he hopes to name the members "in the nearfuture."

On the international front, McRaith says the FIO will work withstate regulators and the International Association of InsuranceSupervisors "to develop a process that guards against unduereporting burdens, builds in proper data-confidentialitymechanisms, and preserves the competitiveness of the U.S.-basedinsurers."

Citing the fact that there are a number of international issueson the table, McRaith says the FIO will coordinate with thestate-insurance regulators to develop and represent U.S. views onthe different elements requested public comments on the IAISproposal for a common framework, or ComFrame, for overseeing large,multinational insurers.

Among its proposals, ComFrame is asking, in comments requestedin July, whether supervision should be based on a rules-based orprinciples-based approach and when to evaluate the financial burdenon supervisors, industry, and consumers.

In his comments, McRaith notes that the 2007-2009 financialcrisis, including the need for the U.S. government to providesbillions in aid to American International Group to ensure itssolvency, justified creation of the FIO.

He says it highlighted the lack of insurance-sector expertisewithin the federal government.

"A federal insurance presence provides our internationalcounterparts with a central point of contact for insurance-relatedmatters, and facilitates the coordination of federal insuranceefforts," he says.