A House Financial Services Committee subcommittee, underpressure from domestic insurance interests, is expected to demandthat Federal Insurance Office Director Michael McRaith pressureEuropean regulators to bend policy more to the liking of U.S.insurers.

The June 13 Housing and Insurance Subcommittee hearingcomes as the International Association of Insurance Supervisorsprepares its final list of global systemically important insurers,and lawmakers will also ask what U.S. governance representativesare doing to shield U.S. insurers from being designated as globallysystemically important insurers.

Back in late March, FSC Subcommittee Chairman on Housing andInsurance, Rep. Randy Neugebauer, R-Texas, told McRaith thatcurrent international standard-setting proposals could imposeunnecessary costs on insurance consumers and hurt the competitiveU.S. marketplace.

Insurers have expressed concerns that McRaith is not using hisvoice abroad to fend off unwanted advances from European financialregulators who may prefer to impose capital standards on insurersthat do business globally.

The questions McRaith is likely to face are based on a briefingabout 15 to 20 committee staffers had last Wednesday withrepresentatives of insurance and reinsurance trade groups, such asthe American Insurance Association, the ReinsuranceAssociation of America (RAA), Property Casualty InsurersAssociation of America (PCI), the National Association ofMutual Insurance Companies and the American Council of LifeInsurers (ACLI.)

The briefing, though, contends that the government entitiesrepresent the industry, not the government, and the Dodd-Frank Actdoes not support such an assertion.

In the June 10 briefing memo to the subcommittee members, themajority staff characterize the FIO director's job as“representing the interests of U.S. insurers during the negotiationof international agreements and advising the Office of the U.S.Trade Representative (USTR) during trade negotiations.”

And the jobs of the three FSOC insurance members are describedas representing “the perspective of the insurance industry” underthe requirements of the Dodd Frank Act.

This wording, though, is not found in Title One of the DoddFrank Act describing FSOC's duties.

Under Dodd Frank, FIO has a say-so in international agreementsregarding insurance regulation. The statute says FIO can representthe federal government in international discussions relating toinsurance regulation, coordinate federal efforts and developfederal policy on prudential aspects of internationalinsurance matters including representing the United States in theIAIS, and assist the Treasury secretary in negotiating coveredagreements.

In addition to McRaith, scheduled to testify are Roy Woodall,the appointed insurance expert voting member of the FinancialStability Oversight Council (FSOC), and the NAIC CEO, formerNebraska Senator Ben Nelson, in his first public testimony beforeCongress since leaving the Senate in December.

The industry hopes that the hearing is the beginning of vigorousoversight over U.S. insurance regulatory involvement in theworkings of IAIS and Financial Stability Board (FSB).

“It is very important for Congress to exercise itscritical role as lawmakers and provide ongoing oversight toassure that U.S. interests, including the defense of our companiesand effective regulatory system, are always pursued by U.S.representatives in international insurance regulatory discussions,”says Dave Snyder, PCI's executive in charge of internationalaffairs.

“ACLI will closely monitor the hearing. Although we are nottestifying, we'll issue a statement to the committee,” says aspokesperson for the trade association.

Anoter issue the industry hopes the House subcommittee willraise is concern over the potential for additional regulation fromthe IAIS' Common Framework for Supervision of InternationallyActive Insurance Groups (ComFrame.)

McRaith heads the IAIS committee overseeing the ComFrame processand will likely get questions on his role in crafting a productthat has become unpopular among vocal industry and NAICrepresentatives. The industry is characterizing ComFrame'sdirection as potentially creating competitive advantages fornational/regional U.S. insurers, with possible creation of a newglobal capital standard and other measures that would create anun-level playing field that disadvantages them.

Governmental insurance representatives did not comment.

Corrected to show the briefing memo was prepared bycommittee staff, not industry groups.