The director of the Federal Insurance Office rejects industryand congressional allegations it is somehow conspiring with foreignregulators to establish capital standards that will undermine thecompetitiveness of U.S. insurers.

In testimony prepared for delivery June 13 tothe House Financial Services' Subcommittee on Housing andInsurance—in what is expected to be the first look at the FIO'svision for its role in insurance regulation—Director MichaelMcRaith says he is operating within the agency's statutoryauthority.

The FIO has power to coordinate federal efforts and developfederal policy on prudential aspects of international insurancematters, including representing the U.S. in the InternationalAssociation of Insurance Supervisors."

The International Association of Insurance Supervisors (IAIS) isa particular focus of industry and congressional concerns, withsome industry and congressional sources saying they fear the IAISwill impose "bank-centric" regulatory oversight on U.S.insurers.

According to prepared remarks obtained by PC360,McRaith will clarify the IAIS is advisory in nature—it is not asupervisor—and it "does not have any legal authority to direct oraffect the structure or manner through which any jurisdictionregulates its insurance sector."

Creation of uniform international regulatory standards will makeit easier for U.S. insurers to compete in emerging markets, saysMcRaith.

But the FIO unequivocally represents the U.S., he willreiterate.

"The U.S. insurance sector is diverse and that diversity isreflected in the views of its participants," McRaith will say."FIO's priority, however, will always be the best interests of theU.S.-based insurance consumers and industry, and jobs andprosperity for the American people."

McRaith's comments are expected to address concerns there isinternational pressure to change the U.S. insurance regulatorysystem.

Four trade groups say this pressure to "force" the U.S. tochange its regulatory system could "put U.S. insurers doingbusiness abroad at a competitive disadvantage."

A letter from the groups—the American Insurance Associations,the Property Casualty Insurers Association of America, the NationalAssociation of Mutual Insurance Companies, and the FinancialServices Roundtable—urges Congress to oppose measures that wouldchange the current system, which worked effectively during thefinancial crisis, they point out. The groups ask lawmakers involvedwith international regulation talks to "ensure a level playingfield through a focus on outcomes, not the imposition of additionallayers of new standards."

The former state regulator also rejects claims by stateinsurance regulators that he is usurping state insuranceauthority.

"We at FIO remain committed to working with the stateregulators," McRaith will say, furthermore making it clear theagency he heads has no intention to conduct day-to-day oversight ofinsurance business.

"Rather, FIO has the responsibility to monitor all aspects ofthe insurance industry, including identifying issues or gaps in theregulation of insurers that could contribute to a systemic crisisin the insurance industry or the U.S. financial system," McRaithsays, according to his prepared testimony.