Consumer advocates are questioning whether the TreasuryDepartment should include an actuary as a member of the proposedFederal Advisory Committee on Insurance (FACI), citing a potentialconflict of interest, among other concerns.

The Consumer Federation of America (CFA) points in particular toa recent letter to Congress written by the American Academy ofActuaries regarding flood-insurance legislation. That group did notdisclose that the actuary who wrote the letter is employed by areinsurer.

In a letter to the Treasury Department, J. Robert Hunter,director of insurance for the CFA, says, “I do not agree thatactuaries need to be on the FACI.”

He says he agrees that actuarial expertise is needed, but headds, “Actuarial expertise is much more suited for subcommittee orstaff functional work, for getting into the details under thedirection of the members of FACI, than in determining publicpolicy.”

Furthermore, Hunter urges Treasury officials to be “very carefulwhen selecting actuaries for such a purpose.”

He says the “vast majority of actuaries are in the employ,directly or indirectly, of the insurance industry and have a directconflict of interest when making independent decisions.”

Hunter wrote his letter to Undersecretary of the Treasury forFinance Jeffrey Goldstein. It was in response to a June 8 letter toGoldstein by officials of the American Academy of Actuaries askingthat an actuary with insurance expertise be appointed to FACI.

The Treasury Department, in a May 13 Federal Register notice,asked people to apply to be members of the FACI.

According to the notice, appointments to the FACI will be madewith the “objective of creating a diverse and balanced body with avariety of interests, backgrounds and viewpoints represented,” andmade up of members who possess “relevant expertise.”

The Treasury Department is creating the FACI to implement aprovision in the Dodd-Frank Wall Street Reform and ConsumerProtection Act of 2010 that requires the department to set up aFederal Insurance Office.

In its letter to the Treasury, the actuary association said thedepartment's efforts to find committee appointees with thenecessary diversity and experience “will not be realized if thecommittee does not include individuals with direct actuarialexpertise.”