The Federal Insurance Office (FIO) says it will release its long-awaited report on recommendations for modernizing and improving insurance regulation before July.
Michael McRaith, director of the FIO, made the comment today at a meeting of the agency’s Federal Advisory Committee on Insurance in Washington.
The FIO will issue reports on how the government should deal with national catastrophes at the same time, along with all other reports it is required to release under the Dodd-Frank Financial Services Reform law. The department will also comment on the nation’s flood insurance program.
The FIO has come under pressure from members of Congress over its delays in issuing required reports. The modernization report was due for release in January 2012, but the Obama administration decided to hold off out of concerns that it would become a political issue in an election year.
Conservative members of Congress are chafing at the bit to use the report’s likely recommendations for greater federal oversight of insurance to criticize the administration for needlessly proposing to expand the federal government.
Rep. Jeb Hensarling, R-Texas, the new chairman of the House Financial Services Committee, issued a statement last month demanding the report’s release, “without further delay.”
Other reports that Congress says are due are the breadth of the global reinsurance market and the ability of state regulators to access reinsurance information.
The insurance industry is also anxious to see the report’s release.
Sue Stead, chair of the insurance regulation practice group at Nelson Levine DeLuca and Hamilton in Washington, said she was “encouraged” by McRaith’s comments.
“This is the first time he has provided a clear signal to his advisory committee as to when the reports will be issued,” Stead said.
She said the timeframe makes sense given the recent confirmation of Jack Lew as Treasury secretary.
“I think the industry, regulators and all of us are going to be surprised by the contents of the modernization report,” Stead said.
“We’re confident the report will be helpful, constructive, authoritative, and move the dial in the right direction on issues of regulatory harmonization,” said Joel Wood, senior vice president of government affairs for the Council of Insurance Agents and Brokers.
Culturally, Wood said, “the Treasury Department hasn’t had much engagement on state insurance regulatory issues, so officials have moved cautiously, which is what accounts for the delay.”
“But now that FIO is almost fully staffed and has excellent leadership, I think this is the year they’ll hit their stride,” Wood said.
Jimi Grande, senior vice president, federal and political affairs, said NAMIC wouldn’t comment until the report’s release. However, NAMIC continues to strongly believe that insurance regulatory reform should focus on improving the state based system, and opposes any efforts to add duplicative federal regulations.
Commenting on McRaith’s comments that the FIO would examine the extent to which the government should be involved in insuring against flood, Grande said that NAMIC is always open to new developments and innovations that could reduce the role of the federal government in insuring against flood.
“However, we do believe the key market characteristics at play with the flood peril will likely always necessitate the National Flood Insurance Program for a segment of the population at greatest risk of flood,” Grande said.
“NAMIC is always open to new developments and innovations that could reduce the role of the federal government in insuring against flood,” Grande said. “We supported the elimination of subsidies in Biggert-Waters and encourage the NFIP to take further steps to regain its financial footing. Subsidized premiums mask the true risk of disasters, thus encouraging irresponsible development and burdening all taxpayers with the ever-increasing costs of post-disaster aid. We will continue to work with FEMA to achieve their goals of a viable NFIP.”