One thing I always find amusing about the insurance industry is its unabashed embrace of acronyms. Surely there are few other industries in the world in which you see quite as many of them bandied about—so much so, in fact, that a certain report we've awaited for quite some time now contains a glossary of them that's nearly two pages long.

But I digress. One of the most discussed of insurance acronyms is the FIO, or Federal Insurance Office, which just in time for Christmas released its long overdue, long-awaited report (created pursuant to the Dodd-Frank Act) that examines whether federal oversight is truly necessary in regulating the insurance industry. It thoughtfully posits that the debate at hand is not whether insurance regulation should be state-based or federal, but whether there are areas in which federal involvement in regulation under the state-based system is warranted.

The report concludes that insurance regulation in the U.S. is best achieved through a hybrid model in which state and federal authorities can work together, their roles defined by which strength each party brings to the process of improving solvency and market-conduct regulation. Solvency, remember (or a lack thereof), is one of the things that started all this talk of increased government regulation in the first place; it's hard to argue against the importance of implementing controls to help prevent any of our industry giants from ever again requiring a bailout.