The Council Says FIO Should Pressure States on Regulatory Issues

The Council of Insurance Agents and Brokers is urging the Federal Insurance Office (FIO) to use its authority to change the current insurance-regulatory system, either through the states or “through federal means.”

The Council expressed its views in a letter to the FIO on modernizing and improving insurance regulation.

“The current state-regulatory scheme is inefficient and costly, with duplicative and inconsistent requirements that have little or no consumer benefit,” says the letter, signed by Council President Ken Crerar.  “Outside the area of financial regulation, the states have shown little ability to make comprehensive changes to improve the process, and the changes that have been made are largely due to federal pressure.”

Two areas that need urgent change, according to the letter, are international-regulatory issues and implementation of the new law modernizing and reforming regulation of the surplus-lines industry.

Regarding that law, the Nonadmitted and Reinsurance Reform Act, Crerar says that “the implementation of the NRRA by the states has lacked the coordination and uniformity that Congress intended, resulting in confusion and costly compliance burdens rather than the simple process NRRA contemplated.”

Citing an example, the letter says, “A majority of states have not joined any multistate agreement or compact and are pursuing their own taxation policies.

“As disappointing as it is that the states missed this opportunity, we remain hopeful that through the efforts of FIO and others, pressure can be brought to bear on the states, and the goals of Congress can be realized.”

The letter also discusses recent increased regulatory scrutiny in a number of jurisdictions; and the lack of international coordination of insurance regulation, which, the Council says, has made it increasingly difficult for insurers and brokers to offer and place master multinational policies.

The letter concludes that it “will take leadership from the federal government to hold the states’ feet to the fire—pressuring them to make the needed changes to modernize and improve the current system.

“And it may take more than pressure—there may be an ongoing role for the federal government in the form of comprehensive insurance regulation, state mandates or standard setting,” it adds.

 The letter adds that FIO’s role as the insurance-regulatory expert in the federal government “and [its] obligation to monitor the industry and its regulation put FIO in a perfect position to work for improvements to the system.”