House Financial Services Committee Tells FIO to Pick Up the Pace on Insurance Reports

The House Financial Services Committee (HFSC) is urging the Federal Insurance Office (FIO) to submit several “long overdue reports without further delay.”

In its oversight plan for the 113th Congress, the HFSC says it will also conduct “significant oversight over the Financial Stability Oversight Council (FSOC),” monitoring the extent to which its designation of systemically important financial institutions (SIFIs) may create an expectation among market participants that the firms are too big to fail.

The committee also said it will work to ensure that the FIO, housed in Treasury, is focused on developing “expertise on insurance matters and does not impose unwarranted or excessive data collection burdens on the insurance sector or on small insurers in particular.”

The overdue FIO reports, required to be submitted to Congress under the Dodd-Frank Act, include: an annual report to Congress, which was due Sept. 30, 2011, on any actions taken to preemt of state laws under an international-insurance agreement; a report, due Sept. 30, 2012, describing the U.S.- and global-reinsurance markets; a report on the ability of state regulators to access reinsurance information; a review of “Nonadmitted Reinsurance and Reform Act” provisions allowing state regulators to access reinsurance information for insurers, due Jan. 1, 2013; and – perhaps the most highly anticipated – a report on the modernization of insurance regulation, due almost 13 full months ago.

The modernization report is supposed to make recommendations to improve the system of insurance regulation in the United States. The report was said to be drafted on time and was caught up in various agency reviews, among other delays. Sources suggest the report might come out this month, after Tresury Secretary designee Jacob Lew is confirmed. Publication dates suggested by sources have slid for more than a year. Those close to the FIO do not expect to see it until the day it is submitted to Congress.

All manner of industry groups and interests, consumer-advocate groups and state regulators have already met with the FIO and weighed in with comments, which were due in mid-December 2011, so many are anxious to see how their input is processed by FIO Director Michael McRaith and his staff. 

However, there is no fine or sanction for delays, and no reason to hurry the report, other than to assuage anxiety among the insurance industry. 

McRaith had earlier pledged to be “prolific” in his reports, and it is expected he has been.

The report may or may not include suggestions for new legislative proposals that would affect the current state regulatory system for insurance, and the National Association of Insurance Commissioners is girding for any such proposals. The NAIC's new CEO, Ben Nelson, former Nebraska senator, last month acknowledged in a quick chat after assuming his new post that his fear is not a discussion of insurance in the modernization report, but some sort of increased FIO role to be gained through legislation. At the outset, Nelson noted that the federal government/FIO is not a regulator.