On December 12, 2013, the Federal Insurance Office released its report on how to modernize the United States insurance regulatory system. The report had been long awaited by the insurance industry, so it comes as no surprise that many in the industry have responded to the report’s findings. So far, reviews are mixed.
“The Dodd-Frank Act established the Federal Insurance Office (FIO) within the Treasury Department and makes clear that FIO is not a regulatory agency and its authorities do not displace state insurance regulation. While we appreciate FIO’s suggestions for improvement, the states have the ultimate responsibility for implementing regulatory changes.”
“While we agree with the report’s conclusion that insurance regulation could be improved and modernized in certain areas, we strongly believe that any federal action should be targeted and limited with day-to-day regulation left in the in the hands of state officials. The state-based system of insurance regulation has served consumers and our economy well for decades. The Big ‘I’ strongly supports the continued preservation of this system and is ardently opposed to any direct infringement by the federal government.”
“As a strong supporter of our successful state-based system of insurance regulation, we are concerned that the FIO report may be driven by assumptions and assertions that do not hold up to scrutiny. Many of FIO’s assumptions appear to have been contradicted by a Government Accountability Office (GAO) report that concluded that the state insurance regulatory system worked well to help mitigate the negative effects of the 2007-2009 financial crisis on the insurance industry.”
“The Report provides a valuable guidepost for collectively working toward improvements that lead to greater regulatory effectiveness, efficiency, and marketplace competition. The overall objective of modernizing and improving U.S. insurance regulation should be to promote the growth of healthy, competitive private insurance markets at home and abroad that will ultimately benefit and protect insurance consumers while emphasizing safety and soundness. The FIO Report affirms these essential goals.”
“RIMS strongly supported the creation of the Federal Insurance Office as a first step toward needed federal regulation of the insurance market. There is no question that commercial insurers, producers and policyholders would benefit from more consistency and uniformity in terms and conditions when insurance is purchased from a single insurer. Opportunities to streamline the insurance purchasing process are a priority for this Society and we’re happy to see the FIO make progress to enhance regulations.”
There is obvious tension between the FIO and many in the industry over what exactly the FIO’s role is and should be going forward. Now that the report has been released, it will be interesting to see what the FIO’s next steps are. Many government issued reports are released and never heard from again. It remains to be seen if the FIO’s report meets that same fate.