Federal Insurance Office Director Michael McRaith To Testify Before U.S. House Financial Services Subcommittee on Insurance Regulatory Modernization Report
Feb 4, 2014
Federal Insurance Office (“FIO”) Director Michael McRaith will testify before the U.S. House Financial Services Housing and Insurance Subcommittee at 10:00 a.m. (ET) this morning, February 4, 2014, on the FIO’s recently released insurance regulatory modernization report. Joining him will be the National Association of Insurance Commissioners International Insurance Committee Chairman, Connecticut Insurance Commissioner Thomas Leonardi.
The hearing, entitled “The Federal Insurance Office’s Report on Modernizing Insurance Regulation,” will explore the FIO’s recommendations contained within the report.
For Webcast information, click here to go to the hearing Web page.
The two-panel hearing includes the following witnesses (click on the names below to go directly to each witness’ written testimony):
- Mr. Michael McRaith, Director, Federal Insurance Office
- Mr. Thomas Leonardi, Commissioner, Connecticut Insurance Department
- Mr. Anthony Cimino, Interim Head of Government Affairs and Vice President for Insurance & Trade, The Financial Services Roundtable
- Mr. Paul Ehlert, President, Germania Farm Mutual Insurance Association, on behalf of the National Association of Mutual Insurance Companies
- Mr. Gary Hughes, Executive Vice President and General Counsel, American Council of Life Insurers
- Mr. Jon Jensen, President, Correll Insurance Group, on behalf of the Independent Insurance Agents & Brokers of America
- Mr. Franklin W. Nutter, President, Reinsurance Association of America
- Mr. Robert Restrepo, Jr., President, Chairman and Chief Executive Officer, State Auto Insurance Companies, on behalf of the Property Casualty Insurers Association of America
- Mr. Scott Sinder, Partner, Steptoe & Johnson, on behalf of The Council of Insurance Agents & Brokers
- Mr. J. Stephen “Stef” Zielezienski, Senior Vice President and General Counsel, American Insurance Association
As explained by an accompanying Congressional bulletin, Title V of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) established the FIO within the U.S. Treasury Department to provide the Federal government with information and expertise on insurance matters. In addition to assigning certain duties to the FIO Director, Dodd-Frank required the FIO to undertake a one-time study on how to modernize and improve the system of insurance regulation in the United States and report to Congress on its findings and recommendations.
The FIO report, issued December 12, 2013, outlines certain recommendations for modernizing insurance regulation; describes the history of insurance regulation, provides an analysis underlying the recommendations regarding prudential and marketplace oversight, and offers the basic principles of insurance regulatory reform.
The report identifies what the FIO believes are inconsistencies within the U.S. insurance regulatory system, explaining that the current insurance regulatory system creates “inefficiencies and burdens for consumers, insurers, and the international community.” These inefficiencies are due, in part, to the multiplicity of jurisdictions with authority over insurance matters within our state-based insurance regulatory system. The FIO argues that “state regulation is often duplicative or inconsistent, that the multiplicity of jurisdictions makes state regulators more prone to ‘capture,’ and that differences in standards between the states provide opportunities for arbitrage, if not a race to the bottom.”
In the international context, the FIO reasons in its report that the lack of uniformity among state regulators may create some competitive disadvantages for U.S. firms operating overseas. As a result, the FIO highlights the necessity of a federal presence in insurance regulation to maintain global competitiveness for U.S. insurance companies.
The FIO also asserts that it would be “much easier to negotiate internationally for more efficient and effective oversight of the insurance sector if U.S. insurance regulation had greater uniformity and predictability.” The report emphasizes that the federal government should not completely eliminate state regulation but, instead, create a hybrid system where “areas in which federal involvement in regulation under the state-based system (are) warranted.”
To view the FIO report, click here.
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