Posted on 20 Jan 2011
The National Association of Professional Insurance Agents (PIA) is calling on the new 112th Congress to pass legislation to defund a study of insurance regulation currently slated to be conducted by the new Federal Insurance Office (FIO), and to repeal the mandate granted to the FIO to make recommendations to Congress regarding insurance regulation based upon that study.
“Federal bureaucrats should not be conducting a study on whether or not their own powers should be expanded, and then making recommendations to Congress based on a study that they alone conducted,” said PIA National Executive Vice President & CEO Leonard C. Brevik. “Having the FIO report on, as the law currently states, ‘the costs and benefits of potential federal regulation of insurance across various lines’ creates an inherent conflict of interest. It assures a biased result because it asks federal regulators if they believe in federal regulation. Of course their answer will be ‘yes.’ Congress needs to defund this Trojan horse for federal expansion and encroachment.”
“The scope of authority of the FIO is strictly limited by law,” Brevik said. “The legislation creating it clearly states, ‘Nothing ... shall be construed to establish or provide the office or the Department of the Treasury with general supervisory or regulatory authority over the business of insurance.’ That authority remains where it belongs – with the states – despite the current attempt by the Obama Administration to expand the FIO into an insurance policy-setting body, which exceeds its mandate.”
The FIO is meant to serve as an information resource for policymakers and to coordinate international insurance agreements. But despite the legislative prohibition against the office acting as a regulator of insurance, Treasury Deputy Secretary Neal Wolin has put forward an interpretation that would vastly expand the office’s activities beyond Congressional intent.
Speaking to stockbrokers in London on November 17, 2010, Wolin said that the Obama administration believes the new financial services reform law gives it the power to monitor the insurance sector and coordinate and develop federal policy on major domestic and international insurance issues. He added that through the FIO, “the federal government will work toward modernizing and improving our system of insurance regulation.”
“This is exactly what Congress did not want the FIO to do when it prohibited it from getting involved in insurance regulation,” said PIA National President Fred Thomas. “It is clear that the Obama Administration is claiming an overly broad mandate for the FIO that is in direct conflict with the law.
That’s why it is critical that this office not be permitted to conduct studies and make policy recommendations to Congress, because it is clearly biased and will recommend that a vast new federal insurance bureaucracy be created. Congress needs to nip this in the bud right now.”
Brevik added that any study needs to be objective in order for it to be credible.
“Rather than having those with a predetermined point of view conduct a study that produces preordained conclusions, any federal study of insurance regulation should either be conducted by a nonpartisan entity such as the Government Accountability Office (GAO), or not at all.