Posted on 29 Sep 2010
The U.S. Secretary of the Treasury has started its official search for the person who will be the first to run the Federal Insurance Office, a new department created as part of the financial reform bill approved by Congress in July.
The job posting has attracted interest in the insurance industry and drawn scrutiny from the state insurance regulators who have direct authority over insurers. The person picked for the federal position will be responsible for turning a few paragraphs from the 2,300-page financial-reform bill into a new entity that will hold at least some sway over the U.S. insurance industry.
"It's a pretty historic opportunity, since whoever gets the job will be the first to run this new federal office," said Howard Mills, a former New York State Insurance Superintendent who is now a director for the insurance practice at Deloitte. "I think there are a lot of former state insurance regulators and a lot of industry luminaries would take a stab at it if they got the chance."
One candidate whose name is being circulated as a likely candidate is Michael McRaith, the director of the Illinois Department of Insurance, who has frequently testified before Congress. Illinois has often been cited by insurers as a regulatory regime they prefer because of the relative freedom they have to set their own rates. McRaith declined to comment on speculation he's a candidate.
The description of the new federal job, posted Sept. 21 on the federal hiring site run by the Office of Personnel Management, says the director will advise the Treasury Secretary on insurance issues and be the U.S.'s public face in negotiating international insurance agreements.
The director will have the power to recommend to another newly formed body, the Financial Stability Oversight Council, any insurance companies that may be large enough to warrant oversight by the Federal Reserve. And the director is supposed to identify gaps in insurance regulation, if any, that could lead to another financial crisis.
It's the first time that such powers have been granted to the federal government. State insurance regulators have been the primary regulators of the industry for more than a century. But some view the new office as a way for the federal government to supplant that role. Indeed, the new director is required to submit a report to Congress on how best to modernize and improve insurance regulation by early 2012 -- and both critics and supporters of a larger federal role in insurance regulation suspect the report will conclude that the U.S. should have a greater presence.
"It's the natural momentum of government to grow, and regulators want to regulate," Mills said. "I can guess what it's going to say 16 months before that report comes out."
The job will pay between $119,554 and $179,700 a year. Among other requirements, applicants must provide "narrative statements" on how they match up against the government's "technical qualifications" for the post. Those qualifications include insurance expertise, a grasp of the legal and regulatory framework that governs the industry, and "knowledge regarding financial institutions as a whole."