The chairman of the U.S. House Financial Services Committee has taken aim at the Federal Insurance Office for failing to meet statutory deadlines for releasing four reports on the U.S. insurance and reinsurance markets. Several of the reports are more than a year past due.
U.S. Rep. Jeb Hensarling, R-Texas, said after missing multiple deadlines set by federal law, FIO should release the reports "without further delay." Hensarling's call came in the committee's new oversight plan the first released under Hensarling, who was appointed committee chairman after the November election.
Dodd-Frank requires FIO to issue a series of reports on the general state of the U.S. insurance market, the state-led regulatory system and the reinsurance marketplace at home and abroad.
Under deadlines laid out in law, FIO was required to release an annual report to Congress on the general state of the insurance industry by Sept. 30, 2011. A second report on the state of the global reinsurance market was due Sept. 30, 2012. Another report on the ability of state regulators to access reinsurance information was due Jan. 1, 2013.
But the most anticipated report, on ways to improve and modernize the U.S. insurance regulatory system, was due Jan. 21, 2012. To date, none of the reports have been released. In public settings, FIO Director Michael McRaith has said only that the reports would be released "soon."
The insurance industry has anxiously awaited the modernization report in particular because it could conceivably call for significant changes to the regulatory status quo.
McRaith, a former director of the Illinois Insurance Department, has said he does not intend to recommend significant changes to the state-led system. But industry representatives have told Best's News Service in past interviews that without knowing the contents of the report, insurers have been left wondering what steps they may need to take to respond to any FIO recommendations. Industry representatives like David Snyder, vice president for international policy at the Property Casualty Insurers Association of America, have said the reports should support the proven state-led system, which he believes has led to a competitive insurance market.
It in unclear what has kept the reports from being released. Efforts to reach a FIO spokesman for comments on the committee's call for the reports to be released were not immediately successful.
FIO was created by the Dodd-Frank financial reform act and is overseen by the Treasury Department. It does not have regulatory authority but serves as an information-gathering agency for Congress and Treasury on trends in the insurance industry. The office is also charged with identifying systemic risks to the U.S. financial system posed by the insurance industry and with developing federal policy on international insurance matters, giving it significant influence on insurance regulation in the U.S. and overseas.
Recently, FIO has played a key role in discussions with the International Association of Insurance Supervisors over how to integrate the U.S. regulatory system with the new Solvency II regulatory framework being implemented in the European Union. Snyder said FIO's involvement in the international negotiations has been positive as U.S. and EU regulators work to develop a Common Framework, or ComFrame, to bring the two systems together.
In addition to addressing the FIO reports, Hensarling's oversight plan says the committee intends to focus on the deeply in-debt National Flood Insurance Program and the federal Terrorism Risk Insurance Program.
The oversight plan says the committee will examine ways to expand the private sector's role in both flood and terrorism risk insurance and reduce the federal government's involvement.