Its no secret that the Federal Insurance Office isnt exactly popular among property-casualty insurers.
But a Washington D.C. nonprofit policy group says it can and should be saved, and even elevated, because it serves a vital industry purpose.
The Bipartisan Policy Center proposes elevating the FIO to a bureau within the U.S. Department of the Treasury (similar to the Comptroller of the Currency), or making it an independent agency outside of Treasury.
While the agency would still not have regulatory authority, except in unusual circumstances, FIOs capacity for helping to develop smart policy recommendations would benefit from greater independence from Treasury and a degree of insulation from the political process, the BPC said in its new report, Improving U.S. Insurance Regulation.
The FIO launched in 2011 after the Dodd-Frank financial reform bill passed in 2010 created it, and it was designed to bring the federal government vital insurance expertise.
While it does not pass or oversee insurance regulation, groups such as the National Association of Mutual Insurance Companies have called for the FIOs elimination, arguing that its work issuing industry reports could be handled by state regulators or others within the U.S. Treasury department. The American Insurance Association, on the other hand, has called for its continuation, at least in some form, asserting, in part, that it helps advocate for U.S. insurers internationally and provides federal agencies vital insurance expertise.
Making the FIO a bureau within the Treasury Department, or giving it status as an independent agency would not come cheap.
As the Bipartisan Policy Center notes, the FIO would need adequate funding to fulfil either revamp idea, likely through an assessment on U.S. insurers an idea that would be controversial among at least some industry leaders.
We recommend that Congress grant FIO the ability to assess U.S. insurers, proportional to the amount of domestic premiums each insurer writes, for its funding, the report states.
A revamped FIO should also be led by a director with a six-year term whod be appointed by the president and confirmed by the Senate, the Bipartisan Policy Center said. As well, it wants the FIO director to serve beyond the six-year term until a successor is appointed and confirmed
The Bipartisan Policy Center report also outlines a number of recommendations to improve state-based insurance regulation, outcomes for policyholders and existing federal oversight.
Among its recommendations: more money and authority for state insurance departments so they can do their jobs betters and reduce variations in state solvency regulation. To improve the lives of policyholders, the report suggests replacing rate regulation with enhanced consumer protections, modernizing state date collection and ensuring market competitiveness, among other options.
For the full report, click here.