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FIO Director McRaith to Testify on Insurance Oversight

Just what will the new Federal Insurance Office (FIO) do
October 25, 2011

Just what will the new Federal Insurance Office (FIO) do? We’ll get a better idea on Tuesday October 25, when the director of the office, former Illinois Insurance Director Michael McRaith appears before Congress. He is scheduled to testify at a hearing of the House Financial Service Committee’s Subcommittee on Insurance, Housing and Community Opportunity, chaired by Rep. Judy Biggert (R-Ill.). [PIA National leaders held a private briefing for Chairwoman Biggert in March during the 2011 Federal Legislative Summit. The following day, Rep. Biggert confirmed to the press that optional federal charters would not get a vote in the current Congress].

This will be McRaith’s first congressional appearance since he became director of the FIO. As such, we may get an indication of whether there will be another chapter in the decades-long debate over how the insurance industry is regulated. When Congress created the FIO under the Dodd-Frank Act, it specifically prohibited it from having any regulatory authority over the business of insurance. But at the same time, Congress mandated that the FIO conduct a study on the state of insurance regulation and ways that it could be improved. It was tasked with completing the study by January and making recommendations to Congress.

PIA objected to the FIO being the entity to conduct such a study, that the office could not be unbiased because a recommendation for greater federal insurance regulation would give the FIO itself more authority. We also noted that there is already a nexus of pro-federal regulation thinking remaining at the Treasury Department, where the FIO is housed. Sentiment within the industry for so-called optional federal charters (OFC) has diminished in recent years. OFC has never garnered much support in Congress, where there is little support for creating a big, new federal insurance bureaucracy. It will be interesting to see if Mr. McRaith acknowledges this, or repeats the tired, old pro-federal regulation arguments that have been made by his predecessors at the Treasury Department.

What It Means to Agents: PIA supports state insurance regulation and opposes federal regulation.

Editors Note: PIA Assistant Vice President of Federal Affairs Mike Becker (@Becker_Mike) will be attending the McRaith hearing, which starts at 2:00 p.m. Eastern Time on Tuesday. He will be tweeting live updates via Twitter.

Read more on McRaith upcoming House appearance: McRaith to Tell House Panel His Plans for FIO (BestWire 10/21/2011)

Read more on the speculation of federal role in insurance: FIO Seeks to Revive Talk of Federal Regulation (PIA 10/18/2012)

See the article on talk of federal insurance regulation: Federal Regulation of Insurance Under Consideration (National Underwriter 10/14/2011)