Insurance Regulators, Trades Get Behind Latest Effort to Abolish FIO
The nation’s insurance commissioners and industry trade associations are looking to support efforts to put the Federal Insurance Office (FIO) back on the chopping block.
Late last week, Rep. Troy Downing, R-Mont., introduced the McCarran-Ferguson Restoration Act to eliminate the FIO. Of course, the McCarran-Ferguson Act was passed in 1945 to solidify states’ regulatory authority over the insurance industry
In 2010, the Dodd–Frank Wall Street Reform and Consumer Protection Act created the FIO as a subsidiary of the Treasury.
Scott A. White, Virginia insurance commissioner and president of the National Association of Insurance Commissioners (NAIC), said regulators “strongly support” the measure because it “restores the proper balance between the states and the federal government.”
“Insurance regulation has always been, and should always remain, a state responsibility,” added White. “This legislation eliminates a federal office that conflicted with that framework, while preserving a focused, non-regulatory role for Treasury to engage internationally and defend the U.S. sector and system of state-based supervision.”
Downing’s legislation also proposes the creation of a U.S. Insurance Representative, to be appointed by the Treasury Secretary, to assist in the administration of the federal terrorism insurance program, coordinate federal efforts on policy for international matters, and consult with state regulators on national insurance matters.
The act also grants voting status to the state-based system’s representative on the Financial Stability Oversight Council (FSOC). State insurance regulators currently have no vote on FSOC.
“The McCarran-Ferguson Restoration Act is a critical measure to preserve the strength of our state-based system of insurance regulation–a framework that has protected consumers and ensured market stability for decades,” said Sam Whitfield, senior vice president of federal government relations and political engagement for the American Property Casualty Insurance Association (APCIA).
“Congress created FIO with explicit language that it is not a regulatory agency, but the years since have seen repeated efforts by the office to test those limits and expand its power. Through needless data calls and reports, FIO has duplicated, or worse intruded on and undermined, the work being done by the states, and at a cost ultimately borne by consumers,” Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies (NAMIC).
One of the more recent FIO reports was one on the the affordability and availability of insurance. FIO called it the “most comprehensive data on homeowners insurance in history.” Predictably, the opinion was not shared by the insurance industry.
Related: Treasury’s FIO Releases ‘Flawed’ Homeowners Insurance Report
David A. Sampson, CEO of APCIA, at the time said the FIO report “provides an incomplete explanation about the affordability and availability of insurance.” NAMIC’s Grande, said FIO’s report was “a frustration to anyone who understands the basic insurance principle of matching rate to risk.”
Downing, a former insurance regulator, last year introduced the Federal Insurance Office Elimination Act, which was additionally supported by the National Association of Professional Insurance Agents (PIA) and the Independent Insurance Agents & Brokers of America (Big “I”).
Also, in 2023, GOP members of the House of Representatives introduced a bill to ditch FIO.