On October 25, 2011, the House Committee on Financial Services Subcommittee on Insurance, Housing and Community Opportunity held a hearing entitled “Insurance Oversight: Policy Implications for U.S. Consumers, Businesses and Jobs, Part 2.”  Michael T. McRaith, Director of the Federal Insurance Office (“FIO”) testified before the Committee providing a report of the FIO’s progress to date.

Sensitive to concerns regarding federal encroachment on the states’ regulatory authority, McRaith stated that “[t]he FIO will consult and work closely with the state insurance departments, which remain the functional regulators over the business of insurance, as we develop federal insurance policy on insurance matters.”  He further testified that “[a]s required by the statute, we will request information only if that information is not already available from public sources, a federal agency, or a state regulator.  We will also coordinate with the Office of Financial Research to reduce reporting burdens by avoiding unnecessary or redundant data requests.”

McRaith also provided an update on the status of FACI efforts. In May 2011, the Treasury announced a 15-member Federal Advisory Committee on Insurance (“FACI”) would be established to provide the FIO with advice on issues related to the responsibilities of the office. (See our previous blog here.)  He indicated that the FIO has received interest from over a hundred qualified insurance experts, and hopes to announce members soon.

On the global front, McRaith stressed the importance of dialogue with international regulators.  He discussed the Solvency II framework adopted by the European Union, highlighting that it may have important implications for U.S. based insurers and the U.S. system of regulation. He indicated that the FIO has been engaging with state insurance regulators, U.S. companies, and European counterparts regarding the framework’s implementation.  He also noted that on October 1, 2011, the U.S. government, through the FIO, became a full voting member of the International Association of Insurance Supervisors, “providing a federal voice on international insurance regulatory matters for the first time.

”McRaith closed his testimony by stating that the FIO’s aspiration is that the Committee come to view the office “as an objective, reliable resource for information on this industry.”

To see McRaith’s full testimony, click here.