Michael McRaith, director of the Federal Insurance Office, said today in his first public appearance that he plans to work closely with state regulators and others in ensuring the stability and solvency of the U.S. insurance industry.
“My aspiration is to develop a foundation of interaction between the FIO and state regulators, to establish customs and practices that best serve the United States, our economy, the insurance industry and consumers,” McRaith said.
He made his comments in testimony before the Subcommittee on Insurance, Housing and Community Opportunity of House Financial Services Committee.
It was his first public comment since he took over the post in May after several years as Illinois insurance commissioner. The FIO was created under the Dodd-Frank financial services reform law. It is housed in the Treasury Department and reports directly to the Treasury secretary.
Its job is to monitor all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that could contribute to a systemic crisis in the insurance industry or the United States financial system.
The DFA also gives the agency the authority to assess the accessibility and affordability of insurance products to minorities, low-and moderate-income persons, and underserved communities; coordinate federal policy in the insurance sector; and offer its insurance expertise to the Financial Stability Oversight Council.
McRaith said the FIO will consult and work closely with the state insurance departments, which remain the functional regulators, and will request information only if the information is not already available from public sources, a federal agency, or a state regulator.
He said he will also coordinate with the Office of Financial Research to reduce reporting burdens by avoiding unnecessary or redundant data requests.
McRaith also noted that the Treasury had announced in May that it would establish a Federal Advisory Committee on Insurance to provide the FIO with advice on issues related to the responsibilities of the office.
He said the advisory panel will be comprised of 15 members, approximately half of whom will be state insurance regulators.
He said that have been more than 100 applications to be members of the committee, and that he hopes to name its members “in the near future.”
On the international front, McRaith said that the FIO will work with state regulators and the International Association of Insurance Supervisors “to develop a process that guards against undue reporting burdens, builds in proper data confidentiality mechanisms, and preserves the competitiveness of the U.S.-based insurers.”
Citing the fact that there are a number of international issues on the table, McRaith said the FIO will coordinate with the state insurance regulators to develop and represent U.S. views on the different elements requested public comments on the IAIS proposal for a common framework, or ComFrame, for overseeing large, multinational insurers.
Among its proposals, ComFrame is asking, in comments requested in July, whether supervision should be based on a rules-based or principles-based approach and when to evaluate the financial burden on supervisors, industry and consumers.
In his comments, McRaith noted that the 2007-2009 financial crisis, including the need for the U.S. government to provides billions in aid to American International Group to ensure its solvency, justified creation of the FIO.
He said it highlighted the lack of insurance sector expertise within our federal government.
“A federal insurance presence provides our international counterparts with a central point of contact for insurance-related matters, and facilitates the coordination of federal insurance efforts,” he said.