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Filed Under:Health Insurance, Disability

Disability Insurance Observer: FIO


The income umbrella (AP photo/Charles Dharapak)
The income umbrella (AP photo/Charles Dharapak)

A bright, 40something friend who is highly skeptical about my own ability to get on in life thrust a piece of paper into my hands yesterday and asked me what on earth it was.

I told him the piece of paper was just an annual report for the annuity that's funding his employer's pension plan. His next question was, "What's an annuity?"

It hit me as I was giving the answers that maybe part of the challenge insurers face in Washington is that a lot of members of Congress and congressional aides are just pretending that they have any idea what an annuity is, or why someone might want disability insurance or long-term care insurance (LTCI).

The new Federal Insurance Office (FIO) is supposed to try to explain what's going on the insurance industry to the U.S. Treasury Department, and the Treasury Department is supposed to use the information in efforts to monitor and manage risks that could wreck the financial system.

Maybe, in the new FIO report, the FIO Director Michael McRaith and other FIO officials are also starting the process of increasing Washington financial policymakers' general level of insurance literacy.

Lobbyists seem to have gone to great lengths to keep the FIO from having anything to do with health insurance or LTCI. But the authors of the FIO's first insurance industry annual report did try to point out that U.S. life and health insurers got about 27 percent of their $645 billion in 2012 premium revenue by selling disability insurance, LTCI products, and other accident and health products.

FIO officials mentioned disability insurance only in passing, but they focused a fair amount of attention on a topic of great interest to writers of long-term disability (LTD) insurance: The harmful effects of ultra-low rates on insurers with long-term insurance obligations, and also the potentially harmful effects of sudden, dramatic spikes in interest rates.

People at the Centers for Medicare & Medicaid (CMS), an arm of the U.S. Department of Health and Human Services (HHS), run giant insurance programs, but they don't seem to make all that much of an effort to see commercial health insurance from the commercial insurers' perspective.

The Center for Consumer Information & Insurance Oversight (CCIIO) -- the CMS unit setting up the Patient Protection and Affordable Care Act (PPACA) exchanges - - might be getting a quick-and-dirty education on how health insurance works, but it's a health insurance supermarket manager, not a think tank.

Maybe the fact that the FIO can look at disability insurers when it chooses to do so will turn out to be good for disability insurers.

Maybe, in the long run, if the FIO makes just a little more effort to explain how private disability insurance works, and how private disability insurers see the world, the disability insurance community will benefit from the fact that someone at a department that policymakers understand is describing the community in terms that the policymakers can understand.

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Nichole Morford

Nichole Morford
Managing Editor

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