Chairman of the Subcommittee on Housing and Insurance Randy Neugebauer, R-Texas, wrote a sharply worded letter to Federal Insurance Office (FIO) Director Michael McRaith at U.S. Treasury demanding to know why several overdue reports required by the Dodd-Frank Act were still not submitted to Congress.
“As director of FIO, you have failed to comply with the statutory requirements to provide the reports detailed below,” Neugebauer wrote, citing three reports, including the so-called insurance regulation modernization report, which is the most long-awaited, having been due Jan. 21, 2012.
The FIO reports, when published, would go to the subcommittee and parent House Financial Services Committee. In the Oct. 7 letter to McRaith, Neugebauer says Congress has not been given any legal justification of why FIO has not met its report deadlines so far and asked for a written response detailing the reasons — whether personnel, budgetary, political, operational or technical — as to why the reports are not submitted yet.
“While I have no reason to question the professionalism of the personnel at FIO, this pattern of disregard for statutorily imposed deadlines for reporting to Congress, without any explanation for the delays, is troubling,” Neugebauer wrote.
Neugebauer's office says he has been having productive meetings with McRaith on insurance issues so far. The FIO says it has received the letter.
Drafts of the reports have been circulated for months but, like many federal work products, are subject to a process at Treasury, and through Treasury to other federal agencies, where they are vetted, explained, rewritten and reviewed again as insurance events or regulatory issues occur and arise — all before they are sent to the Office of Management and Budget (OMB) for review. A new office's first official agenda-setting item would likely go through this process in an even more involved and protracted way.
Neugebauer has taken an interest in calling on FIO and McRaith to explain their roles and involvement in issues of insurance regulation domestically and internationally.
These are the first agenda-setting work products of the first agency office dedicated to insurance oversight and monitoring — if not supervision — at the federal level, many acknowledge. People from the National Association of Insurance Commissioners (NAIC) to members of Congress to international regulators, along with trade groups, consumer groups, and industry chiefs are all anticipating the tone and scope of the reports, especially the one that will set forth FIO’s domestic agenda in detail, the modernization report.
In mid-July, Neugebauer told McRaith he wanted to be frequently updated and have key people involved in ongoing discussions regarding international measures that can create new, overarching capital adequacy standards or expectations for certain U.S. insurance companies. His office did said that the subcommittee chairman has been having productive talks with McRaith and works well with him and appreciates the work FIO does.
In June, the subcommittee pressed McRaith on his work, his relationship with the NAIC, and the federal independent insurance expert for the Financial Stability Oversight Council (FSOC), Roy Woodall.
In late March, Neugebauer wrote to McRaith, who also heads the influential technical committee of the International Association of Insurance Supervisors (IAIS), expressing concern on the development of two major IAIS initiatives — ComFrame and standards for systemically risky insurers. Neugebauer’s March letter was said to reflect the concern of many in the U.S. state regulatory and industry communities.
Completion of the modernization report, which was expected by summer into early fall, is likely slowed down due to the government shut-down with the huge swathe of furloughed federal employees at Treasury, OMB and other agencies and who would be hands-on to any FIO report.
The other two overdue reports that Neugebauer asked for are the global reinsurance market report, which was due at the end of September 2012, and a report on the impact of the Nonadmitted Insurance and Reinsurance Reform Act of 2010 on state regulators’ ability to access reinsurance information, due Jan. 1, 2013.
Treasury said through a spokesman that it received the letter.