WASHINGTON BUREAU — The American Academy of Actuaries (AAA) says actuaries should be part of the U.S. Treasury Department’s new Federal Advisory Committee on Insurance (FACI).
Mary Frances Miller, president of the AAA, Washington, says the department’s efforts to find committee appointees with the necessary diversity and experience “will not be realized if the committee does not include individuals with direct actuarial expertise.”
Actuaries help oversee other actuaries, and “it is the nature of the actuarial profession’s peer reinforced oversight that makes the point why the actuarial voice on the FACI is essential,” Miller writes in a letter addressed to Jeffrey Goldstein, the Treasury Department’s under secretary for domestic finance.
The Treasury Department is creating the FACI to implement a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 that requires the department to set up a Federal Insurance Office (FIO).
Treasury Secretary Timothy Geithner serves as the chairman of another body created by the Dodd-Frank Act, the Financial Stability Oversight Council (FSOC). The FSOC is supposed to track trends and events that could threaten the stability of the financial system.
Michael McRaith, the first FIO director, is a non-voting member on the FSOC.
Goldstein oversees the FIO, and he also helps oversee Treasury Department participation on the FSOC.
The Treasury Department published a notice seeking FACI members May 13 in the Federal Register.
Appointments to the FACI will be made with the “objective of creating a diverse and balanced body with a variety of interests, backgrounds, and viewpoints represented” and members who possess “relevant expertise,” officials say in the notice.
In the AAA letter, Miller notes that the FIO’s duties will include monitoring all aspects of the insurance sector and that the FACI will deal with the same issues.
“Just as the regulatory actuary is in place to critically examine the work of industry, there similarly should be controls in place to view the work of technical advisors on staff to the FIO to ensure their resources are deployed appropriately and adequately to complete the office’s mission,” Miller says.
“Just as it is necessary to have actuarial oversight at the state regulatory level to fully assess the industry’s actuarial work product, it is important, if not more important, at the federal level to assist the committee and the FIO director in navigating these complex issues,” Miller says.