In comments to the Federal Insurance Office, a branch of the Treasury Department, insurance and financial services groups, consumer advocates and others are clamoring for changes to the state regulatory system, with varying roles played by the FIO in addressing them.
Some want a strong FIO to be able to manage the interplay among other federal agencies such as the Federal Reserve and the Securities and Exchange Commission in Washington, and to also be a voice with which to be reckoned with on the international stage.
Others want the FIO to remedy perceived disclosure inadequacies, collect more information and streamline licensing. Almost all comments reviewed identified perceived deficiencies in state regulation as they promote streamlining and greater transparency in the name modernization, although statutory accounting still wins the day, according to comments received.
Trade associations with bigger members, such as the Financial Services Roundtable, want the FIO to beef up its staff and add some heft in Washington in order to accomplish its goals, whatever they are projected to be.
“Our hope is that, from the outset, the FIO will play a significant role, in concert with insurance experts on the Financial Stability Oversight Council (FSOC), in ensuring that any new regulation imposed on insurers is commensurate with the risk posed by the regulated entity,” stated the Roundtable in comments submitted Dec. 15.
Comments are due today, Dec. 16, before midnight, for a statutorily required report by FIO to Congress early next year, as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
“… we strongly support increased funding, staffing and stature for the FIO, and believe those goals should be made part of the FIO’s study recommendations,” said the group, which represents large financial entities such as Allianz Life Insurance Company of North America, John Hancock, Lincoln National, Protective Life, The Principal Financial Group, Nationwide Axa Financial and Allstate, Chubb Corp., Citigroup, Charles Schwab Corp. and Suntrust.
The American Council of Life Insurers also recommended a strengthened FIO staff in its comments earlier this week. The FIO is hiring or has hired for at least four positions requiring strategic or financial regulatory expertise.
Some major insurance companies want to strengthen the FIO as their lead regulator, as they do not want too many cooks in their kitchen, and prefer FIO to take point as the regulator who would best understand their industry, filed comments suggested.
To wit, “companies are concerned that existing federal oversight by the Treasury, SEC, Financial Industry Regulatory Authority (FINRA) and Department of Labor (DOL), added to new oversight imposed by implementation of Dodd-Frank rules and regulations by various federal agencies, combined with existing state regulations, is making the life insurance regulatory regime increasingly complex, fragmented and difficult to coordinate,” the ACLI commented to FIO earlier this week. An ACLI study did find that CEOs did respond more favorably to statutory accounting than to most other elements of state regulation, and a majority thought it good or better.
These sentiments were echoed by industry panelists at the FIO conference in Washington Dec. 9 at the Treasury building, and hosted by FIO Director Michael McRaith in his first public appearance as FIO director. The Roundtable submitted as part of its comments results from the Cluff Fund study it completed in October.
Also, today, the National Association of Insurance and Financial Advisors submitted a comment letter urging the FIO to educate federal regulators – from the Treasury Department to the SEC to the Department DOL about the insurance industry, how it works, and how it interacts with other financial industries and review state insurance regulations and work with the states to eliminate redundant or inconsistent regulations.
“It’s important that our government officials really understand the industries they regulate, and the Federal Insurance Office has great potential to educate and inform those regulators whose decisions greatly affect consumers, advisors and the economy,” said NAIFA President Robert Miller.