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FIO Misses Deadline for First Report to Congress

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The Federal Insurance Office missed its first deadline when it failed to release a much-anticipated report to Congress on how to improve and modernize insurance regulation in the United States by the end of January.

The FIO was created as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by President Obama on July 21, 2010. The Act mandated that the FIO present the report to Congress within 18 months of the Act becoming law. That meant it was due by the end of January, 2012.

When asked by Life Insurance Selling and for an update on when the report will be released, a Treasury Department spokesperson replied on Feb. 1: “We are hard at work preparing FIO’s first report on how to improve and modernize the system of insurance regulation in the U.S., and expect to send the report to Congress in the coming weeks.”

The FIO is quickly gaining a reputation for tardiness. It took the Treasury Department, where the FIO is housed, nearly a year – months longer than most industry observers expected – to fill the position of Director. Illinois Insurance Director Michael T. McRaith was appointed to the position of FIO Director in the spring of 2011, and took office last June.

The FIO did not begin soliciting public comment for the report until October 17, and accepted comments until December 19. Approximately 150 comment letters were received, many exceeding 20 pages. That left roughly a month and a half – including the peak holiday season – in which to analyze public input, draft and present the report to meet the mandated deadline.

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The entire insurance industry – life & health as well as property & casualty – is eager to learn the specifics about the recommendations to Congress that will be included in the report. While there is near unanimous agreement that the FIO needs to fill a void and become a central, unified U.S. voice on international insurance matters, there is considerably less consensus about whether the FIO will firmly back the existing state-based insurance regulation system, or take steps to move toward the creation of an optional federal charter.

McRaith said in remarks to the Property/Casualty Insurance Joint Industry Forum in New York on Jan. 10 that issues such as product approval, producer licensing and group supervision all generated “healthy debate” during a Dec. 9 conference at the Treasury Department.

“We know that you are very interested in the report,” McRaith told the audience in New York. “It goes without saying that this first report of FIO is a significant and broad undertaking. But while the report is one big task, and an important platform for future FIO efforts, it is also a small slice of our total responsibility. As I said during the conference on December 9th, we could write until the Cubs win the World Series and still not address every issue that warrants improvement or modernization. That’s simply a fact.”

McRaith noted that the FIO will continue to study, report on and discuss issues important to the insurance sector and consumers.

“We will be active and engaged,” McRaith said. “We will be in regular contact with all aspects of the sector – the states, industry, and consumers – as we define and fulfill our statutory authority. And we expect to be prolific.”