The House Financial Services Committee (HSFC), in a portion of its oversight plan for the 113th Congress, is urging the Federal Insurance Office (FIO) to submit several “long overdue reports without further delay.”
The plan also said the HSFC will conduct “significant oversight over the Financial Stability Oversight Council (FSOC),“ monitoring the extent to which its designation of systemically important financial institutions (SIFIs) may create an expectation among market participants that the firms are too big to fail.
Separately, in his confirmation hearing today for U.S. Treasury secretary before the Senate Committee on Finance, Jacob Lew said the work of the FSOC, which is headed by the secretary, will be a very high priority of his, as will be the complete implementation of the Dodd-Frank Act. Lew even suggested there might be more measures needed “as we go forward,” to make sure the U.S. regulatory system keeps pace with the financial services arena.
The Committee also said it will work to ensure that the FIO, housed in Treasury, is focused on developing “expertise on insurance matters and does not impose unwarranted or excessive data collection burdens on the insurance sector or on small insurers in particular.”
The rules of the U.S. House require each standing committee, not later than Feb. 15 of the first session, to adopt an oversight plan for the 113th Congress. The 21-page committee print constitutes the chairman’s proposed oversight plan of the Committee on Financial Services for the 113th Congress and includes many areas in which the Committee and its subcommittees expect to conduct oversight during this Congress, but is not intended to be an exhaustive list.
The Committee, chaired by Jeb Hensarling (R-Texas), also has the work of the International Association of Insurance Supervisors’ (IAIS) under scrutiny in its future designation of global systemically important insurers (G-SIIs).
The Financial Services Committee’s plan said that the Committee will monitor implementation of the FIO’s statutory authority to coordinate policy and represent the U.S. on international insurance issues, and pay “particular attention to FIO’s role in addressing a number of substantive and procedural concerns” regarding the IAIS’s methodology for designating G-SIIs. The insurance industry has been very wary of the G-SII designations and their concomitant policy measures.
The overdue FIO reports, required to be submitted to Congress under the Dodd-Frank Act, include an annual report to Congress that was due Sept. 30, 2011, on any actions taken related to preemption of state laws under an international insurance agreement; a report due Sept. 30, 2012, describing the U.S. and global reinsurance markets; the ability of state regulators to access reinsurance information; a review of the “Nonadmitted Reinsurance and Reform Act” provisions on the ability of state regulators to access reinsurance information for insurers due Jan. 1, 2013, and – perhaps the most highly anticipated – the modernization report, due almost 13 full months ago.
The modernization report is supposed to make recommendations to modernize and improve the system of insurance regulation in the United States. The report was said to be drafted on time and was caught up in various agency reviews, among other things. Sources suggested it might come out this month, after Lew is confirmed. Publication dates suggested by sources have slid for more than a year. Those close to FIO don’t expect to see it until the day it is submitted to Congress.
The report on how to modernize and improve insurance regulation was due 18 months after the effective date of the Dodd-Frank Act, landing it in late January 2012.
All manner of industry groups and interests, consumer advocate groups and state regulators have already met with the FIO and weighed in with comments, which were due in mid-December 2011, so many are anxious to see how their input is processed by FIO Director Michael McRaith and his staff.
However, there is no fine or sanction for delays, and no reason to hurry it, other than to assuage anxiety among the insurance industry.
McRaith had earlier pledged to be “prolific” in his reports, and it is expected he has been.
It is “How To Modernize and Improve Insurance Regulation in the United States” which may or may not include suggestions for new legislative proposals that would affect the current state regulatory system for insurance.
The NAIC is girding for any such proposals under its new CEO Ben Nelson, former Nebraska senator. Last month Nelson acknowledged in a quick chat after taking the new NAIC CEO job, that the fear is not a discussion of insurance in the modernization report, but some sort of increased role for itself to be gained through legislation. At the outset, Nelson noted that the federal government/FIO is not a regulator.
There will be a full House Financial Services Committee hearing Feb. 14 to mark up and adopt the Committee’s oversight plan for the 113th Congress — it is not known if FIO will even come up at the hearing.
An inquiry to the Committee press office was not immediately returned. Treasury had no comment.
The Hensarling oversight plan must then be submitted simultaneously to the Committee on Government Reform and the Committee on House Administration.