The director of the Federal Insurance Office (FIO) said today that some of the findings that the FIO has about potential abuses in use of captives by the life insurance industry might find its way into the report on recommendations for modernizing and improving insurance regulation the agency will release by July.
Michael McRaith’s comments imply that the captives issue is potentially emerging as another source of conflict between federal and state insurance regulators.
He made the comment in disclosing that the FIO is examining the national implications of the use or possible abuse by life insurers of captives and special purpose vehicles.
McRaith said he was not interested in duplicating the efforts of the states, but needs the U.S. Treasury Department to be “fully informed” about what is going on with this type of risk transfer.
Washington, D.C., Insurance (and Banking and Securities) Commissioner William White, who is very experienced in captives and the various kinds of risk transfers that can be done, and multiple scenarios for their use, and who oversees as a regulator a thriving captives industry in D.C., will head the task force.
Tom Finnell, who heads FIO’s regulatory policy development, is very interested in the issue and will work on it at the FIO end, McRaith said.
Some members of FACI had wanted the investigation of the use of captives for offloading excess reserves to artificially bolster risk-based capital ratios to be the sole province of the NAIC.