The chairman of the House Financial Services Subcommittee on Housing and Insurance wants more from Michael McRaith, and intends to press him on a continued basis for updates on international insurance matters to make sure the U.S. insurance system is not drawn into a Euro-centric model, according to Hill staff and a letter sent yesterday to McRaith.
Subcommittee Chairman Randy Neugebauer, R-Texas wants to be frequently updated and have key people involved in ongoing discussions regarding international measures that can create new, overarching capital adequacy standards or expectations for certain U.S. insurance companies.
Neugebauer, whose subcommittee is part of the House Financial Services Committee, wants monthly updates from the Federal Insurance Office (FIO) director on international projects, his office’s relationship with state regulators and general identification coordination of the U.S insurance policy with other agencies.
In a letter July 15, Neugebauer asked for monthly updates to the Subcommittee starting Aug. 1, providing an estimated timeline of the key dates when significant decisions will be made with respect to measures. These include the designation of G-SIIs or global systemically important insurers, the International Association of Insurance Supervisor’s (IAIS) ComFrame project, and IAIS and Financial Stability Board (FSB) working group meetings or reports.
The FSB is due to name the G-SIIs this month. McRaith is not a member of the FSB, but his agency’s head, Treasury Sec. Jacob Lew, is. McRaith is, however, chair of an influential IAIS policy-making committee, the Technical Committee.
Just this week the IAIS published a draft paper discussing–but not prescribing–the oversight of global insurance company branches and subsidiaries in foreign countries for public consultation. Insurers and state regulators are pleased it is better for them than earlier drafts, but are keeping an eye on its further development to make sure it does not make recommendations against the use of branches abroad, for example.
Neugebauer also dug into communications between state insurance regulators, and “other U.S. insurance supervisors,” which could refer to the Federal Reserve or the Financial Stability Oversight Council (FSOC), of which McRaith is a non-voting member. (His office is not one that is by statute a supervisory office. The SEC oversees variable annuity sales as securities.)
During testimony last month before the Subcommittee, National Association of Insurance Commissioners (NAIC) CEO Ben Nelson told lawmakers that FIO should show deference to state regulators, enhancing their voices abroad, not replacing them.
State regulators fear a “one-size-fits-all” approach that could impose new burdens on U.S. companies and consumers and a two-tier system of designated and non-designated systemically important insurers that could also lead to an over-concentration in the insurance sector. Neugebauer also wants to plumb the relationship between FIO and the insurance voting member of FSOC, Roy Woodall, as well as that with the United States Trade Representative (USTR) on how they are coordinating a “united U.S. policy position going forward.”
Subcommittee members want Woodall involved, especially on the G-SII matters, according to a Hill staffer, even if it is after the G-SIIs are announced.
Woodall has said in testimony that he would like a seat at the table at IAIS but is not a member.
Rep. Dennis Ross, R-Fla., asked during the June 13th hearing why Woodall was not part of helping set standards with for globally significant insurers.
“I would like to be in the room, too, when Mike McRaith is there. The more boots on the ground the better … there cannot be too many eyes and ears,” Woodall said last month.
“We feel that Roy should be in those meetings. That sentiment was bipartisan in the hearing–and it should begin almost immediately. Roy needs to be involved. We would have been able to get him involved upfront,” the Subcommittee staffer stated, during a discussion of FSB’s anticipated announcement of G-SIIs later this month.
The IAIS member proposal that was later tabled would have allowed other countries’ stability board members to be on the IAIS. However, many of these stability board members are from banking fields and could easily rush in and drown out the U.S. insurance voices, as one Washington regulatory lawyer with Hill and NAIC experience noted.
Over the months, there were reports of tensions between Treasury and USTR on primacy in international insurance matters last year. FIO has statutory authority to represent the United States on prudential aspects of international insurance matters, while USTR is having its own negotiations on trade matters.