Earlier today, the director of the new Federal Insurance Office, Michael McRaith, made his first trip to Capitol Hill to testify before Congress in his new capacity. Speaking before the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity, Director McRaith went on the record regarding his view of the role of the FIO and how it fit into the larger system of insurance regulation.
On the whole, McRaith’s testimony echoed many of the same arguments that NAMIC has been making in Washington over the last several years. He pointed out that it was not the insurance entities that caused the problem at AIG, that the property/casualty insurance market is highly competitive, that traditional property/casualty insurers fared well during the financial crisis, and that any new regulation for large insurers deemed necessary by the Financial Stability Oversight Council should not be based on size alone. He also pledged to work closely with both Roy Woodall and Missouri Director of Insurance John Huff to properly inform the FSOC on how the insurance industry in the US operates.
Several members of the subcommittee took the opportunity to make clear to Director McRaith that they believed it was the legislative intent of the Dodd-Frank Act that the office be purely a source of information and not a regulator. McRaith agreed and said that “Dodd-Frank is explicit – FIO is not a regulator and not a supervisor.” Instead he said that he would be working to establish a collaborative relationship with the state regulators and a set of common customs and practices for working together.
Several times during the hearing, Director McRaith made clear that his office would like to receive input from all interested stakeholders for the study on the US insurance regulatory system, due out in January. He also announced that the members of the Federal Advisory Council on Insurance – the body of experts that will advise the FIO on the insurance industry – will be named in the near future.
Encouraged by his first round of testimony, NAMIC continues to look forward to working with Director McRaith to achieve the twin goals of building an “objective, reliable resource for information” on the insurance industry while ensuring “the state insurance departments remain the functional regulators over the business of insurance.”
An archived webcast of the hearing can be found here.
Contact: Jimi Grande
Senior Vice President
Federal and Political Affairs