Protecting State Insurance Regulation
Defend the State Insurance Regulatory System
PIA strongly supports our thriving, state-based insurance regulatory system and opposes federal laws and regulations that encroach on and thus threaten it. As such, PIA supports the repeal of the Federal Insurance Office (FIO).
PIA supports our successful system of state-based insurance regulation because it has effectively protected consumers for more than a century and has created and cultivated a competitive and diverse U.S. insurance market that has served policyholders’ needs for over 150 years.
The insurance industry is regulated by individual state oversight of members of the insurance industry licensed by each state, rather than by a federal bureaucracy. This structure helps to ensure fairness for consumers by allowing state insurance regulatory authorities to design and refine their system of supervision so that it is tailored to meet the needs of that state’s policyholders. Indeed, according to a report issued by the Government Accountability Office (GAO) in June 2013, the decentralization of our state-based insurance regulatory system helped to mitigate damage to the insurance industry during the 2008 financial crisis.
Repeal the Federal Insurance Office
In 2010, in a misguided effort to respond to the 2008-2009 financial crisis, advocates of federal insurance regulation created the Federal Insurance Office (FIO) as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (commonly referred to as Dodd-Frank). PIA opposed the creation of the FIO from its inception; its very existence threatens the primacy of state-based insurance regulation.
Many of FIO’s duties are examples of federal overreach and are duplicative of activities that are already being done within our state-based insurance regulatory system. Additionally, like most federal offices, the FIO’s power has consistently expanded since its creation. In the decade since, the FIO has sought to federally regulate mortgage insurance; to be included in international supervisory colleges; and to promulgate uniform national standards for state guaranty associations. Every one of these acts is well outside the FIO’s mandate. In addition, over the years, it has been identified as a potential overseer of the National Association of Registered Agents and Brokers (NARAB).
In November 2016, PIA became the first national insurance association to publicly call for the repeal of the FIO. Since then, PIA has been working with members of Congress to develop legislation to repeal it. PIA supports the Federal Insurance Office Abolishment Act [not yet introduced in the 118th Congress; sponsored in the 117th Congress by Senator Ted Cruz (R-TX) and Representatives Ben Cline (R-VA) and Tom Tiffany (R-WI)].
Unfortunately, the Biden administration’s Executive Order (EO) on Climate-Related Financial Risk has also expanded the mandate of the FIO. The EO directed the Treasury Secretary to task the FIO with assessing “climate-related issues or gaps in the supervision and regulation of insurers.” In response, the Treasury Secretary issued a Request for Information on the Insurance Sector and Climate-Related Financial Risks, and PIA registered its objections to this broadening in scope of the FIO’s mandate.
More recently, the Treasury Secretary issued a notice and request for comments on a proposed “climate-related financial risk data collection.” PIA registered its objections to this proposed data collection with greater specificity, noting that it has the potential to unnecessarily duplicate state-based regulatory data collections and would impose an unnecessary burden on proposed respondents.
Complete repeal of the FIO is the only way to protect the continued primacy of state insurance regulation and ensure against further federal encroachment. We will continue to encourage support for FIO repeal legislation in the 118th Congress.
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