Biden Gives Federal Insurance Office New ResponsibilitiesJune 17, 2021
A recent Executive Order (EO) signed by President Biden is providing added impetus to PIA’s effort to bring about the repeal of the Federal Insurance Office.
The Biden administration recently assigned new tasks to the FIO in an Executive Order on Climate-Related Financial Risk that issues climate-related instructions to both the FIO and the Financial Stability Oversight Council (FSOC).
The Executive Order directs the Treasury secretary to have the FIO “assess climate-related issues or gaps in the supervision and regulation of insurers, including as part of the FSOC’s analysis of financial stability, and to further assess, in consultation with States, the potential for major disruptions of private insurance coverage in regions of the country particularly vulnerable to climate change impacts.”
Under the order, the FSOC, whose members include the director of the FIO, is supposed to examine the possible effects of climate change on financial institutions and determine whether climate change could affect insurers’ financial stability. The FSOC is also expected to ask state insurance regulators what they are doing to mitigate climate-related financial risk. The EO requires the FSOC to report its results to the president within 180 days.
In issuing this EO, the Biden administration has assumed the oversight role of state insurance regulators and improperly delegated the tasks associated with that role to the FIO and the FSOC. PIA maintains that if an inquiry into the potential effects of climate change on the stability of the insurance industry is warranted, it should be undertaken at the state level by state insurance regulators, not the federal government.
In 2016, PIA was the first national insurance association to advocate for the full repeal of the FIO. In pursuit of that work, PIA led the effort to develop the Federal Insurance Office Abolishment Act (S. 524), which was introduced in the Senate in March.