An Office of National Insurance study and report to Congress on how to modernize and improve the system of insurance regulation in the United States is under attack by the insurance industry, which wants to kill funding for the study. The Dodd-Frank Wall Street Reform and Consumer Protection Act,
H.R. 4173, was signed into law in July 2010.
One important insurance provision, included in the new
law, was a requirement for an insurance modernization report to
the U.S. Congress supported by the Automotive Service
Association (ASA). The director of the Office of National
Insurance is to conduct a study and submit a report to Congress
on how to modernize and improve the system of insurance
regulation in the United States not later than 18 months after
the date of enactment.
Included in the Dodd-Frank Wall Street Reform and
Consumer Protection Act was a requirement for the creation of
the Federal Insurance Office (FIO). The purpose of the FIO is to
review international insurance agreements and monitor the
industry from a federal level.
The bill enlarges the scope of the Federal Insurance
Office’s authority regarding all insurance types except health.
The bill mandates that the FIO report back to Congress on the
modernization and improvement of insurance regulation in the
United States.
The report to Congress will address the
following considerations:
- Systemic risk regulation with respect to insurance
- Capital standards and the relationship between capital
allocation and liabilities, including standards relating to
liquidity and duration risk
- Consumer protection for insurance products and
practices, including gaps in state regulation
- The degree of national uniformity of state insurance
regulation
- The regulation of insurance companies and affiliates
on a consolidated basis
- International coordination of insurance regulation
The potential consequences of subjecting insurance
companies to a federal resolution authority, including the
effects of any federal resolution authority – on the operation
of state insurance guaranty fund systems, including the loss of
guaranty fund coverage if an insurance company is subject to a
federal resolution authority; on policyholder protection,
including the loss of the priority status of policyholder claims
over other unsecured general creditor claims; in the case of
life insurance companies, on the loss of the special status of
separate account assets and separate account liabilities; and on
the international competitiveness of insurance companies.
The study and report will also contain any legislative,
administrative or regulatory recommendations, as the director
determines appropriate, to carry out or effectuate the findings
set forth in such a report.
With respect to the study and report, the FIO director
will consult with state insurance regulators, consumer
organizations, representatives of the insurance industry and
policyholders, and other organizations and experts, as
appropriate.
At least one insurance industry organization has
targeted the elimination of funding for this study. It is
requesting that Congress pass legislation to defund the study of
insurance to be conducted by the new Federal Insurance Office
and repeal the mandate granted to the FIO to make
recommendations to Congress regarding insurance regulation based
upon that study.
PAGE 3 While speaking with stockbrokers in London in November,
U.S. Department of Treasury Deputy Secretary Neal Wolin spoke
about the Federal Office of Insurance, stating:
“The Office will monitor for problems or gaps in
insurance regulation that can contribute to a systemic crisis in
the insurance industry or the financial system; gather data and
information on the industry and insurers; and coordinate policy
in the insurance sector.” Wolin went on to say that insurance
power would not be limited to the hands of the insurance office:
“The act does not provide the Federal Insurance Office with
general supervisory or regulatory authority over the business of
insurance. The states remain the functional regulators. Through
the office, however, the federal government will work toward
modernizing and improving our system of insurance
regulation.”
The Automotive Service Association supported the
creation of the Federal Insurance Office and is against repeal
of the mandate granted to the FIO to make recommendations to
Congress regarding insurance regulations. ASA encourages
independent repairers to go to the ASA legislative
website,www.TakingTheHill.com, to send a letter to their
senators and representatives encouraging them to oppose efforts
to eliminate funding of the Federal Insurance Office
modernization study.
The Automotive Service Association is the largest not-
for-profit trade association of its kind dedicated to and
governed by independent automotive service and repair
professionals. ASA serves an international membership base that
includes numerous affiliate, state and chapter groups from both
the mechanical and collision repair segments of the automotive
service industry. ASA’s headquarters is in Bedford,
Texas.
For additional information visit www.ASAshop.org, or www.TakingTheHill.com.
