WASHINGTON — The Federal Advisory Committee on Insurance has been one of the lowest-profile panels in Washington, but that could change in the coming months.
The adviser to the Federal Insurance Office, established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, has been expanded to 21 members from its original 15 members. The group previously was dominated by insurance regulators.
During the first meeting earlier this month of the expanded body, FIO Director Michael McRaith said the “insurance sector of the United States is incredibly diverse” and expanding the advisory panel was called for to reflect that diversity.
Aside from regulators and a state legislator, the expanded body now includes consumer advocates, executives of property/casualty insurers, life insurers, reinsurers and producers, as well as academics.
New members brought up concerns ranging from insurance coverage for cyber attacks to insurer transparency to mortgage insurance to natural catastrophe policy to the health care reform law, prompting Mr. McRaith to remind them that health insurance issues do not fall within the FIO's jurisdiction.
Marsh & McLennan Cos. Inc. President and CEO Daniel Glaser, who was named to chair the committee in early August, said how insurance policies should respond to cyber attacks and questions concerning disaster resilience are issues the committee could examine.
The committee is expected to discuss international issues at its next meeting slated for early November.
Frank Nutter, president of the Washington-based Reinsurance Association of America, said the group should focus on international matters.
“FIO has an important roles related to international regulation,” said Mr. Nutter, who attended the meeting. “We would like to see the advisory committee and FIO focus on those. The covered agreement would be one. The capital standards under development by the International Association of Insurance Supervisors would be another and facilitating recognition of the U.S. system by other foreign regulators” would be a third major issue the RAA would like the committee to discuss.
Lawrence Mirel, a former District of Columbia insurance commissioner and now a partner in the Washington office of Nelson Brown Hamilton & Krekstein L.L.C., also attended the August meeting and thinks Mr. McRaith has two clear priorities.
“One is the covered agreement process dealing with reinsurance collateral, but he also wants to pay attention to the affordability and availability issue — primarily personal lines” because that is what “gets people's attention,” Mr. Mirel said.
He said covered agreements, which are essentially treaties for the U.S. treatment of cross-border reinsurance, are among the few matters over which FIO actually has power rather than merely advisory functions.
The advisory committee's size does pose a challenge, said Howard Mills, a former New York insurance superintendent and now chief adviser of the insurance industry group at Deloitte L.L.P. in New York.
“I think the huge challenge for the body is there are such divergent views on so many pressing issues, and you've got the challenges of the regulatory structure of insurance, the challenges of tensions within the states, you've got the overlay of various bodies at the federal level now — FIO, the Fed, and you've got the whole international structure that's pushing all of those,” Mr. Mills said.
Mr. McRaith “has a very tough job as he tries to channel this input and move ahead with his mission of trying to make the regulatory process smoother and more efficient,” Mr. Mills said.
Mr. Mirel said the committee's powers are limited and the chance of the committee “actually doing anything is quite limited.”
“This is an advisory body to what is essentially an advisory office,” Mr. Mirel said. The FIO itself is “an adviser to the secretary of the Treasury, who is an adviser to the president.”
“They're a sounding board basically for the FIO, and they're important in that regard. But the FIO, I think, will pick and choose what it wants to hear,” he said.