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A bill to reform the Federal Insurance Office was introduced Thursday in the U.S. House of Representatives.
H.R. 3861, the Federal Insurance Office Reform Act of 2017, is sponsored by Housing and Insurance Subcommittee Chairman Sean Duffy, R-Wisconsin, and Denny Heck, D-Washington.
The bill would limit FIO’s role largely to international matters and provide that FIO speaks for Treasury — but not other federal agencies — in international discussions, according to a bill summary published Thursday. It would also authorize FIO to coordinate federal insurance policy and require FIO to achieve consensus with the states before advocating or agreeing to positions in international forums, such as the International Association of Insurance Supervisors, and eliminate FIO’s authority relating to purely domestic issues, including the authority to engage in broad information gathering authority and reporting obligations.
The proposed legislation would retain FIO’s existing authority to monitor all aspects of the insurance industry and advise the Treasury Secretary on the administration of the Terrorism Risk Insurance Act, according to the summary.
It would continue the authority of Treasury and the United States Trade Representative to negotiate and enter covered agreements, but the Secretary, not the FIO Director, would have the authority to determine whether a covered agreement pre-empts state law. It would also provide that a covered agreement may not include new prudential requirements for U.S. insurers.
The United States and the European Union signed a covered agreement last week to address the U.S. lack of equivalency related to the bloc’s Solvency II directive for the insurance industry. But the Trump administration was being lobbied by the National Association of Insurance Commissioners and some federal legislators to revisit certain provisions of the agreement. NAIC President and Wisconsin Insurance Commissioner Ted Nickel said the organization was “pleased to see Treasury and USTR clarify their interpretation of the covered agreement, as we have asked, in key areas like capital, group supervision, reinsurance and the joint committee. We've worked closely with Treasury and USTR on these clarifications and appreciate their affirmation of the primacy of state regulation. In the months ahead, NAIC members will assess the impact of the covered agreement on state regulation consistent with our open and transparent process, and consider any changes to insurance regulation that may be necessary."
Nat Wienecke, senior vice president, federal government relations at the Property Casualty Insurers Association of America applauded the FIO reform bill’s introduction in a statement on Friday.
“This bipartisan legislation will reduce FIO’s domestic footprint, eliminate its quasi-regulatory authority, and refocus the FIO on international matters, where it can play an appropriate role in coordinating with the states to develop consensus on U.S. international insurance policy,” he said. “The bill also limits the bureaucracy from expanding beyond its core mission.”
“PCI looks forward to working with Reps. Duffy and Heck and the Financial Services Committee to move this bill through the legislative process,” he added.
A bill that included a provision to clarify that mortgage lenders could accept private flood insurance in lieu of federal coverage to satisfy the mandatory purchase requirement failed to pass the U.S. House of Representatives on Monday.