WASHINGTON—Lawmakers and industry observers are growing increasingly troubled by the Obama administration's delay in naming an insurance expert as a voting member of the new Financial Stability Oversight Council.

During a hearing concerning the FSOC held by the House Financial Services Committee's Oversight and Investigations Subcommittee last week, legislators from both sides of the aisle expressed concern about the administration's lack of action.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the White House is required to appoint a person with “insurance expertise” as a voting member of the FSOC. The FSOC has the power to designate financial institutions as presenting a systemic risk to the economy, making them subject to greater regulation.

“Can you indicate when the position will be filled?” Rep. Michael Fitzpatrick, R-Pa., asked Jeffrey A. Goldstein, Treasury undersecretary for domestic finance, during the hearing.

Mr. Goldstein responded that he didn't have influence over the White House but added, “I understand that people are hard at work” on the issue.

Rep. Fitzpatrick continued to press the official, asking him whether he thought it was appropriate for the council to move forward on issues that could impact insurers without the insurance expert in place.

Mr. Goldstein replied that the council could call on insurance expertise without having seated the insurance expert. Specifically, he noted the insurance expertise of two nonvoting FSOC members—John Huff, the director of the Missouri Department of Insurance, Financial Institutions and Professional Registration, who represents the National Assn. of Insurance Commissioners on the council; and Illinois Insurance Director Michael McRaith, who recently was named head of the new Federal Insurance Office but is not expected to assume the job's duties until later this spring.

The lead House sponsor of the Dodd-Frank Act—Rep. Barney Frank, D-Mass.—also pressed Mr. Goldstein on the issue, noting that “we worked very hard” to ensure that the insurance industry had adequate representation on the FSOC.

Mr. Huff also weighed in during his appearance before the panel, saying, “While FSOC engages in work that could impact insurers, two of our three insurance representatives are absent from the table.”

Insurance industry observers welcomed the panel's questions.

Leigh Ann Pusey, president and CEO of the American Insurance Assn. in Washington, pointed out that lawmakers from both parties as well as industry figures have written the administration asking that the vacancy be filled as soon as possible.

“In terms of a hearing being helpful, it was helpful to echo those concerns raised in the letters from the industry and the Hill,” she said.

“I think the members of the committee raised some very serious questions about the fact that FSOC is working on how they will consider companies to be systemically significant without having the insurance expert mandated by the Dodd-Frank Act taking part,” said a spokesman for the National Assn. of Mutual Insurance Cos. in Washington. “Labeling somebody systemically significant has enormous consequences, and it's somewhat concerning that they're doing this without having the insurance expert at the table.”

“We've expressed publicly our concerns that the FSOC is legislating on insurance companies without having the insurance expert in place,” Ben McKay, senior vp in the Property Casualty Insurers Assn. of America's Washington office, said before the hearing.

“We can appreciate the pressures they're under in the extraordinary mandate given them by the Dodd-Frank Act, but we are still concerned,” he said.