Industry eager for inaugural FIO report

A potential inside-the-Beltway equivalent of a best-seller—at least for some people—is likely to roll off the presses in the next few weeks.

Unlike, say, the latest from John Grisham, this volume won't cost its readers a cent other than their share of whatever tax money goes into its production.

The long-anticipated publication, at least long anticipated among some in the insurance industry, is the Federal Insurance Office's report on modernizing and improving insurance regulation. The FIO gathered information from interested parties for a couple of months and is expected to issue its report soon.

In fact, the Dodd-Frank Wall Street Reform and Consumer Protection Act directs the FIO to submit such a report to Congress no later than 18 months after Dodd-Frank's enactment, which makes the report due before the end of this month.

Some federal reports, such as the Warren Commission report on the assassination of President John F. Kennedy or the 9/11 Commission's final report on the 2001 terrorist attacks on the United States, make for compelling reading. More often, they're pretty turgid affairs for anyone outside the industry or people directly affected by a report's recommendations.

But the people most interested in the FIO report aren't necessarily going to be looking for sparkling prose. As a matter of fact, odds are they're going to be looking for something rather mundane—a sort of road map.

The report should give a strong indication of how the new insurance office views the current state of insurance regulation as well as the office's view of its role in improving regulation.

Under Dodd-Frank, the office has next-to-no regulatory authority. Regulation remains the prerogative of the states, courtesy of the McCarran-Ferguson Act, and is likely to remain so for some time. McCarran-Ferguson, however, doesn't mean that the federal government in general and the FIO in particular can't influence the nature of insurance regulation.

While the FIO can't overrule the states, it certainly can prod them in certain directions, and there are a lot of interested parties that would like to see the FIO do a bit of prodding. For example, in its comments submitted to the FIO, the Risk & Insurance Management Society Inc. stressed the need to have more uniform regulatory standards.

What suggestions the FIO makes to Congress regarding how and where insurance regulation can be improved and modernized could set the tone of Washington's relations with the industry and the states that regulate insurance for some time to come.

As such, it's certain to be snatched up as eagerly by insurance types as the general public goes after the latest from James Patterson.