In its report, How to Modernize and Improve the System of Insurance Regulation in the United States (Modernization Report), the Federal Insurance Office (FIO) concluded that a combination of reforms to the state-based system of regulation and actions by the federal government are necessary.
Executive SummaryAs the regulatory landscape evolves in response to the Federal Insurance Office's December 2013 Modernization Report, potential consequences for P/C insurers include federal scrutiny of risk classes used in insurance underwriting, downward pressure on reinsurance prices and state qualification standards for directors and officers, according to partners at Nelson Levine de Luca & Hamilton.
What does this mean to property/casualty insurance carrier leadership teams and their boards of directors?
While an array of topics were addressed in the Modernization Report, notable themes emerged, including challenges associated with the lack of uniformity in the existing insurance regulatory regime as well as the need to align domestic and international supervisory standards. The FIO called for states to implement significant changes and repeatedly expressed its intent to monitor states’ efforts.