Under U.S. President Donald Trump, the Federal Insurance Office’s future is far from certain.
Created by the Dodd-Frank financial reform bill in 2010 and launched in 2011, the Federal Insurance Office was designed to bring insurance expertise to the federal government. Housed within the U.S. Department of Treasury, it monitors the insurance sector, issues industry reports and advises federal officials, in part, about national and international matters affecting the industry.
The FIO may not survive because Trump has vowed to restrict or eliminate regulatory bodies or parts of the federal bureaucracy that his administration feels inhibit growth and efficient business dealings, which makes the FIO vulnerable. Many insurers and others have long criticized the FIO, questioning its necessity and fearing its involvement in an industry they say fares better with state regulation and less federal involvement. industry lobbyists and analysts are mixed as to whether the FIO should, or will remain. Some hope the FIO continues on in some form, but others want the office gone.
“The office as it exists should be eliminated,” said Jimi Grande, senior vice president of federal affairs for the National Association of Mutual Insurance companies. “We believe that any financial reform should take a long and hard look at whether or not we can remove redundancies and streamline the way our businesses operate. Not having a Federal Insurance Office located within the Department of Treasury is something that should be considered in any new legislation.”
Grande said the FIO’s work issuing industry reports (on auto insurance affordability and other topics) and providing insurance expertise at the federal level could easily be taken on “through any combination of people” within the U.S. Treasury Department, or by state regulators.
AIA Sees a Future for FIO
Leigh Ann Pusey, president and CEO of the American Insurance Association, said she sees a future for the FIO, within the context of improvements to its organization and mission.
“AIA has been supportive of the Federal Insurance Office to serve as an advocate for U.S. insurers competing in international markets and as a voice of insurance expertise at the federal level for other agencies,” Pusey said in email remarks submitted to Carrier management. “While there are certainly reforms that can make the FIO’s role more focused, we support its role.”
Pusey added she expects the current Congress will possibly make some reforms to the FIO as part of its exploration of possible Dodd-Frank changes. She added AIA was on the same page.
“AIA is also looking for ways to improve the focused mission of FIO and looks forward to engaging with the committees as they consider changes to the Office,” Pusey added.
FIO Could Help Trump’s Agenda
Ian Adams, a senior fellow with the R Street Institute, a non-profit non-partisan public policy research organization, said he’s noticed an uptick in talk about getting rid of the FIO, but he said the office can still serve a purpose for the industry as “an agent of good.”
Adams said, for example, that he could see the FIO as helping the Trump administration implement a campaign promise with the National Association of Registered Agents and Brokers to facilitate insurance across state lines.
If the FIO is eliminated, Adams said he could see its functions picked up by the National Association of Insurance Commissioners. But that would have limits due to its status as a private trade association that can’t negotiate on behalf of the U.S. government or state governments, Adams added.
Adams said that “there is a tremendous amount the federal government does that affects the business of insurance and that it is appropriate that someone employed by the government be a repository of knowledge about that matters.” With that in mind, he said he expects the FIO will remain in some form.
The FIO “will continue for the simple reason that [the FIO head] is a political appointment,” Adams said. “Any political appointment is a chance to do a favor for someone who heled out politically, and may do so again in the future. There’s someone, somewhere who wants the job and will take it.”
Regardless, the FIO office is nonetheless an office in transition. Original director Michael McRaith, a former director of the Illinois insurance department, resigned his post as of inauguration day on Jan. 20. Current staff within the office are running operations in the interim.