The First Director of the Federal Insurance Office Takes the Reins

Former Illinois Insurance Director Michael McRaith takes the reins as the first Director of the Federal Insurance Office.

Michael McRaith, former Illinois Insurance Director, takes office as the first Director of the newly created Federal Insurance Office (‘FIO’) today, June 13, 2011.

The FIO was established under Subtitle A of Title V of the Dodd–Frank Wall Street Reform and Consumer Protection Act (the ‘Dodd-Frank Act’).[1] Subtitle A, also known as the Federal Insurance Office Act of 2010, authorizes the FIO to, among other things:

• Monitor all aspects of the insurance industry and identify gaps in the regulation of insurers that could contribute to a systematic crisis in the industry or the U.S. financial system as a whole;

Among other things, the Federal Insurance Office is authorized to monitor all aspects of the insurance industry and identify potential gaps in insurance regulation.

• Monitor the extent to which traditionally underserved communities and consumers, minorities, and low to moderate-income persons have access to affordable insurance products;
• Assist in administering the Terrorism Insurance Program of the U.S. Treasury Department;
• Coordinate federal efforts and develop federal policy on aspects of international insurance matters;
• Consult with the states and state insurance regulators regarding insurance matters of national importance and prudential insurance matters of international importance; and
• Perform such other related duties and authorities as may be assigned to the Office by the Treasury Secretary.[2]

The FIO Director is also an advisory member of the Treasury’s Financial Stability Oversight Council established under the Financial Stability Act of 2010.

The FIO’s mandate to identify 'gaps' in the state-based insurance regulatory system opens the door to more federal regulation of insurance.

While the Federal Insurance Office Act of 2010 states that it is not intended to establish or provide the FIO or the Treasury Department with general supervisory or regulatory authority over the business of insurance, the FIO’s mandate to monitor the insurance industry and identify 'gaps' in the current state-based system opens the door to additional federal regulation of the business of insurance.[3]

Although the FIO is still in the formative stages, the Treasury Department created the Federal Advisory Committee on Insurance in May as one in a series of steps it is taking to establish the new Federal Insurance Office created by the Dodd-Frank Act.

According to Deputy Treasury Secretary Neal Wolin, the staff of the new FIO has already begun work. In written testimony before the Senate Banking Committee on May 12, 2011, Wolin indicated that the FIO staff 'has served an important consultative role in advising on several Dodd-Frank studies, rule writing processes and ongoing responsibilities' as well as 'providing expert advice on the Volcker Rule study and rule writing, Orderly Liquidation Authority rule writing and participating in the FSOC insurance working group.'[4]

1. Dodd-Frank Wall Street Reform and Consumer Protection Act; Pub.L. 111-203, H.R. 4173.
2. Federal Insurance Office Act of 2010, Sec. 503; 31 USC 313(c).
3. Federal Insurance Office Act of 2010, Sec. 503; 31 USC 313(k).
4. Deputy Secretary Neal S. Wolin Written Testimony Before the Senate Committee on Banking, Housing, and Urban Affairs, May 12, 2011.