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By Sandy Laycox, Associate Managing Editor, Leader’s Edge, June 26, 2017

Last month, the Networks Financial Institute held its annual Insurance Public Policy Summit, bringing together leaders from Congress, the administration and the insurance industry to discuss insurance imperatives after the federal elections.

Here are some highlights:

National Flood Insurance Program

Rep. Sean Duffy (R-WI), chairman of the Subcommittee on Housing and Insurance of the House Financial Services Committee, provided an overview of the NFIP reauthorization and discussed his committee’s attempts to balance actuarially sound rates with affordability concerns as it worked to help pass legislation to reauthorize the program, which currently expires in September. He indicated that legislation is coming soon, but could be divided into smaller bills for passage.

True enough, in the weeks since then the House has been reviewing multiple flood bills, and several have passed through committee and are ready for vote by the full House.

The Covered Agreement

The Obama administration finalized a covered agreement with the European Union in January of this year. Negotiated in part by the U.S. Department of the Treasury, which includes the Federal Insurance Office, the agreement is now hanging in the balance as we wait to see whether the Trump administration will move forward with it, scrap it or re-negotiate.

As The Council’s Chief Legal Officer Scott Sinder wrote, “The primary U.S. goal in the agreement is to ensure continued U.S. insurer and reinsurer access to the EU, which has been cast into doubt by EU ‘equivalence,’ which the U.S. does not satisfy. The primary EU objective is to eliminate U.S. individual state collateral requirements for foreign reinsurers. Both the U.S. and the EU largely achieved their objectives.”

News of the agreement was met with support from many in the industry, including The Council. Insurance Journal reported that the American Insurance Association, the American Council of Life Insurers and the Reinsurance Association of America welcomed the agreement in a joint statement, as did the International Underwriting Association. However, there were some skeptics, including the National Association of Mutual Insurance Companies and the NAIC.

The panelists at the summit well represented that mixed reaction with the agreement as it stands. While some fully supported it, claiming it a win for recognition of the U.S. state-based system with the ability to open up markets around the world. Others wanted clarification on certain issues. And others felt that it potentially creates confusion internationally regarding federal/state authority in the U.S. system.

FIO and the States

The issue of federal/state authority involves the role of the Federal Insurance Office, which was created as part of Dodd-Frank. This new office and the role it plays was touched on by several other speakers.

Thomas Sullivan, associate director, Division of Supervision and Regulation, Board of Governors, Federal Reserve System, discussed the importance of the three-legged stool of the Fed, FIO and the NAIC. He noted the Fed’s intention to be responsible to the insurance industry—instead of being too bank-centric—and not to duplicate the work of the states.

Michael McRaith, immediate past director of the Federal Insurance Office, echoed the importance of federal-state cooperation. He explained that FIO was not created as a regulator and should not act as one, but instead should be the best objective source on insurance matters. He underscored the importance of FIO representing the U.S. in international insurance matters and noted that the number of issues that will require the entire U.S. insurance sector to come to resolution will only grow.