Alert December 17, 2013

Federal Insurance Office Issues Report on Modernization, Improvement of Insurance Regulation

Fulfilling a mandate under the Dodd-Frank Act, the Federal Insurance Office (“FIO”) of the Department of the Treasury issued a report to Congress on how to modernize and improve the system of insurance regulation in the United States.  The report follows consultation with various stakeholders by the FIO and a period of public comment in response to a formal request for comment focused on the considerations specified by the Dodd-Frank Act.  The report include 18 specific areas of near-term reform for the states falling into three broad categories: (1) capital adequacy and safety/soundness, (2) reform of insurer resolution practices, and (3) marketplace regulation.   The report does not advocate for federal regulation to supplant state regulation of insurance.  Instead it posits that federal involvement should be targeted at solving problems resulting from the legal and practical limitations of state regulation, such as the need for uniformity or the need for a federal voice in U.S. interactions with international authorities, and provides nine recommendations targeting those goals.