Insurance Regulators and Industry Leaders Unite to Support Abolishing FIO

The nation’s insurance commissioners and industry trade associations are rallying to support efforts aimed at eliminating the Federal Insurance Office (FIO). This initiative gained momentum late last week when Rep. Troy Downing, R-Mont., introduced the McCarran-Ferguson Restoration Act, a legislative move designed to dismantle the FIO.

The McCarran-Ferguson Act, originally passed in 1945, was instrumental in affirming states’ regulatory authority over the insurance industry. However, the landscape shifted in 2010 when the Dodd–Frank Wall Street Reform and Consumer Protection Act established the FIO as a subsidiary of the Treasury.

Scott A. White, Virginia’s insurance commissioner and president of the National Association of Insurance Commissioners (NAIC), expressed strong support for the measure, stating it “restores the proper balance between the states and the federal government.” He emphasized, “Insurance regulation has always been, and should always remain, a state responsibility.” White further noted that the legislation aims to eliminate a federal office that conflicts with this framework while maintaining a focused, non-regulatory role for the Treasury to engage internationally and defend the U.S. sector and system of state-based supervision.

In addition to abolishing the FIO, Downing’s legislation proposes the establishment of a U.S. Insurance Representative. This representative, appointed by the Treasury Secretary, would assist in managing the federal terrorism insurance program, coordinate federal policy on international matters, and consult with state regulators on national insurance issues.

Moreover, the act aims to grant voting status to the state-based system’s representative on the Financial Stability Oversight Council (FSOC), a significant change since state insurance regulators currently lack voting rights on this council.

“The McCarran-Ferguson Restoration Act is a critical measure to preserve the strength of our state-based system of insurance regulation—a framework that has protected consumers and ensured market stability for decades,” remarked Sam Whitfield, senior vice president of federal government relations and political engagement for the American Property Casualty Insurance Association (APCIA).

Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies (NAMIC), criticized the FIO, stating, “Congress created FIO with explicit language that it is not a regulatory agency, but the years since have seen repeated efforts by the office to test those limits and expand its power.” He pointed out that the FIO has duplicated, and at times undermined, the work done by states, ultimately at a cost to consumers.

One of the more contentious FIO reports focused on the affordability and availability of insurance, which the office claimed was the “most comprehensive data on homeowners insurance in history.” However, this assertion was met with skepticism from the insurance industry.

Related: Treasury’s FIO Releases ‘Flawed’ Homeowners Insurance Report

David A. Sampson, CEO of APCIA, criticized the FIO report for providing an incomplete explanation regarding insurance affordability and availability. Similarly, NAMIC’s Grande expressed frustration, stating that the report contradicted the basic insurance principle of matching rate to risk.

Downing, a former insurance regulator, previously introduced the Federal Insurance Office Elimination Act, which garnered support from the National Association of Professional Insurance Agents (PIA) and the Independent Insurance Agents & Brokers of America (Big “I”). Additionally, in 2023, GOP members of the House of Representatives introduced a bill to eliminate the FIO.

The nation’s insurance commissioners and industry trade associations are rallying to support efforts aimed at eliminating the Federal Insurance Office (FIO). This initiative gained momentum late last week when Rep. Troy Downing, R-Mont., introduced the McCarran-Ferguson Restoration Act, a legislative move designed to dismantle the FIO.

The McCarran-Ferguson Act, originally passed in 1945, was instrumental in affirming states’ regulatory authority over the insurance industry. However, the landscape shifted in 2010 when the Dodd–Frank Wall Street Reform and Consumer Protection Act established the FIO as a subsidiary of the Treasury.

Scott A. White, Virginia’s insurance commissioner and president of the National Association of Insurance Commissioners (NAIC), expressed strong support for the measure, stating it “restores the proper balance between the states and the federal government.” He emphasized, “Insurance regulation has always been, and should always remain, a state responsibility.” White further noted that the legislation aims to eliminate a federal office that conflicts with this framework while maintaining a focused, non-regulatory role for the Treasury to engage internationally and defend the U.S. sector and system of state-based supervision.

In addition to abolishing the FIO, Downing’s legislation proposes the establishment of a U.S. Insurance Representative. This representative, appointed by the Treasury Secretary, would assist in managing the federal terrorism insurance program, coordinate federal policy on international matters, and consult with state regulators on national insurance issues.

Moreover, the act aims to grant voting status to the state-based system’s representative on the Financial Stability Oversight Council (FSOC), a significant change since state insurance regulators currently lack voting rights on this council.

“The McCarran-Ferguson Restoration Act is a critical measure to preserve the strength of our state-based system of insurance regulation—a framework that has protected consumers and ensured market stability for decades,” remarked Sam Whitfield, senior vice president of federal government relations and political engagement for the American Property Casualty Insurance Association (APCIA).

Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies (NAMIC), criticized the FIO, stating, “Congress created FIO with explicit language that it is not a regulatory agency, but the years since have seen repeated efforts by the office to test those limits and expand its power.” He pointed out that the FIO has duplicated, and at times undermined, the work done by states, ultimately at a cost to consumers.

One of the more contentious FIO reports focused on the affordability and availability of insurance, which the office claimed was the “most comprehensive data on homeowners insurance in history.” However, this assertion was met with skepticism from the insurance industry.

Related: Treasury’s FIO Releases ‘Flawed’ Homeowners Insurance Report

David A. Sampson, CEO of APCIA, criticized the FIO report for providing an incomplete explanation regarding insurance affordability and availability. Similarly, NAMIC’s Grande expressed frustration, stating that the report contradicted the basic insurance principle of matching rate to risk.

Downing, a former insurance regulator, previously introduced the Federal Insurance Office Elimination Act, which garnered support from the National Association of Professional Insurance Agents (PIA) and the Independent Insurance Agents & Brokers of America (Big “I”). Additionally, in 2023, GOP members of the House of Representatives introduced a bill to eliminate the FIO.