While the Federal Insurance Office (FIO) attempts to begin its work with the release of the office’s first report pending, Rep. Ed Royce (R-Calif.), a senior member of the House Financial Services Committee, sent a letter to FIO Director Michael McRaith seeking more defined jurisdictions for the FIO and the National Association of Insurance Commissioners (NAIC).
The FIO was not expected to include any mention of the NAIC in its long-overdue report; there had been hints of
Rep. Royce asks Director McRaith to address a long series of questions either in the pending report or directly. The questions vary from “in your opinion, what is the NAIC?” to asking for support regarding implications made in the letter, such as “If the NAIC is to play a significant role in our nation’s regulatory structure going forward, do you believe its self-imposed rules on transparency and oversight, and the manner in which it implements those rules, are consistent with a world-class regulatory organization?”
In a series of pointed comments preceding the questions for Director McRaith, Rep. Royce accuses the NAIC of actions suggesting private regulation. This includes vague open meetings policy and statements from the NAIC that could suggest regulatory authority is being assumed—including a letter from the NAIC Executive Committee sent to the System for Electronic Rate and Form Filing Board stating, “the (SERFF) Board is responsible for furthering the regulatory activities of the NAIC by providing for the overall improvement of insurance regulation through voluntary participation in the SERFF program.”
The letter to Director McRaith reads: “Serious questions arise when the actions listed are taken by an organization with a $70 million budget that does not follow open meetings laws, does not appropriate its budget through a public authority and does not abide by the same standards of due process as its members.”
In recent months, the FIO has gone silent and avoided inquiries regarding the missing report and their activity in lieu of it. This letter begs the question: How much longer can Director McRaith and his office remain silent?
The NAIC is not releasing any new statements regarding the letter to Director McRaith. However, at the end of February, Rep. Royce sent a letter to the NAIC making similar implications, to which the NAIC President Kevin McCarty wrote a lengthy response, stating, "It appears there may be some confusion regarding the role of the NAIC... The NAIC as an association does not have regulatory authority, but its members do. The association does provide a forum for members to establish regulatory policy, stadards and best practices. Howver, the decision to implement such standards remains with the individual states... There can be confusion when collective state regulatory actions developed at an NAIC meeting are mistakenly referred to as actions 'of the NAIC' in the press or elsewhere, but at no time has the organization itself represented that it is a regulator." President McCarty then went on to address each specific concern Rep. Royce raised in his letter to them.
INN has also reached out to the FIO for comment. Check back for updates.
