One important insurance provision, included in the new law, was a requirement for an insurance modernization report to the U.S. Congress supported by the Automotive Service Association (ASA). The director of the Office of National Insurance is to conduct a study and submit a report to Congress on how to modernize and improve the system of insurance regulation in the United States not later than 18 months after the date of enactment.
Included in the Dodd-Frank Wall Street Reform and Consumer Protection Act was a requirement for the creation of the Federal Insurance Office (FIO). The purpose of the FIO is to review international insurance agreements and monitor the industry from a federal level.
The bill enlarges the scope of the Federal Insurance Office’s authority regarding all insurance types except health. The bill mandates that the FIO report back to Congress on the modernization and improvement of insurance regulation in the United States.
The report to Congress will address the following considerations:
- Systemic risk regulation with respect to insurance
- Capital standards and the relationship between capital
allocation and liabilities, including standards relating to
liquidity and duration risk
- Consumer protection for insurance products and
practices, including gaps in state regulation
- The degree of national uniformity of state insurance
regulation
- The regulation of insurance companies and affiliates
on a consolidated basis
- International coordination of insurance regulation
With respect to the study and report, the FIO director will consult with state insurance regulators, consumer organizations, representatives of the insurance industry and policyholders, and other organizations and experts, as appropriate.
At least one insurance industry organization has targeted the elimination of funding for this study. It is requesting that Congress pass legislation to defund the study of insurance to be conducted by the new Federal Insurance Office and repeal the mandate granted to the FIO to make recommendations to Congress regarding insurance regulation based upon that study.
While speaking with stockbrokers in London in November, U.S. Department of Treasury Deputy Secretary Neal Wolin spoke about the Federal Office of Insurance, stating:
“The Office will monitor for problems or gaps in insurance regulation that can contribute to a systemic crisis in the insurance industry or the financial system; gather data and information on the industry and insurers; and coordinate policy in the insurance sector.” Wolin went on to say that insurance power would not be limited to the hands of the insurance office: “The act does not provide the Federal Insurance Office with general supervisory or regulatory authority over the business of insurance. The states remain the functional regulators. Through the office, however, the federal government will work toward modernizing and improving our system of insurance regulation.”
The Automotive Service Association supported the creation of the Federal Insurance Office and is against repeal of the mandate granted to the FIO to make recommendations to Congress regarding insurance regulations. ASA encourages independent repairers to go to the ASA legislative website,www.TakingTheHill.com, to send a letter to their senators and representatives encouraging them to oppose efforts to eliminate funding of the Federal Insurance Office modernization study.
The Automotive Service Association is the largest not- for-profit trade association of its kind dedicated to and governed by independent automotive service and repair professionals. ASA serves an international membership base that includes numerous affiliate, state and chapter groups from both the mechanical and collision repair segments of the automotive service industry. ASA’s headquarters is in Bedford, Texas.
For additional information visit www.ASAshop.org, or www.TakingTheHill.com.