(NEW YORK) December 30, 2013 – Earlier this month, the U.S. Department of the Treasury’s Federal Insurance Office (FIO) released a report on how to modernize the country’s insurance regulation system. While RIMS, the Risk Management Society™, External Affairs Committee reviews the report’s findings, the Society is pleased that the FIO has taken this important step toward improving the inconsistent system of laws currently regulating both domestic and international insurance.
“RIMS strongly supported the creation of the Federal Insurance Office as a first step toward needed federal regulation of the insurance market,” said Carolyn Snow, RIMS Board Director. “There is no question that commercial insurers, producers and policyholders would benefit from more consistency and uniformity in terms and conditions when insurance is purchased from a single insurer. Opportunities to streamline the insurance purchasing process are a priority for this Society and we’re happy to see the FIO make progress to enhance regulations.”
In December 2011, RIMS filed a comment letter to the FIO with the Society’s recommendations for insurance regulations. Issues in the letter included:
- A recommendation to counter the inherent weakness in the state-based system that allows states to legislate variance to national standards or model laws or simply apply or interpret these standards in a manner that diverges from any national standard.
- RIMS identified the lack of uniformity in licensing requirements, new product entry, requirements, or terms and conditions, without any sound policy justification for differences as creating significant barriers to entry into the market.
- In regards to insurance subsidiaries of groups that are internationally active, RIMS advocated in favor of credit to be given to the capital held at the subsidiary level and that capital requirements should be the same for domestic and international insurers and subsidiaries. The Society noted that disparate regulations could lead to lower credit ratings, higher borrowing costs for international groups, as well as affect capacity and therefore increase cost of insurance to consumers.