PIA Puts Spotlight on FIO in House Committee Hearing Testimony

The House Financial Services Committee’s Subcommittee on Oversight and Investigations is holding a hearing today entitled: “Holding the Biden Administration Accountable for Wasteful Spending and Regulatory Overreach.” PIA submitted written testimony for the record in advance of the hearing to highlight the recent actions by the Federal Insurance Office (FIO).

In 2010, in a misguided response to the 2008-2009 financial crisis, advocates of federal insurance regulation created the FIO as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (commonly referred to as Dodd-Frank). PIA opposed the creation of the FIO from its inception; its very existence threatens the primacy of state-based insurance regulation.

In our written testimony, we noted that the states are the proper place for the regulation of insurance; state regulation has served the insurance industry and consumers well for over 100 years. Any attempt to increase the scope of the federal administrative state’s role in the regulation of insurance is inappropriate and would negatively affect policyholders.

Like most federal offices do, the FIO has consistently expanded its power since its creation. In the decade since Dodd-Frank was passed, the FIO has sought to federally regulate mortgage insurance; to be included in international supervisory colleges; and to promulgate uniform national standards for state guaranty associations. Every one of these acts is well outside the FIO’s mandate. In addition, over the years, it has been identified as a potential overseer of the National Association of Registered Agents and Brokers (NARAB).  

We also highlighted several areas related to the FIO that have been concerning recently: in the FIO’s recent climate risk data collection; with recent report language that, while unsuccessful in part thanks to PIA’s advocacy efforts, would have directed the FIO to gather data on property damage exclusions in homeowners’ and renters’ insurance policies, as well as examine the impact on the auto insurance market of non-driving related characteristic homeowners’ and renters’ insurance; and in the recent 2022 FIO annual report where the FIO laid out its intended scope for its office.

In November 2016, PIA became the first national insurance association to publicly call for the repeal of the FIO and we strongly support the FIO Elimination Act, introduced last Congress by Representatives Ben Cline (R-VA) and Tom Tiffany (R-WI) and in the Senate by Senator Ted Cruz (R-TX).  PIA is working to have this legislation reintroduced in the 118th Congress.

The FIO should be repealed, or its mandate significantly curtailed. Some substantial limitation on its growing authority is the only way to protect the primacy of state insurance regulation and ensure against further federal encroachment. PIA will continue to encourage support for legislation that would repeal the FIO or meaningfully reform it in the 118th Congress.