News & Updates


Congressional Proposal Would Create Federal Insurance Office

Congressional Proposal Would Create Federal Insurance Office

United States Representative Paul Kanjorski of Pennsylvania has released a discussion draft of a strike-all amendment to H.R. 2609 that would create the Federal Insurance Office (FIO) as an office in the United States Department of the Treasury.  Kanjorski’s amendment would be referred to as the Federal Insurance Office Act of 2009 and would set forth the powers and responsibilities of the FIO.

The draft Federal Insurance Office Act of 2009 is substantially similar to the Office of National Insurance Act proposed by the U.S. Treasury earlier this year.  However, notably absent is a provision that would give the Federal Insurance Office the power to subpoena the production of data from insurers and their affiliates.

Under the draft amendment, the Federal Insurance Office within the Department of the Treasury would be headed by a Director, whose position would be career reserved position in the Senior Executive Service.  A career reserved position must be filled by a career appointee, which is designed to provide for impartiality and facilitate public confidence in the appointee’s ability to conduct his or her duties in an impartial manner.  The authority of the Federal Insurance Office would extend to all lines of business except health insurance.

Duties of the Federal Insurance Office:

The legislation would provide for the Federal Insurance Office to perform the following duties:

  • Monitor all aspects of the insurance industry, including identifying potential gaps in the regulation of insurers that could lead to a systemic crisis in the insurance system or the United States financial system.
  • Recommend to the Board of Governors of the Federal Reserve System that it designate an insurer (including its affiliates) as a Tier 1 financial holding company under other regulatory reforms being pursued by the federal government.  Under these reforms, a Tier 1 financial holding company is a company for which material financial distress could pose a threat to global or U.S. financial stability. 
  • Assist in the administration of the Terrorism Insurance Program established in the Department of the Treasury under the Terrorism Risk Insurance Act of 2002 (TRIA). 
  • Coordinate federal efforts and establish federal policy on prudential aspects of international insurance matters, including representing the United States in the International Association of Insurance Supervisors and assisting in the negotiation of International Insurance Agreements on Prudential Measures. 
  • Determine whether state insurance measures are preempted by International Insurance Agreements on Prudential Measures. 
  • Consult with the states on insurance matters of national importance and prudential insurance matters of international importance. 
  • Perform other related duties assigned to the FIO by the Department of the Treasury.

Collection of Data by the Federal Insurance Office:

The Federal Insurance Office will advise the Department of the Treasury on major domestic and prudential international insurance policy matters.  A key component of the FIO’s authority is its ability to collect information from the insurance industry.  Under the proposed Act, the Federal Insurance Office would be authorized to collect information from insurers and their affiliates.  Small insurers, as would be defined under a threshold established by the FIO, would be exempt from the data collection requirement.

Before collecting information directly from insurers and their affiliates, the Federal Insurance Office would be required to coordinate with the various state regulators to determine whether the information requested is already available from them or can be obtained by them in a timely manner.  The Act also provides that notwithstanding any other provision of law, the state regulators are authorized to share the requested information with the FIO.

Importantly, the Act provides for the continuing confidentiality of proprietary information submitted to the Federal Insurance Office.  The Act specifies that submission of the data to it does not constitute a waiver of, or otherwise affect, any federal or state law privilege protecting the data.  In addition, applicable federal or state law protections and existing written agreements with sources of the data regarding the confidentiality of data continue to apply.  In addition, the Act contains an exemption from the federal Freedom of Information Act (through a reference to an existing exception for information relating to the supervision of financial institutions).  For a brief overview of the relationship between the proposed Federal Insurance Office Act and Florida confidentiality laws, please refer to Travis Miller’s related podcast in the Podcasts section of

The Federal Insurance Office’s duties will culminate each year in a report to the President and Congress on the state of the insurance industry, any actions taken by the office relating to preemption, and other information deemed relevant by the Director of the FOI or requested by congressional committees overseeing insurance.

Preemption of State Insurance Laws:

The Act provides for the Federal Insurance Office to adopt policies preempting state statutes, rules, bulletins, and similar measures if those measures would treat a non-U.S. insurer that is subject to an International Insurance Agreement on Prudential Insurance Measures less favorably than a U.S. insurer licensed in the state.  The Act also provides for preemption of state measures that are inconsistent with international insurance agreements.

Under the act, the Director of the Federal Insurance Office would be required to go through an established process for declaring preemption of a state-based measure.  The FIO would publish notice in the Federal Register identifying the potential inconsistency or issue giving rise to preemption.  Interested parties then would have an opportunity to submit written comments to the FIO.  After considering the comments, the FIO would make a determination on preemption, and if the state-based measure is preempted would establish a reasonable period in which the determination would become effective.  The determination and its effective date will be published in the Federal Register.

Preservation of State Regulation:

The preemption provisions under the draft Act are limited, and the Act specifically reserves much of the current insurance regulatory system to the states.  The Act provides that it does not preempt any state requirement governing insurers’ rates, premiums, underwriting or sales practices, or coverage requirements.  The Act also does not alter the application of the antitrust laws of any state to the business of insurance.

Travis Miller is board certified by The Florida Bar in State & Federal Government and Administrative Practice.  Please contact with any questions relating to the Federal Insurance Office proposal.