Late last week, the renewed Federal Advisory Committee on Insurance convened for its second meeting since its expansion to 21 members last August. Cyber security, auto insurance affordability and international issues were among the committee’s agenda items.
In his opening remarks, Federal Insurance Office Director Michael McRaith said the increased committee size is intended to reflect the diversity of the insurance sector in the United States. Eight of the new members are state regulators. This was the second meeting chaired by Daniel Glaser, president & CEO of Marsh & McLennan Companies, Inc.
The first agenda item focused on cyber security, particularly the role and protections provided by cyber insurance. The National Institute of Standards & Technology, which is a part of the Department of Commerce, presented about the creation of a national cybersecurity framework. President Obama issued an Executive Order in February 2013 calling on “stakeholders to develop a voluntary framework for reducing cyber risks to critical infrastructure.” Zurich also gave a presentation on the “Security & Privacy Insurance Landscape,” which focused on educating smaller companies about the need for proper cyber coverage protection. According to Zurich, larger companies with more than $1 billion in revenue are currently the primary holders of cyber coverage.
The second part of the meeting included a discussion of auto insurance affordability and a presentation by the Consumer Federation of America on the “Cost of Mandatory Auto Insurance for Lower-Income Households.” The committee discussed different mandatory state requirements for auto policies, which some regulators identified as a reason for the difficultly in defining what is considered “affordable” for all lower-income homes across the country.
The final part of the meeting included a presentation on “Workstreams of the International Association of Insurance Supervisors.” McRaith said the new International Capital Standards, which may take effect as early as 2016, will follow a three-step process before implementation: standard development, testing and adoption. He also stressed that any international standards cannot have a negative impact on the diversity of the U.S. insurance market and that each jurisdiction must implement the standards according to its own approach. Only state regulators and, where relevant, the Federal Reserve will have the ability to implement the standards.
Jen McPhillips is Big “I” senior director of federal government affairs.
