Last week, the U.S. Department of Treasury issued a report on federal oversight of the insurance industry. The report is a response to an executive order issued earlier this year requiring the Treasury to review the U.S. financial regulatory system to ensure it is consistent with “core principles,” including:

• Empowering Americans to make independent financial decisions and informed choices in the marketplace, save for retirement and build wealth.
• Preventing taxpayer bailouts.
• Fostering economic growth and vibrant financial markets through more rigorous regulatory impact analysis.
• Enabling American companies to be competitive with foreign firms.
• Advancing American interests in international financial regulatory negotiations.
• Making regulation more efficient, effective and appropriately tailored.
• Restoring public accountability within federal financial regulatory agencies.

The report is generally supportive of state insurance regulation, recognizes the primacy of the state-based system, and notes that in most cases the business of insurance is local in nature and a national one-size-fits all regulation approach is not appropriate. However, the report also notes that if state legislators and regulators do not institute more uniform data security and breach notification laws for insurers, Congress should do so. The report also urges states to adopt the recent National Association of Insurance Commissioners model law on data security. 

Of specific interest to independent insurance agents and brokers, the report expressly supports implementing the National Association of Registered Agents and Brokers (NARAB) as a one-stop, nonresident licensing compliance mechanism. The report states that the Treasury, through the Federal Insurance Office (FIO), will take steps to recommend nominations to President Trump for the NARAB Board of Directors. Appointing a board of directors is the first step in getting NARAB operational.

The report also recommends that states take steps to increase the efficiency and uniformity of the appointment process for agents and brokers, and to streamline state insurance laws related to product development and commercial lines regulation.

The report further sets out a revised mission for the FIO, intended to refocus the office, and increase transparency and stakeholder engagement. The Big “I” supports significantly restricting or eliminating the FIO.

Finally, the report expresses support for reexamining the Department of Labor’s fiduciary rule, and recommends that the DOL engage with state insurance regulators regarding standards of care for annuity sales.

Big “I” staff met with officials at the U.S. Department of Treasury and the FIO to advise on developing the report’s recommendations, and submitted written comments on the fiduciary rule, agent and broker licensing, and private flood insurance. The Big “I” looks forward to continuing to work with the Administration to ensure that Congress considers the association’s priorities and hears the views of agents and brokers as federal legislators examine the report’s recommendations.  

Jennifer Webb is Big “I” federal government affairs counsel.