WASHINGTON (May 19, 2021)—The Federal Insurance Office (FIO), a small and little-understood unit within the U.S. Department of the Treasury (Treasury), may receive heightened attention in a new administration and with new leadership at the Treasury.

In a new policy study, R Street Director of Insurance Policy Jerry Theodorou examines what the FIO has done in its first 10 years of existence and its prospects in the Biden era.

The FIO has had a challenging first decade. Since its launch, insurers have been concerned that the introduction of a new federal body, like all bureaucracies, is the camel’s nose in the tent, which would eventually lead to an attempted expansion of its scope. Today, even though many have come to accept the FIO—provided it does not attempt to exceed its authority—there are still efforts to abolish it.

“The loud chorus of critical voices from insurance trade associations may be understood as a response to fears that the new body would, over the years, arrogate more powers to itself and move closer to being a burdensome, restrictive, costly layer of regulation overlaying the existing state-based system of insurance regulation,” said Theodorou.

In the past, government restrictions of the free market with involvement in insurance have proven inefficient and anticompetitive. Should the FIO advance legislative attempts to address the “affordability and accessibility” of insurance, it will likely contribute to the disruption of an efficient private market closely regulated at the state level.