The Federal Insurance Office: Looking Back, Looking Forward
The FIO was created in the wake of the financial crisis, as part of the Dodd-Frank Act. It has since been active on two fronts: as a source of information about the insurance industry for the U.S. Department of the Treasury and other branches of government, and as a representative of the insurance industry in international negotiations.
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 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.
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 “affordability and accessibility” of insurance, it will likely contribute to the disruption of an efficient private market closely regulated at the state level.
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The Federal Insurance Office (FIO) was created just over 10 years ago with passage of the 2010 DoddFrank Act (Dodd-Frank), and it began operating in 2011. Its main functions are to monitor the U.S. insurance industry and to present a unified voice for U.S. interests in international insurance negotiations. It is the first federal body expressly involved in the state-based insurance regulatory system. Since its founding, the FIO has been the target of challenges regarding the scope of its powers and its very raison d’être. Opponents of the FIO point to the potential for bureaucratic overreach and expansion of its scope, while supporters cite its accomplishments. This paper will reflect on the FIO’s first decade; review its role, achievements and challenges; and make two recommendations for the FIO to become a more effective institution.