A civic group is recommending that the Federal Insurance Office (FIO) re-examine how funding for insurance regulatory bodies is managed.
The Bipartisan Policy Center said in a recent report that the federal authority needs to flex more muscle in ensuring that state insurance regulators receive adequate funding. The group noted that these agencies need to be properly funded to ensure that they are able to fulfil their duties, especially given that insurance companies are evolving into complex multinational concerns.
Yahoo Finance said in a report on the study that these regulators are able to collect significant amounts through regulatory fees and levies on insurance premiums. However, the group observed that regulators seem to always be underfunded, as their budgets are channelled towards state programs rather than the discharge of their oversight duties.
Among other suggestions, the Bipartisan Policy Center said that the FIO should be allowed to evaluate states on how well they are achieving the recommended funding levels for their insurance regulatory bodies and report the findings to Congress.
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The FIO is an arm of the US Department of Treasury. It was created in 2010 under the Dodd Frank financial reform law to monitor insurance markets and serve as the information channel for Congress on industry developments.
However, Peter L. Hartt, director of New Jersey’s Insurance Division, observed that the civic organization’s recommendation comes with “significant issues.”
“I wonder whether a line is being crossed,” the Yahoo report quoted Hartt as saying. He pointed out that the recommendation for the FIO to intercede in state affairs suggests that the states become “instruments of the federal government, which isn’t our system,” he added.
Furthermore, he emphasized that insurance regulators in the majority of states across the country are self-funded through mechanisms such as fees and fines, which lends them a certain level of autonomy.
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