The U.S. Department of the Treasury’s Federal Insurance Office, or FIO, has submitted to Congress and released a report on how to modernize and improve the system of insurance regulation in the United States. Given the significance of the insurance sector in the U.S. economy, and the globally active nature of U.S. insurance firms, the report concludes that in some circumstances, policy goals of uniformity, efficiency, and consumer protection make continued federal involvement necessary to improve insurance regulation. However, the report concludes that insurance regulation in the United States is best viewed in terms of a hybrid model, where state and federal oversight play complementary roles and where the roles are defined in terms of the strengths and opportunities that each brings to improving solvency and market conduct regulation.
The report, mandated under Title V of the Dodd-Frank Wall Street Reform and Consumer Protection Act, makes recommendations in the areas of insurance sector solvency and marketplace regulation. The recommendations outline near-term reforms that states should undertake regarding capital adequacy, safety and soundness, reform of insurer resolution practices, and marketplace regulation. In addition, the report outlines areas for federal involvement in insurance regulation.