The Federal Insurance Office & Dodd-Frank Eric C. Nordman, CPCU, CIE Director of Regulatory Services Director of the CIPR

Agenda The Federal Insurance Office Overview Specific Duties of the FIO The FIO Role with FSOC The Terrorism Risk Insurance Program FIO Powers FIO Preemption of State Laws or Regulations State Recourse FIO Reports

The Federal Insurance Office Established by Dodd-Frank Monitoring Responsibilities Not a Regulator Role with the Financial Stability Oversight Council or FSOC International Role Limited Preemption Authority

The Federal Insurance Office Created by Title V of the Dodd-Frank Wall Street Reform and Consumer Protection Act Established within the Department of the Treasury Led by a Director who is appointed by the Secretary of the Treasury

The Federal Insurance Office Specific Duties Include: Collect and analyze information regarding the insurance industry; Assist the FSOC in identifying any systemically risky insurers; Represent the federal government in international discussions relating to insurance regulation; and Coordinate federal efforts to negotiate international agreements relating to insurance regulation.

The Federal Insurance Office The FIO is authorized to cover all lines of insurance except for health, long-term care and crop insurance The FIO is authorized to monitor the extent to which under-served communities have access to affordable insurance products.

The Federal Insurance Office The FIO is tasked with recommending to the FSOC that a particular insurer be designated as a non-bank financial company to be regulated by the Federal Reserve. Once a company is designated, the Federal Reserve Board of Governors must coordinate with FIO and any primary federal financial regulator on annual stress tests.

The Federal Insurance Office The FIO is required to coordinate with the appropriate federal regulatory agencies in issuing regulations regarding stress tests of the systemically important non-bank financial institutions. The FIO is to assist the Secretary of the Treasury in administering the Terrorism Risk Insurance Program.

The Federal Insurance Office The FIO is to develop federal policy and represent the federal government on “prudential aspects of international insurance matters. The FIO is tasked with assisting the Secretary of the Treasury in negotiating covered agreements.

The Federal Insurance Office The FIO has a role with regard to managing an insolvency of a systemically important non-bank financial institution. The FIO can determine that a systemically risky insurer requires a Dodd-Frank Title II orderly resolution however, there are some caveats.

FIO Powers The FIO is authorized to collect data and it can enter into information sharing agreements with state regulators and others. The FIO can require an insurer or its affiliate to submit data to the office.

FIO Powers The FIO is authorized to assist the Treasury Secretary and U.S. Trade Representative in negotiating covered agreements. The substantially equivalent caveat means the FIO is not authorized to recommend the approval of a covered agreement unless the result preserves important solvency and consumer protection standards contained in state laws and regulations.

FIO Powers The FIO can recommend preemption if applying a state law or regulation results in less favorable treatment of a subject non-U.S. insurer than an admitted U.S. insurer and the law or regulation is inconsistent with the terms of the covered agreement. There is also a savings provision prohibiting the preemption of certain state laws and regulations.

FIO Preemption Process Notice of Potential Inconsistency Publication in the Federal Register Notice of Determination of Inconsistency Notice of Effectiveness

State Recourse Consider Law Amendments Contest the Determination The Federal Administrative Procedures Act Applies The Judicial Review is de novo

FIO Reports One of the main functions of the FIO is to issue reports: How to Modernize and Improve the System of Insurance Regulation in the United States (Jan. 23, 2012) Annual Report Documenting Preemption Actions (Starting Sept. 30, 2011)

FIO Reports An Annual Report Intended to Inform Congress about the Insurance Industry and Provide other Information Deemed Important by the FIO Director or one of Several Congressional Committees (Starting Sept. 30, 2011)

FIO One-Time Reports A report “describing the breadth and scope of the global reinsurance market and the critical role such market plays in supporting insurance in the United States.” (Sept. 30, 2012) A report describing the impact of the changes to reinsurance regulation on regulators access to reinsurance information for regulated companies in their jurisdiction. (Jan. 1, 2013)

THANKS!!!!