The New Federal Insurance Office (FIO)
The new Federal Insurance Office for Workers Comp was commenced by a financial reform package. The Workers Compensation and other lines of insurance will be federalized. I have received questions on the newly legislated Federal Insurance Office (FIO). I mentioned it as a probable part of the federalization of Workers Comp and other lines of insurance. The FIO will be involved with Workers Comp as the bill does not delineate any line of insurance.

On Dec 2, 2009, a Federal Office was quietly established in a financial reform package passed by the House Financial Services Committee. The key committee passed H.R. 2609, the Federal Insurance Office Act of 2009.
I found it interesting that the Committee was introduced as not having any regulatory authority over the business of insurance and would not be able to override state insurance laws. I find that very hard to believe. The FIO is overseen by the U.S. Treasury Department. Within the Treasury Department, of course, is the Internal Revenue Service (IRS). Would this bill give the FIO the power on the level of the IRS?
The FIO was established to address two major areas that have been the focus of criticisms of state insurance regulation.

1. To establish a knowledge base or informational source in Washington, D.C.
2. Assist state insurance regulators in representing the United States in multilateral insurance discussions or entering into binding international agreements.
Let’s now look at what the revisions of the bill and what was altered or removed to satisfy all parties.
1. The bill now contains specific language that the bill does not establish a supervisory or regulatory authority over the business of insurance and bars the FIO from pre-empting state insurance laws governing rates, premiums, coverage requirements, antitrust laws, underwriting or sales practices.
2. The committee also amended the legislation to clarify that the definition of “insurer” under a mandatory data collection provision does not include insurance agents and agencies.

3. The subpoena authority given to the FIO under the administration’s proposal also was removed. In the version passed by the committee, the FIO can request data from an insurer only after first checking with state regulators and the National Association of Insurance Commissioners that the required information is not already publicly available.
I am sure that with the passage of time and as the FIO begins to grow under the same agency that is over the IRS, the FIO will expand its powers. We have seen this often where agencies start small, gain power, and then regulate more and more with new legislation. I think that 1 – 3 above will likely be reconsidered over time.
I have been often questioned and debated over my view that Workers Comp and other lines of insurance will be federalized. If one looks at the CMS posts that I have written, Workers Comp has already been federalized. What if the CMS provides their data to the FIO and vice-versa? All it would take is a sharing of databases by the Federal and State governments.
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