|Copyright:||(c) 2011 A.M. Best Company, Inc.|
|Source:||A.M. Best Company, Inc.|
In a sternly worded letter, leaders of the
Voss finally got her answer, in part, when Geithner named
The FIO was created by the Dodd-Frank financial reform law. As its director, McRaith will be an ex officio nonvoting member of the FSOC, another Dodd-Frank creation. The FSOC is currently deciding what its rules for determining systemic risk should be and how those rules would apply to nonbank financial entities, including insurance companies. But it is doing so with just one insurance expert on the panel:
Property/casualty insurers, in particular, are concerned that without people who understand the state-based regulatory system and the unique nature of insurance, the industry could get saddled with rules that make sense for banks, but not for them. In particular, there is widespread concern that the size of a company could be used as the determination of a systemic risk, not one of many factors.
As the industry has generally low leverage, high liquidity and is highly regulated, its systemic risk is low, said
Speaking at the same event as Voss, Huff spoke carefully of his frustrations. He is unable to share information with his fellow commissioners or anyone but three NAIC staff members due to FSOC confidentiality restrictions. With nine FSOC standing committees, what staff he can draw on is stretched thin. “You can imagine: nine committees and three people,” he said. “Today, the FSOC is operating without insurance expertise.”
McRaith’s presence will help, Hartwig said. “I would be willing to bet that it is highly unlikely he would deem a property/casualty company to be systemically risky,” he said.
But McRaith won’t begin his federal duties until June. And the remaining FSOC nominee, when named, will still undergo a potentially lengthy
Before the McRaith announcement, one industry lobbyist quipped, “What if they created a federal agency but never put anyone in charge?” With that question off the table, there is an inevitable follow-up: “What about the other post?”