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Debate on Federal Regulation of Insurance Continues

At hearing, FIO Director Michael McRaith notes that Republican President Theodore Roosevelt called for the federal regulation of insurance in his 1904 State of the Union address.


The U.S. House of Representatives Committee on Financial Services’ Subcommittee on Housing and Insurance held a hearing on “The Federal Insurance Office’s Report on Modernizing Insurance Regulation.” The report was released in December 2013. The U.S. Department of Treasury’s Federal Insurance Office (FIO) was established as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

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The Automotive Service Association (ASA) worked with members of the U.S. House of Representatives and Senate to ensure that the FIO was included in the reform of the financial services industry. ASA supports the federal regulation of the insurance industry. There are areas of insurance where the federal government already performs a regulatory role, such as deposit insurance, flood insurance, crop insurance, etc.

The hearing heard testimony from Michael McRaith, director of the FIO. McRaith noted that Republican President Theodore Roosevelt called for the federal regulation of insurance in his 1904 State of the Union address:

“The business of insurance vitally affects the great mass of the people of the United States and is national and not local in its application. It involves a multitude of transactions among the people of the different states and between American companies and foreign governments. I urge that the Congress carefully consider whether the power of the Bureau of Corporations cannot constitutionally be extended to cover interstate transactions in insurance.”

Roosevelt reiterated the importance of federal regulation again in his 1905 address.

The FIO has proposed modest federal reforms for the insurance industry, yet this has sparked an outcry from some state insurance regulators and the insurance industry. Also called into question at the hearing were policy actions by the trade association representing state insurance regulators as far as transparency in the development of regulatory policy recommendations for states.


According to ASA, it was clear from the testimony provided by witnesses, and questions from the members of the subcommittee, that much division remains in Congress as to whether the insurance industry should be regulated by the federal or state governments.

Rep. Ed Royce (R-Calif.) provided a historical analysis by stating that, as far back as 2001, state insurance regulators have testified that state uniformity is right around the corner and that we have to have issues addressed in two to three years, yet the same issues exist in 2014. Royce has been a consistent advocate of having a larger federal regulatory role in the insurance industry.

More information:

ASA Legislative Website – Taking the Hill




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