FSOC Insurance Member Criticizes
Handling Of Industry Interests
BY ARTHUR D. POSTAL
THE INSURANCE industry’s interests on the Financial Stability Oversight Coun- cil (FSOC) are “inadequately represented” because of the council’s policies, the
National Association of Insurance Commissioners (NAIC) told a congressional panel.
The Treasury Department has taken “a
very narrow and, in my opinion and the
NAIC’s opinion, incorrect view” of the provision establishing the FSOC in the Dodd-Frank law, John Huff, director of insurance
in Missouri and a non-voting member of
the FSOC, said in testimony before the
Oversight and Investigations Subcommittee
of the House Financial Services Committee.
Specifically, he said he has been restricted
from consulting with his fellow state insurance regulators on matters before the FSOC.
He contended that the restrictions contradict “congressional intent and the deference
accorded to state insurance regulators in the
explicit language” of Dodd-Frank itself.
“Quite simply, FSOC should want—and
the U.S. taxpayers should demand—all
the regulatory resources and expertise that
their regulators can provide to FSOC’s important work in protecting the U.S. financial system,” he said.
He said the issue is so important that
he and Terri Vaughan, NAIC CEO, “sent a
public letter to [Treasury Secretary Timothy
Geithner] asking for him to rectify this issue.”
He said the NAIC has yet to receive a
written reply, but that some accommodations have been made to date, although he
declined to disclose what they were.
Rep. Randy Neugebauer, R-Texas, chairman of the oversight panel, charged at the
hearing that the FSOC is proceeding to
designate certain nonbank financial firms
as “systemically important” without any
representative at the federal level “who truly understands the business of insurance.”
Neugebauer added, “On top of that, Director John Huff, who is the only insurance
� FSOC RESTRICTIONS BARRING consultation with his fellow state insurance regulators
leave Missouri Insurance Director John Huff (a
non-voting member) and the insurance industry without adequate representation.
expert [non-voting] currently participating
on the FSOC, has publicly declared his
frustration with his ability to meaning-
fully participate and provide the regulatory
perspective of the insurance sector in these
Neugebauer said Huff has “even offered
additional NAIC staff to support the work
of FSOC at no additional cost to the U.S.
taxpayers. Unfortunately, his complaints
and generous offer have been ignored by
the chairman of the council [Geithner].”
Matt Brady, a spokesman for the Nation-
al Association of Mutual Insurance Cos.,
commenting on Huff’s testimony, says,
“We share Commissioner Huff’s concern
that important decisions are being made by
the FSOC without a sufficient understand-
ing of the insurance industry.”
“In creating the FSOC, Congress clear-
ly intended for someone with a thorough
understanding of those differences to
have a voice, and a vote, in the FSOC’s
Cat Bonds Set 1Q Record
BY MARK E. RUQUET
THE VALUE OF insurance-linked-se- curities (ILS) placements increased by more than half in the 2011 first
quarter as four insurers placed more than
$1 billion in bonds in the market, according to a report from Willis Group.
In its “ILS Market Update, Q1 2011:
The Market Digests a Major Catastrophe
Event” report, Willis Capital Markets &
Advisory says there was a record $1.015
billion of ILS placed in the market compared to $650 million for the same
period last year—in a quarter traditionally seen as “relatively quiet” for such
Four carriers make up the sponsoring
of the issuance:
� Munich Re with a three-year tranche of
� Chubb with both a three-year and four-
year tranche, totaling $475 million.
� The Hartford with a four-year term
tranche of $135 million.