NAIC Doubles Down on State Control, Pushes for FIO Elimination
The National Association of Insurance Commissioners (NAIC) has declared its support for state-level insurance regulation and called for the elimination of the Federal Insurance Office (FIO). This stance was outlined in a recent letter to congressional leaders, as part of its federal priorities for 2025.
The NAIC’s core argument is that the FIO duplicates regulatory work already handled by state authorities, thus conflicting with states’ longstanding role as the primary regulators of insurance markets. The NAIC also highlighted concerns about the FIO’s impact on international regulatory interactions and the separation of the Treasury Department from other financial regulatory bodies.
According to the NAIC, empowering the FIO with powers to preempt state regulations and directly access confidential insurer information extends beyond the appropriate functions of the Treasury. The NAIC expressed worries that this could lead to the politicization of insurance regulation, a concern that led to the Treasury Department intentionally being separated from other financial regulators.
However, the NAIC acknowledged the usefulness of maintaining an insurance expert within the Treasury Department for particular responsibilities, including the management of the Terrorism Risk Insurance Program.
This recommendation aligns with ongoing legislative efforts to dismantle the FIO. A bill introduced in the US House of Representatives in January proposed abolishing the office.
FIO’s Role in the Industry
The FIO was established in 2010 under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Its principal responsibilities involve monitoring the insurance industry, identifying regulatory gaps, and representing the US in international insurance matters. The FIO operates within the US Department of the Treasury and serves in an advisory capacity, without direct regulatory authority.
In recent years, the FIO has faced criticism from various state insurance regulators and industry stakeholders. Critics maintain that state regulators are better positioned to oversee the insurance market and that the FIO’s presence results in excessive federal intrusion.
Prior to the official launch of the Elon Musk-led Department of Government Efficiency (DOGE), a coalition of nine state insurance commissioners from Alabama, Arkansas, Kansas, Louisiana, New Hampshire, North Carolina, Oklahoma, Tennessee, and West Virginia jointly urged the elimination of the FIO. This coalition contended that the FIO’s ongoing operation creates an unnecessary burden on taxpayers, in addition to its perceived redundancy.
