FIO is overstepping says Senator

FIO is overstepping says Senator | Insurance Business America

Environmental

FIO is overstepping says Senator

“It’s almost like a strong-arm game”

Environmental

By
Mark Schoeff Jr.

Sen. Mike Rounds, R-S.D., recently warned that the Federal Insurance Office is trying to force insurers to adopt climate-risk policies that he said would place a burden on the industry.

A member of the Senate Banking Committee, Rounds raised his concerns at last week’s Independent Insurance Agents and Brokers of America Legislative Conference in Washington.

Rounds (pictured above) asserted the FIO had overstepped its bounds by seeking climate-related information from insurers. He said it was a misguided effort to impose environmental, social and governance obligations on the industry.

The FIO initiative didn’t involve formal rules or regulations, Rounds said. It was more of an attempt at moral suasion that Rounds said could hurt insurers and customers.

“They do try and place pressure on state regulators and the insurers themselves,” Rounds said last Thursday at the Big I event. “It’s almost like a strong-arm game. I believe that the FIO must understand that efforts to push insurers and state regulators into potentially adopting sort of ESG strategies, all in the name of climate-risk mitigation, will have real-world impacts on real people that they sometimes forget about. These impacts will come in the form of higher compliance costs on insurers and higher premiums on Americans.”

An FIO spokesperson was not immediately available for comment.

The FIO proposed in October 2022 to collect climate-related information from insurers to assess the impact of climate disasters on insurance consumers. In March, the National Association of Insurance Commissioners launched its own data call for property and casualty coverage with the goal of obtaining zip-code-level information in 70 areas, including premiums, losses, limits and non-renewals.

The NAIC said it will share the information it gathers with the FIO, which said it wouldn’t do its own collection. But Rounds and other lawmakers remain wary that the FIO will try to encroach on state regulation of insurance.

“Insurance is regulated at the state level and it has been for more than 150 years,” Rounds said to applause from the Big I audience. “It has to remain that way.”

Rounds, a former insurance broker and past Big I member, spoke to more than 600 Big I members before they set off for talks on Capitol Hill with members of the House and Senate and congressional staff. He worked in the industry for about 30 years, running an insurance and real estate business with offices throughout South Dakota.