DEPARTMENT OF THE TREASURY 

FEDERAL INSURANCE OFFICE (FIO) 

FEDERAL ADVISORY COMMITTEE ON INSURANCE (FACI) 

MINUTES - 18 June 2019 

The Federal Advisory Committee on Insurance (F ACI) convened via teleconference at 2:00 pm., 

with Dan Glaser, Chair, presiding. 

In accordance with the Federal Advisory Committee Act, the meeting was open to the public. 

Committee Members Present 

DAN GLASER, Chief Executive Officer, Marsh & McLennan 

ERIC ANDERSEN, Co-President, Aon 

AMY BACH, Executive Director, United Policyholders (by proxy, EMILY ROGAN) 

BIRNY BIRNBAUM, Executive Director, Center for Economic Justice 

QUINCY BRANCH, Chief Executive Officer, Branch Benefits Consultants (by proxy, JOSEPH 

CORTINA) 

GREG CRABB, President & CEO, Amerisure 

MARK GRIER, Vice Chairman, Prudential 

GEORGE KEISER, Representative, North Dakota House of Representatives 

SEAN MCGOVERN, General Counsel, AXA XL 

ANDREW STOLFI, Administrator, Oregon Division of Financial Regulation 

KENT SULLIVAN, Commissioner, Texas Department of Insurance 

BILL WHEELER, President & CEO, Athene 

Also Present 

STEVEN SEITZ, Director, Federal Insurance Office (FIO) 

LINDSEY BALDWIN, Senior Policy Analyst, FIO (Designated Federal Officer) 

1 
Welcome and Introduction 

Chairman Glaser welcomed the committee members and conducted a roll call. He announced the 

newest member of the FACI, Bill Wheeler, President & CEO of Athene. Mr. Wheeler's 

appointment was recently finalized and at the time of the meeting, he had not yet joined any 

subcommittees. 

Chairman Glaser stated that the F ACI would continue its conversation from its April 2019 public 

meeting by having each subcommittee choose 2-3 topics to work on leading up to the September 

2019 public meeting. 

Chairman Glaser announced the subcommittee chairs selected by FJO, and provided clarification 

on the focus of the availability and protection gap subcommittees: 

• Availability of Insurance Products: Co-chairs: Amy Bach and Bimy Birnbaum. 

Focused on availability of insurance products from a consumer perspective. 

• FIO's International Work: Chair: Mark Grier. Upon finalization ofFACI appointment, 

he will be joined as co-chair by Tom Leonardi of AIG. 

• Addressing the Protection Gap Through Public-Private Partnerships and Other 

Mechanisms: Co-Chairs: Dan Glaser and Sean McGovern. Has been re-named from 

"Addressing the Protection Gap." Will focus on protection gap issues that may require 

an element of government involvement, whether through a public-private partnership or a 

government program. 

Chairman Glaser acknowledged potential overlap between the three subcommittees, and 

encouraged members to work together as appropriate across the subcommittees. 

Update on FIO Activities 

Director Seitz thanked the members for their time and commitment, and provided a status update 

on FIO's work: 

• Secretary Mnuchin's Speech at the National Association of Insurance 

Commissioners' (NAIC) International Forum: Secretary Mnuchin spoke at the 

NAIC's Washington D.C. forum in May 2019, and expressed PIO and Treasury's 

continued engagement with other "Team USA" members (U.S. states, the NAIC, and the 

Federal Reserve Board) in international standard-setting work at the International 

Association oflnsurance Supervisors (JAIS). The Secretary highlighted three key areas 

of focus for FIO and Treasury on the insurance capital standard (JCS) work at the IAIS: 

(1) improving the JCS design to more appropriately reflect the unique business model of 

insurers, particularly with respect to the market valuation approach, and the negative 

effects it could have on the ability of insurance companies to provide long-term savings 

products; (2) Treasury's belief that IAIS needs to create a defined structure and process 

for further work and revisions during the JCS monitoring period (2020-2024); and (3) 

2 
working with Team USA and the broader IAIS membership to develop the criteria and 

process by which the U.S. approach to group capital may be deemed outcome-equivalent 

to the JCS. The Secretary also highlighted the IAIS's proposed holistic framework for 

assessing and mitigating systemic risk, and confirmed Treasury's support for moving 

systemic risk analysis away from individual entities toward the activities-based approach. 

• June 2019 IAIS Meetings in Buenos Aires: FIO attended the recent IAIS meetings in 

Buenos Aires, which served as a check-in as FIO works with Team USA to prepare for 

the November 2019 IAIS meetings in Abu Dhabi. 

• US-EU Covered Agreement: During the last week of June, the NAIC plans to adopt a 

model law related to the implementation of the U.S.-EU and U.S.-UK Covered 

Agreements. PIO has been closely following this work and remains committed to serving 

as a resource to NAIC and the states as they begin the implementation process. 

• Terrorism Risk Insurance Program (TRIP): TRIP will expire on December 31, 2020 

and activity regarding reauthorization is increasing. The Senate Banking Committee held 

a hearing on reauthorization on June 18, 2019 and GAO is currently conducting a study 

on the Terrorism Risk Insurance Act's (TRIA) expiration, processes, and exposure. FIO 

continues its evaluation of the Program through stakeholder and regulator engagement, as 

well as analysis of the Program's data calls. FIO will be holding a meeting of the 

Advisory Committee on Risk-Sharing Mechanisms later this summer (date to be 

determined). This committee provides Treasury with advice on matters related to the 

Program and the terrorism risk insurance market in general. PIO concluded its 

mandatory TRIP data call in May 2019, and is finalizing its study on the competitiveness 

of small insurers in the Program. 

• InsurTech: Treasury directly tasked FIO with further exploring InsurTech issues in its 

July 2018 report on Non-Bank Financials, Fintech, and Innovation. On June 7, GAO 

published a report highlighting the need for the NAIC, FIO, and state insurance 

regulators to continue monitoring InsurTech developments. Over the past several 

months, FIO has met with stakeholders to hear viewpoints on InsurTech-related issues. 

Based on this outreach, FIO intends to further review issues related to speed-to-market, 

data privacy, and how InsurTech may affect long-term trends in consumer choice for 

insurance products. PIO is planning to include a detailed InsurTech discussion in its 

2019 Annual Report. FI O's InsurTech efforts will likely be a multi-year effort. 

Director Seitz concluded by stating that PIO will provide support and guidance to the F ACI, but 

emphasized FIO's desire for the Committee and subcommittees to drive the conversation 

forward. 

Establish 2019 Priorities for the Subcommittee on the Availability of Insurance 

Chairman Glaser summarized the topics related to the availability of insurance that were 

discussed at the April 2019 F ACI meeting: 

• Long-term care insurance and retirement security 

3 
• Regulatory impediments to availability 

• InsurTech (including technological challenges to affordability) 

• Consumer confidentiality, privacy, transparency (including big data) 

• Aspects of cyber insurance related to building resilience and the availability of risk 

transfer 

Mr. Birnbaum suggested narrowing the subcommittee's work to two workstreams: (1) InsurTech 

and big data; and (2) long-term care and retirement security products. He referenced current 

efforts related to retirement security products, including suitability, illustrations, and best interest 

efforts. Mr. Bimbawn stated that the topic of regulatory impediments to availability would be 

best addressed within the topics of InsurTech and retirement security products. 

Ms. Rogan agreed with the idea of combining InsurTech and big data into one workstream, and 

that long-term care and retirement security products should be the subcommittee's other priority. 

She expressed United Policyholders' concerns that the long-term care market has problems 

keeping prices stable and affordable, and social security benefits will not be sufficient to cover 

long-term care costs for every American. 

Mr. Birnbaum suggested that the subcommittee do an in-depth review on FIO's work related to 

InsurTech and long-term care to ensure that the subcommittee's contributions are helpful. 

Director Seitz agreed with the approach proposed by Mr. Birnbaum and said FIO can assist with 

setting up calls and briefing the subcommittee on FIO's activities to assist with drilling down 

into concrete sub-topics and deliverables. 

Establish 2019 Priorities for the Subcommittee on FIO's International Work 

Chairman Glaser summarized the topics related to the FIO's international work that were 

discussed at the April 2019 F ACI meeting: 

• ICS 

• Treatment of war exclusions in cyber insurance 

• FIO's promotion of the industry's ability to access international markets 

• Holistic framework 

• Systemic risk, including financial guarantee products 

Mr. Grier said that the IAIS is aware of objections to the ICS, so it would not be beneficial for 

the subcommittee to debate methodology. Rather, he suggested that the subcommittee examine 

the impact of the ICS, particularly with respect to long-term products and other issues that are 

most important to U.S. insurers. Mr. Grier also suggested that the subcommittee review the 

structure of the ICS monitoring period and examine sub-topics such as confidentiality. He said 

4 
that Prudential had not considered U.S. equivalence as a potential topic, but this could be 

revisited as a possibility by the subcommittee. 

Mr. Grier stated that the FIO's role in the industry's ability to access international markets was 

important and would be an appropriate topic for the subcommittee's attention. He suggested this 

could include level-playing field regulatory issues as well as topics such as market entry and 

joint venture. 

Mr. Grier also suggested considering systemic risk and the holistic framework together, and said 

that these topics are important to companies designated as internationally-active insurance 

companies (or designated by the Financial Stability Oversight Council). 

Mr. Grier said he did not have any objections to reviewing war exclusions in the context of cyber 

insurance. Chairman Glaser, who raised this topic in the April 2019 meeting, suggested that the 

subcommittee should not review this item given the broad scope of the other three topics Mr. 

Grier proposed. He added that the market is moving, and some insurers are offering broader 

levels of protection and clarity around when war exclusions would apply to a policy. Mr. Grier 

and Director Seitz agreed that the topic could be de-prioritized as a separate workstream, but 

could be considered as a regulatory issue within the scope of the other workstreams. 

Mr. Grier said that subcommittee members (and their organizations) have already been engaged 

in ICS discussions and are in a good position to contribute resources, but suggested that the 

subcommittee would need to speak to FIO to clarify the topics and determine the source of the 

most valuable resources. Mr. McGovern agreed and suggested that although the subcommittee's 

members have extensive experience in various markets, it would be valuable to have a 

conversation with PIO in the near future regarding international markets and level-playing field 

access to ensure that the subcommittee's activities align with FIO's priorities. 

Mr. Birnbaum suggested that focusing on something other than IAIS activities might be more 

beneficial to FIO, given the extent of industry engagement with FIO, the Federal Reserve, and 

the NAIC that already occurs with respect to the ICS and holistic framework.- Director Seitz 

responded that the subcommittee would need to find a way to differentiate itself from other 

avenues of work, but suggested that this should be feasible, given the wide-ranging nature of the 

ICS. He added that the market access topic referenced by Mr. McGovern was separate from 

IAIS, and that FIO would be able to set up a conversation with the subcommittee on this topic. 

Mr. Grier that the subcommittee's mission to support FIO could be distinguished from the 

individual company engagement that has been happening at the IAIS, and said that because the 

Secretary has laid out priorities related to the IAIS, the subcommittee should ensure that it is 

providing the proper support. 

5 
Establish 2019 Priorities for the Subcommittee on Addressing the Protection Gap Through 

Public-Private Partnerships and Other Mechanisms 

Chairman Glaser emphasized that FIO wants this subcommittee to focus on areas where the 

government would play a role in closing the protection gap, whether through public-private 

partnerships or government programs. Chairman Glaser reviewed the potential topics discussed 

during the April 2019 meeting: 

• Survey of best practices and lessons learned from existing programs to understand the 

overall dynamics of public-private partnerships in the area of risk transfer 

• Risk mitigation and remediation, including the use of infrastructure funding 

• National Flood Insurance Program 

• Cyber 

• Terrorism Risk Insurance Program 

• Education and financial literacy 

Mr. McGovern suggested that rather than immediately focusing on specific programs and risks, a 

starting point could be for the subcommittee to level-set and define the extent of protection gaps 

in the United States in order to understand what problems needs to be fixed. He added that this 

would be easy to accomplish due to existing resources on the topic. He identified known 

protection gaps as flood, earthquake, and cyber (potentially in the future). He added that the 

frequency and severity of the gap is growing, and population and economic shifts are 

compounding the problem. Level-setting would pennit the subcommittee to define the 

protection gap, understand the implications of the gap (such as reliance on government; lack of 

individual, corporate, and community resilience; and economic stability). After this, he 

suggested the subcommittee could take a holistic view of how the government can create better 

conditions for risk-taking and deploy private capital; and how the industry can continue to 

innovate and incentive mitigation and the use of new products (such as parametric products). 

Mr. McGovern said the subcommittee could use this infonnation to identify the characteristics of 

a "good" government program. He suggested the subcommittee could add value with respect to 

public-private partnerships by giving FIO the opportunity to engage and facilitate industry 

conversations with other federal agencies having an interest in financial protection and/or 

resilience. 

Mr. Birnbaum agreed that level-setting was a good idea, but suggested this work should lead into 

identifying the reasons for the protection gaps. He stated that discussing a solution to protection 

gaps is not feasible without an understanding of why the market is failing. Mr. Andersen agreed 

it was important to understand why markets struggle in certain areas, whether because of 

risk-based pricing, take-up rate, or other market aspects, and stated that he believed Mr. 

McGovern had identified the best approach to the topic. 

6 
Mr. Birnbawn identified retirement security as an area with a significant protection gap and 

asked whether it should be addressed by the availability subcommittee or the protection gap 

subcommittee. Chairman Glaser suggested that retirement security could be examined as a part 

of the protection gap subcommittee's review, but should remain a primary focus of the 

availability subcommittee. 

Mr. Andersen asked whether the protection gap subcommittee would focus primarily on property 

& casualty (P&C) related topics. Chairman Glaser responded that this could be a good focal 

point for the subcommittee, but it could also identify retirement security as a protection gap issue 

being primarily handled by the availability subcommittee. 

Mr. Birnbaum identified advances in InsurTech with respect to mitigation, and suggested that 

there would need to be collaboration between the subcommittees when discussing mitigation. 

Chairman Glaser noted that several topics are being addressed by other entities (including 

legislative bodies, government agencies, and advocacy groups), such as terrorism and the 

National Flood Insurance Program. He asked whether the Committee's members agreed it 

would be best for the Committee to avoid advocating for a position in these areas, and instead 

maintain a high-level overview of these topics. Mr. McGovern also noted subject-matter 

crossover with the Advisory Committee on Risk-Sharing Mechanisms with respect to terrorism, 

and agreed it would be best to avoid duplicating efforts. He suggested that performing a 

level-set as a first step would help prevent these types of issues. Chairman Glaser agreed that 

this could serve as a base for the Committee to decide the areas it would like to assess more 

closely. 

Mr. Andersen asked Director Seitz whether FIO would rather have the Committee take policy 

positions or simply outline the issues. Director Seitz responded that he would defer to the 

Committee as to whether it would be helpful for them to take positions, but agreed that using an 

iterative approach would be beneficial. 

Chairman Glaser provided a summary of each subcommittee's decisions: 

Subcommittee on Availability: 

• Two workstreams: 

• InsurTech and Big Data (including privacy and confidentiality) 

• Retirement Security and Long-Term Care Products 

• Regulatory impediments in these areas will be part of the focus 

• Subcommittee plans to closely examine FIO's existing work in these workstreams 

• Each subcommittee member will provide resources from their organizations 

• Subcommittee will rely on FIO to assist with scheduling follow-up calls 

7 
Subcommittee on FIO's International Work: 

• Three work.streams: 

• ICS: impact of capital requirements on products and capabilities, 

understanding the monitoring process (e.g., confidentiality provisions) 

• Access to international markets and ensuring a level-playing field 

• Holistic framework and systemic risk 

• Subcommittee will use individual company materials as resources and have separate 

conversations with FIO on the ICS impact study and international markets 

Subcommittee on Addressing the Protection Gap Through Public-Private Partnerships and 

Other Mechanisms: 

• Emphasis on P&C 

• Multi-phase workstream; first step will be to create level-set by examining the following 

issues: 

• Definitions and parameters around identifying protection gaps 

• Detem1ining size of the overall protection gap in the United States 

• Identifying current efforts to address protection gaps 

• Understanding reasons why protection gaps exist 

• Determining how the government can reduce protection gaps 

• Determining how industry can innovate to reduce partnerships 

• Understanding what a good public-private partnership will look like 

• Following this level-setting exercise, subcommittee will be able to identify the way forward 

and conduct a "deeper dive" into specific risks 

• Some issues, like retirement security and innovation related to mitigation efforts, will be 

alluded to, but will remain the primary responsibility of the availability subcommittee 

• Subcommittee will avoid policy positions in areas handled by other entities, unless a clear 

way forward is identified 

Adjourn: 

No new business was presented. 

Chairman Glaser announced that the next F ACI meeting will be held at the U.S. Treasury in 

Washington D.C. on September 23, 2019. 

8 
Chairman Glaser reminded Committee members that all subcommittee work is preparatory in 

nature, and therefore at the next public meeting each subcommittee co-chair will be asked to 

present a summary of their subcommittee's work. The full FACI will consider this swnmer, 

have a full discussion, and make final decisions on providing advice and recommendations to 

FIO. 

At 3:01 pm, Chairman Glaser concluded the meeting. 

I hereby certify these minutes of the June 18, 2019 Federal Advisory Committee on Insurance 

public meeting are true and correct to the best of my knowledge. 

Chair 

9