Comments of Birny Birnbaum, FACI International Subcommittee Member 

To the Federal Advisory Committee on Insurance 

December 1, 2020 

I write to offer brief comments explaining my agreements and disagreements with the 

report and recommendations of the FACI International Subcommittee. 

I start by expressing my thanks to the Subcommittee Chair for the inclusive process 

employed to develop the report and recommendations. 

First, while I have concerns about the balance of perspectives presented in the white 

paper describing insurers’ international market access issues, I supported sharing the white paper 

with FACI as part of the December 3, 2020 materials as a starting point to identify potential 

market access issues. My concern is that the Market Access / Level Playing Field white paper 

reads like an industry wish list with issues presented in a one-sided fashion. The issue of "Data / 

IT Localization and Digital Protectionism" is an example. What insurers call "digital 

protectionism," consumer, privacy, human rights and civil rights advocates call protection of 

human rights to privacy and protection from unwarranted and consent-less government and 

corporate surveillance. The discussion of SOEs is the only market access issue in the white 

paper that presents a more balanced description of the issue. 

Regarding the discussion and recommendation regarding data flow, during our 

subcommittee discussions, subcommittee members noted that the TPP had excluded financial 

services from the data flow (or e-commerce) provisions of the treaty. It was Treasury who 

demanded that exclusion in response to the 2008 financial crisis when Treasury was unable to 

obtain data housed in other jurisdictions. It is also my understanding that in the more recent 

USMTA, financial services were also excluded from the e-commerce chapter, but data flow 

provisions regarding financial services were included in the financial services chapter. While 

these financial services chapter provisions did promote free flow of financial services data, the 

chapter included specific requirements for financial services regulator access that are stronger 

than the prudential carve-out. Consequently, we don’t see the market access issue regarding data 

localization as simply including financial services in trade agreement e-commerce provisions. 
 

Birnbaum Comments to FACI re International Subcommittee Report and Recommendations 

December 1, 2020 

Page 2 

I note that the EU has ruled the U.S. EU Privacy Shield to be invalid because it didn't 

provide EU residents with data protections – for EU resident data moved to the U.S. – 

guaranteed by the EU. This is relevant for any discussion of trade involving the movement of 

personal consumer information. US citizens have some protections against government 

surveillance and use of personal consumer information. But, residents from other counties, 

whose data are moved to the US, do not have those protections. Residents of the EU and other 

locations have protections against corporate surveillance and corporate use of personal consumer 

information. But US citizens -- other than those in California -- do not have similar protections. 

Consequently, I see the barriers to free flow of data to be, one, lack of data protection for 

non-US citizens whose data are moved to the US, two, lack of a country-wide data protection 

scheme for US and non-US people whose data are moved to the US; and, three, lack of a 

requirement that companies make other-than-personal-consumer data regarding the company 

available to the relevant regulatory agencies of that country. Consequently, one major 

impediment to trade agreements regarding data flow is the missing consumer data privacy and 

security protections for US and non-US residents. I feel the discussion regarding data flow in 

international agreements should include a recommendation for FIO and Treasury to advocate for 

these high-federal-minimum standards U.S. data and privacy protections. 

The white paper discussion includes some relevant points -- there is no need to keep data 

on a server located in the country if the relevant data for financial services regulators is promptly 

available upon demand. But, the paper only mentions the first part of that proposition and not 

the second. 

Further, it is unclear how "digital protectionism" -- defined in the paper as requiring local 

housing of data -- places US insurers at a competitive disadvantage, generally, since all insurers 

are subject to that requirement, or at the specific disadvantages "in the use of data for predictive 

modeling, predictive analytics, claims processing, fraud detection, pricing and risk selection." It 

is unclear how having to house data in a particular jurisdiction limits an insurer's ability to use 

those data within that jurisdiction. 

Second, the white paper and recommendations suffer from the absence of any reference 

to proportionality. US insurers have virtually unlimited resources to make their case for policies 

and practices here in the US and abroad. So-called "equal access" to, say, regulatory processes 

in a small or developing country can lead to a massive disparity in lobbying and legal pressure 

by US insurers versus domestic players. Our concern with the white paper is that all the market 

access issues are presented as binary problems without acknowledgement of the need for 

proportionality or limitations on foreign players for a country to develop a domestic 

infrastructure that can realistically compete or benefit from participation and partnership with 

huge international players. 
Birnbaum Comments to FACI re International Subcommittee Report and Recommendations 

December 1, 2020 

Page 3 

I greatly appreciate the recent revisions to recommendation 3 regarding data localization 

to address my concerns, but am still unable to support the recommendation. I believe a 

recommendation that better articulates the trade agreement issues and better balances 

stakeholders concerns can be achieved and suggest that this recommendation be held in the 

subcommittee for further work and presentation to FACI in early 2021. 

Finally, I have concerns that the last two recommendation regarding application of IAIS 

and FSB policies and standards suffers from the lack of reference to the foundational principle of 

proportionality that runs through not only IAIS, but also U.S. regulatory requirements. In the 

U.S., for example, application of cybersecurity requirements is done proportionately. 

Internationally, the IAIS work with A2II is based on a proportional regulatory approach for 

jurisdictions with emerging insurance markets. In an effort to address this concern, I suggest the 

following in place of the last two recommendations: 

FIO should advocate for Treasury, the NAIC and the Federal Reserve to advance policies 

and standards at the IAIS and FSB that, while recognizing the importance of 

proportionality in supervision, do not create or encourage disparate supervision of similar 

market participants within a jurisdiction. 

Or 

FIO should advocate for Treasury, the NAIC and the Federal Reserve to advance policies 

and standards at the IAIS and FSB that, while recognizing the importance of 

proportionality in supervision, do not create or encourage supervisory practices that favor 

some market players over others, absent objective and verifiable public policy standards 

to justify such disparate treatment.