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DEPARTMENT OF THE TREASURY

FEDERAL INSURANCE OFFICE (FIO)

FEDERAL ADVISORY COMMITTEE ON INSURANCE (FACI)

MINUTES – June 4, 2020

The Federal Advisory Committee on Insurance (FACI) convened at 1:30 pm on 4 June 2020 via 

teleconference, 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, Marsh & McLennan (Chair)

ERIC ANDERSEN, Aon

AMY BACH, United Policyholders

BIRNY BIRNBAUM, Center for Economic Justice

QUINCY BRANCH, Branch Benefits Consultants

LUKE BELLSNYDER, Texas Department of Insurance 

(proxy for Kent Sullivan) 

GREG CRABB, Amerisure

ROB FALZON, Prudential

DOUG HELLER, Consumer Federation of America

PETER KOCHENBURGER, UConn School of Law

GEORGE KEISER, North Dakota Legislative Branch

JAMES KELLEHER, Liberty Mutual

SEAN McGOVERN, XL CATLIN

ANDREW STOLFI, Oregon Department of Insurance

MARK THRESHER, Nationwide

BETSY WARD, MassMutual

BILL WHEELER, Athene

Also Present

STEVEN SEITZ, Director, Federal Insurance Office (FIO)

LINDSEY BALDWIN, Senior Insurance Regulatory Policy Analyst, FIO (Designated Federal 

Officer) 

DAVID MAURSTAD, FEMA

GLENN POMEROY, California Earthquake Authority
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Welcome and Opening Remarks

Chairman Glaser performed a roll call to confirm attendance on the call.

Chairman Glaser announced that the meeting would feature two guest speakers: Glenn Pomeroy, 

CEO of the California Earthquake Authority, and David Maurstad, FEMA Deputy Associate 

Administrator for Insurance and Mitigation and Senior Executive of the National Flood 

Insurance Program. 

Update on Federal Insurance Office Activities

Director Seitz announced that FACI has a new subcommittee focused on COVID-19. The 

subcommittee will focus on how COVID-19 is affecting the insurance market and is open to all 

members of the FACI. Betsy Ward, Dan Glaser, and Gregg Crabb will serve as Co-Chairs of the 

Subcommittee. Director Seitz announced that Chairman Glaser will step down as the Co-Chair 

of the Protection Gap Subcommittee.

Director Seitz provided an update on actions that Treasury and FIO have taken in connection 

with COVID-19. He noted that business interruption insurance has garnered much attention, 

especially since COVID-19 has affected the operation of small and medium enterprises. Director 

Seitz stated that Treasury is monitoring the various proposals related to business interruption 

being discussed in Congress, state legislatures, and the private sector. In addition, several states 

have introduced legislative measures, some of which would appear to retroactively change the 

terms of insurance contracts and compel coverage of COVID-19 business interruption losses. 

Director Seitz stated that such proposals fundamentally conflict with the contractual nature of 

insurance contracts and could have troubling implications for the insurance market. 

Director Seitz reported that FIO has communicated with insurers across all business lines 

regarding a broad range of subjects, including insurer participation in the capital markets, 

workers’ compensation claims, and the sector response to COVID-19. Director Seitz added that 

FIO is monitoring market developments and volatility to understand the effect on insurer

investments in commercial real estate, private debt, and alternative investments (such as 

collateralized loan obligations).

Director Seitz reported that Treasury is working with the National Economic Council, Congress, 

the states, the National Association of Insurance Commissioners (NAIC), and other stakeholders 

to determine a methodology to address losses attributable to the current and potential future 

pandemics. FIO is also coordinating on data collection with the NAIC and the states to enhance 

FIO’s ability to counsel the Secretary on business interruption insurance. FIO is also monitoring 

volatility in the equity markets and assessing the impact of the low interest rate environment on

carriers writing certain products such as variable annuities with certain guarantees. Director 

Seitz added that COVID-19 will be a key topic in FIO’s annual report, which will be published 

by September 30, 2020. The report will also discuss InsurTech and how COVID-19 is affecting 

innovation in the insurance sector.
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Director Seitz reported that the Advisory Committee on Risk-Sharing Mechanisms held a public 

meeting in May 2020 and provided an initial report to FIO including findings and 

recommendations related to TRIP. The recommendations to FIO included:

 Evaluate the evolving cyber market in the context of TRIP.

 Explore the coverage provided by the program for nuclear, biological, chemical, and 

radiological risk and its impact on the $100 billion program cap.

 Further evaluate TRIP’s certification process.

 Evaluate the potential impact on the program of indexing the insurance marketplace 

aggregate retention amount.

 Evaluate TRIP’s recoupment mechanism.

 Examine ways to limit incentives to use alternative carrier mechanisms (such as captive 

insurers) to shift terrorism risk to other parties

 Explore ways for FIO to facilitate terrorism risk transfer to global markets, including 

evaluating program administration to improve terrorism risk modeling, evaluation of risk 

exposure, and mitigation efforts.

Director Seitz reported that the Federal Interagency Task Force on Long-Term Care Insurance

(LTCI) completed its review of proposals and policy options presented by the NAIC to Congress 

in April 2017, and drafted a report with its recommendations related to these proposals. This

report will be published in Summer 2020. Director Seitz stated that the industry, state regulators,

and the NAIC continue to face challenges in the LTCI market, including regulation of LTCI and 

a consistent approach for reviewing LTCI rate increases. Upon completion of the report, FIO 

will monitor the implementation of the report’s recommendations, and continue to work with 

federal and state policymakers and stakeholders on long-term care.

Director Seitz reported that FIO continues to engage with the IAIS on a variety of topics, 

including the IAIS response to COVID-19. The IAIS issued a statement on business 

interruption, cautioning against initiatives seeking to retroactively require insurers to cover 

COVID-19-related losses which are specifically excluded in insurance contracts. Director Seitz 

reported that FIO supports focusing this year’s global monitoring exercise and data calls on the 

effects of COVID-19. He noted that the current economic and pandemic crisis may provide an 

example of the merits of the activities-based approach. FIO has also joined a group at the IAIS 

that is dedicated to monitoring supervisory responses to COVID-19. FIO is also continuing its 

engagement with the IAIS on the insurance capital standard during the monitoring period and the 

ongoing work for comparability for the aggregation method being developed by the United 

States. Finally, the US-EU and the US-UK Covered Agreements continue to be priorities for 

FIO. Director Seitz confirmed that FIO will continue to advocate for appropriately tailored IAIS 

initiatives with strong confidential networks. 

Director Seitz also stated that the U.S.-EU and U.S.-UK Covered Agreements continue to be FIO 

priorities, and the office is monitoring state progress in adopting laws consistent with the 

agreements as well as related workstreams such as the NAIC’s Group Capital Calculation.
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Director Seitz concluded by reminding the members of the committee that all subcommittee 

work is preliminary in nature and lays the groundwork for the full FACI’s ultimate 

consideration.

Presentations from the Subcommittee on Addressing the Protection Gap Through PublicPrivate Partnerships and Other Mechanisms

Chairman Glaser provided an overview of the work conducted by the Protection Gap 

Subcommittee. The subcommittee drafted recommendations which FACI reviewed and 

presented to FIO. FACI recommended that FIO adopt the principles of the National Mitigation 

Investment Strategy and recommended that FIO adopt two additional principles:

 Provide financial and other incentives to implement mitigation measures.

 Promote innovative industry solutions and products with increased transparency.

FACI also recommended that FIO to use its convening authority to bring together industry 

experts to discuss the insurance protection gap. Accordingly, the Protection Gap subcommittee 

invited two speakers to the meeting. Chairman Glaser noted that both the California Earthquake 

Authority (CEA) and FEMA’s Building Resilient Infrastructure and Communities (BRIC) 

program incorporate these recommendations into the work. Mr. Pomeroy and Mr. Maurstad also 

spoke to the Protection Gap Subcommittee on a subcommittee call prior to the FACI meeting. 

Mr. Glaser added that the subcommittee intends to consider concrete recommendations on ways 

that FIO can build upon and support the work of the CEA and FEMA.

Presentation by Glenn Pomeroy, California Earthquake Authority

Mr. McGovern introduced Glenn Pomeroy, Chief Executive Officer of the California Earthquake 

Authority (CEA). Mr. Pomeroy is also a former member of the North Dakota House of 

Representatives, former North Dakota Insurance Commissioner, and prior President of the 

NAIC. Mr. Pomeroy has been the CEO of the CEA since 2008. 

Mr. McGovern said the CEA has provided insurance protection to over 1.1 million California 

homes and coupled this coverage with a comprehensive mitigation strategy of retrofitting older 

homes in high-risk areas. He added that CEA was also recently appointed administrator of the 

California Wildfire Fund, which provides up to $21 billion of coverage for wildfires caused by 

investor-owned utilities.

Mr. Pomeroy said that CEA is attempting to close the protection gap in California through both 

insurance and mitigation. Mr. Pomeroy gave an overview of the CEA, which was formed in 

response to a lack of homeowners’ insurance options in California after the Northridge 

earthquake, when insurers left the market due to the requirement that they offer earthquake 

insurance on all policies. CEA was formed in 1996 and currently has over one million 

policyholders. CEA is publicly managed, privately financed and operates on a not-for profit 

basis. CEA’s mitigation program has provided retrofitting grants to over 11,000 homes. Mr. 

Pomeroy presented a slide showing the insurers that have joined the CEA and are therefore able 
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to participate in the California homeowners’ market and offer CEA policies. He added that 

about 70 percent of the California homeowners’ market is written by companies that are CDEA 

members.

CEA is newly responsible for administering the California Wildfire Fund. Although the mandate 

for the fund did not include mitigation, a lot of external mitigation is occurring for wildfires. 

The Fund was created because in California, utility companies are strictly liable for fires caused 

by their equipment. This strict liability caused one of California’s utilities, PG&E, to file for 

bankruptcy. The Fund was established to provide financial resources for wildfire victims and to 

give stability to utility companies. The Fund is funded in equal parts by ratepayers (by an 

existing monthly surcharge) and California’s three investor-owned utility companies. Mr. 

Pomeroy added that PG&E is still in bankruptcy and not yet an official member of the Fund. 

PG&E’s participation will bring the Fund’s value up to $21 billion in protection for wildfire 

losses. 

With respect to earthquake insurance, Mr. Pomeroy reported that the market was relatively flat 

(growing about 6,700 policies per year) until CEA introduced new product options in 2016, 

which brought the average growth rate close to 60,000 a year between 2016 and 2019. Since 

2016, CEA earthquake policies have grown around 60,000 policies a year, which is a ten-fold 

increase over the past four years compared to the previous decade. Mr. Pomeroy attributed the 

increase to better products, more effective outreach and greater awareness (resulting from 

educating Californians about the risk and the need to be insured). However, over 90 percent of 

California homes remain uninsured.

Mr. Pomeroy explained that California holds two-thirds of the nation’s earthquake risk, and has 

been working on mitigation efforts and understanding vulnerabilities that different types of 

homes present. CEA’s grant program focuses on homes with “cripple walls” which were 

prominent prior to World War II up to 1980. These homes have crawl spaces and sit on vertical 

studs, so when the ground shakes, the house will easily fall off the foundation. Mr. Pomeroy 

explained that fixing this problem is easily fixed by sending a contractor into the house’s crawl 

space to install braces and bolts and wrap everything in plywood. This ties the home to the 

foundation and dramatically lowers the risk that the house will collapse. CEA’s Brace & Bolt 

program began in 2014 and has provided grants to retrofit 11,000 homes. Mr. Pomeroy added 

that there are over one million homes in California that require this type of retrofitting, and there 

are also other types of houses with different vulnerabilities. 

Mr. Pomeroy explained that a CEA policy is not required to receive a grant under the program, 

however CEA policyholders who complete the retrofit receive a 25 percent discount on their 

earthquake premiums. The Program therefore helps reduce risk while providing financial 

incentives for CEA policyholders. He added that CEA has partnered with FEMA to receive 

approximately $5 million a year in loss mitigation funding, which would have allowed CEA to 

provide grants for 4,400 homes in 2020 (noting that COVID-19 prevented this goal from being 

met). 
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Mr. Pomeroy emphasized that state-funded grants for retrofitting are considered federally 

taxable, although federally-funded grants are tax-exempt. CEA formed a coalition with other 

states providing funding to advocate for the Catastrophe Loss Mitigation Incentive and Tax 

Parity Act” (H.R. 5495) which would make state-funded mitigation grants non-taxable. Mr. 

Pomeroy noted that the legislation is bi-partisan and has co-sponsors from five states, and they 

are hoping to attach it to a larger piece of legislation. He added that they have received letters of 

support from the NAIC, NCOIL, and the U.S. Chamber of Commerce. Copies of the legislation 

and letters of support were provided to Committee members following the meeting. Mr. 

Pomeroy said that CEA is considering ways to make its grant program more narrowly-focused 

for low-income communities who need help the most, and emphasized that these individuals 

should not have to report the grant as income on the federal taxes.

Mr. Pomeroy explained that CEA does not have a government backstop, and if California passed 

legislation to create a small backstop, CEA would be able to reduce its spending on reinsurance. 

He proposed that this spending could be redirected to mitigation and accelerate CEA’s efforts to 

further minimize the protection gap.

Ms. Bach asked what type of support CEA needed on HR 5495. Mr. Pomeroy suggested it 

would be beneficial for FACI to go on the record in expressing support for the bill (if possible).

He added that individuals could also help by contacting their representatives and requesting that 

they co-sponsor the bill.

Mr. Andersen asked why the California Wildlife Fund was added to CEA’s responsibilities, and 

whether it was due to CEA’s outreach and mitigation activities. Mr. Pomeroy responded that

governor and legislators were working on creating a fund, and they reached out to CEA to ask if 

CEA would have the ability to administer the fund, because another entity with CEA’s 

experience did not exist in California. 

Mr. Heller noted that within CEA’s proposed funding tower to add funding for mitigation (a 

topic which had been discussed in greater depth on the subcommittee’s call), the industry 

assessment layer goes down over time which a property/casualty policy assessment was added as 

a layer. He asked whether CEA has considered adding/increasing an industry assessment layer 

instead to shift the burden from policyholders. Mr. Pomeroy responded that CEA’s capital 

structure (which includes capital, reinsurance, policyholder surcharges, and industry 

assessments) are dictated by California statute. The statute was designed for the industry 

assessment layer to roll off, since this is an attractive feature for insurer participation. Mr. 

Pomeroy suggested that a proposal to freeze or increase this roll-off would be met with 

overwhelming resistance from participating insurers and be difficult to accomplish through by 

the California Legislature. A two-thirds majority vote of the legislature would be needed 

because the potential assessment would be considered a tax, although Mr. Pomeroy noted that 

the probability of an assessment would be less than one-half of 1 percent, and would average 

about $1 a month for the average auto or home owner. Mr. Pomeroy added that he wants to keep 

this alive as a possible concept, since it is a way to provide actual support for mitigation work 

and start lowering risk in a proactive way.
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Presentation by David Maurstad, FEMA Deputy Associate Administrator for Insurance and 

Mitigation and Senior Executive of the National Flood Insurance Program

Chairman Glaser introduced David Maurstad, FEMA Deputy Associate Administrator for 

Insurance and Mitigation and Senior Executive of the National Flood Insurance Program (NFIP). 

The NFIP is the largest single peril insurance operation in the world, providing more than $1.3 

trillion in flood coverage to more than 5 million U.S. policyholders. Mr. Maurstad’s presentation 

was on FEMA’s Building Resilient Infrastructure and Communities Initiative (BRIC), which 

focuses on mitigation through public-private partnerships that reduce physical and financial risks

for communities across the United States. BRIC’s program principles include supporting 

communities through capability and capacity building, encouraging and enabling innovation, 

promoting partnerships and enabling large projects, and maintaining flexibility and providing 

consistency. Chairman Glaser added that FEMA was a member of the working group that 

developed the National Mitigation Investment Strategy.

Mr. Maurstad explained that FEMA has had two aspirational “moonshot” goals over the past two 

years: doubling the number of properties covered by flood insurance (either through the NFIP or 

private insurance) and increasing the investment in mitigation by a factor of four. 

Mr. Maurstad described the National Mitigation Investment Strategy (Investment Strategy), a 

multi-federal agency effort led by FEMA to create a single national strategy for the whole 

community to more effectively and efficiently advance the practice of mitigation investment,

increase the nation's resilience to natural hazards, and build a culture of preparedness that will 

reduce disaster suffering. The Investment Strategy includes three goals which frame the initial 

steps needed to more effectively advance the practice of mitigation investment. The first goal is 

to demonstrate how mitigation investments reduce risk. In doing this, the whole community 

builds a shared understanding of mitigation investment and values, which saves lives, protects 

homes, neighborhoods, ecosystems, and critical lifelines. The second goal is to coordinate 

mitigation investments in the pursuit of reducing risk. Shared risk information, reinforced 

strategies for risk reduction, easier access to funding helps the whole community justify 

investments and choose the most cost-effective and reasonable actions. The third goal is to 

standardize the practice of mitigation, where the whole community will factor mitigation into all 

investment decisions. This will involve partners promoting financial products that will protect 

investments from risk and consider mitigation standard professional practice needed to safeguard 

citizens, critical lifelines, services, and national safety and security. Mr. Maurstad emphasized 

that the Investment Strategy requires maximum participation from the whole community and 

consistent collaboration between the federal government and non-federal partners. He added that 

the Investment Strategy was intentionally written in plain language so it can be understood and 

used by the whole community to catalyze increased innovation and investment.

Mr. Maurstad said that implementation of the Investment Strategy will begin this year, and will 

involve: working to share the intent, value, and results of the investment strategy; integrating the 

strategy into existing policy, programs, and doctrine; reviewing proposed programs and policy 

for alignment; demonstrating and validating how the strategy is actionable; and measuring the 

success of the strategy.
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Mr. Maurstad then discussed BRIC, a new source of FEMA’s mitigation investment funding that 

will be rolled out later in 2020. BRIC is a pre-disaster mitigation grant program that will replace 

FEMA’s previous main mitigation program, the Hazard Mitigation Grant Program (PDM, a postdisaster grant program). BRIC was created under Section 1234 of the Disaster Recovery Reform 

Act, which amended Section 203 of the Stafford Act to ensure an annual funding stream for predisaster mitigation projects. The amendment allows FEMA to set aside 6 percent of the 

estimated amount of disaster assistance for pre-disaster hazard mitigation projects. In 2020, this 

amounted to $250 million (which was allocated to the existing Hazard Mitigation Grant 

Program, but will be allocated to BRIC in the future).

Mr. Maurstad explained that states and territories that have had a major disaster declaration 

under the Stafford Act in the 7 years preceding the start of the annual application period are 

eligible to apply for federal assistance under BRIC. In addition, tribal governments that have 

had a major disaster declaration in the past 7 years, or those which are entirely or partially 

located in a state that has had a declaration are also eligible to apply as applicants (or as subapplicants through the states). He noted that all states and territories received disaster 

declarations as a result of COVID-19, and therefore all states, territories, and tribal governments 

will be eligible for BRIC assistance for the next 7 years. BRIC will also promote federal cost 

sharing of up to 75 percent (or 90 percent for small impoverished communities).

Mr. Maurstad said that BRIC allocates funding in three ways: (1) an allocation to each eligible 

state and territory for mitigation capability-and capacity-building activities and mitigations 

projects; (2) a set-aside for tribal government applicants; and (3) competitively awarded grants 

for eligible applicants conducting mitigation projects. BRIC grants can be used for non-financial 

technical assistance, capability- and capacity-building activities, mitigation projects, and 

management costs.

Mr. Maurstad said that BRIC was developed through substantial engagement with the public, 

government officials, private, and non-profit sectors. FEMA received more than 70 letters and 

5000 comments in response to this outreach. FEA is also planning additional stakeholder 

engagement over the summer to educate stakeholders on all aspects and details of the BRIC 

program and provide networking and relationship-building opportunities.

Mr. Maurstad then discussed the differences between BRIC and PDM:

 BRIC projects will be selected based on clear program priorities, including lifeline and 

infrastructure projects, building codes, shared responsibility and partnership, and 

innovative projects that reduce risk. 

 BRIC will expand eligible capability- and capacity-building activities, including building 

code adoption and enforcement efforts and establishing partnerships.

 BRIC adds increased flexibility by reducing limitations or caps on number of applications 

and funds per state, and permits funding of project development costs incurred pre-award.

 BRIC will streamline the application process; and provide FEMA regional offices the 

authority to approve extensions based on simple, consistent checklists.
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 BRIC will introduce phased projects with milestones to improve implementation 

outcomes.

Mr. Maurstad stated that BRIC supports broader adoption of updated building codes, which 

allows communities to modernize and enforce more resilient building codes. BRIC projects 

must comply with the latest two published consensus codes (2015 or 2018). Communities that 

have not updated their codes or are not enforcing their codes due to lack of resources are eligible 

to receive funding for building code activities (which PDM did not allow). Eligible products 

include support for establishing, adopting, and enforcing codes and standards.

Mr. Maurstad described the alignment between BRIC and the Investment Strategy. 

Recommendation 3.1 of the strategy encourages communities to adopt and enforce up-to-date 

building codes (which is a grant opportunity under BRIC). Recommendation 3.2 focuses on 

strengthening lifelines (critical infrastructure including energy, food water and shelter, medical, 

safety and security, communications, transportation, and hazardous materials). Mr. Maurstad 

said this recommendation is intended to support programs like BRIC in developing better 

protection and standards with respect to systems and interdependencies between systems. Mr. 

Maurstad concluded that both the Investment strategy and BRIC are poised to be “generational 

game changers” in efforts to increase mitigation investments and reduce disaster suffering at the 

individual and community levels.

Ms. Bach asked whether BRIC covers all hazards and whether the grants are community or 

individual grants. Mr. Maurstad confirmed that the program covers all hazards and added that 

FEMA’s Flood Mitigation Assistance Grant Program is the agency’s only hazard-specific 

program. BRIC only provides community grants, however communities can provide assistance 

to individuals (e.g., a neighborhood sponsoring a neighborhood buyout program).

Ms. Bach asked relationships between FEMA and state agencies. Mr. Maurstad responded states 

are the applicants under BRIC, and can apply on behalf of state hazard mitigation programs or 

projects at a community/regional level. He added that CEA’s use of FEMA mitigation grant 

funds is in line with how FEMA would like to move forward with BRIC, and FEMA further 

hopes to expand efforts at the community level for local govern, non-profits, and the private 

sector to work together and combine resources to buy down risk.. FEMA is also hopeful that 

BRIC will encourage larger grant programs and infrastructure mitigation activities through 

partnership.

Ms. Bach asked whether private insurers are required to provide a policyholder reward, credit, or 

preferred risk category for completion of a mitigation project, or if this effort is within the 

FEMA workstream. Mr. Maurstad responded that the NFIP is doing work to encourage property 

holders to mitigate risk and positively impact their insurance rates.

Mr. Heller asked if FEMA has policy preferences for pre-disaster projects, i.e., best practices for 

how a project would be accomplished (e.g., use of a managed retreat or levies in a sea rise zone)

or if the agency is open to options chosen at the state or local level. Mr. Maurstad responded that 

FEMA is developing new best practices to provide guidance on successful past projects, and if 
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the project is applicable to the local mitigation plan, FEMA will be able to provide information 

to consider as a project, understand ways in which the project was successful, understand the 

partnerships, and learn what types of innovation were leveraged. He added that FEMA has 

broad categories of priorities, however projects that will buy down risk in the long term and are 

cost effective will be considered. 

Mr. Heller asked if FEMA has a preference for projects involving conceptual planning versus 

design or build phases. Mr. Maurstad stated that the BRIC notice of funding opportunity was 

written at a high-level to allow FEMA the ability to adapt without having to go through a 

regulatory process. He added that FEMA will learn from the first years of the program, and will 

continue to improve the program to meet the needs of communities and spur an actual movement 

to obtain whole community buy-in. Mr. Maurstad concluded by emphasizing that there needs to 

be a commitment to take steps now to reduce impacts and disaster suffering in the future.

COVID-19 Subcommittee Discussion

Chairman Glaser reiterated that the purpose of the COVID-19 subcommittee is to focus on how 

the insurance industry can play a role in creating a society that is better educated, protected, and 

prepared for managing future pandemics. The subcommittee will gather best practices from the 

FACI membership and provide FIO with concrete advice and recommendations on the role of the 

insurance industry in better managing future pandemic risk. Chairman Glaser reminded members 

that they received an email the previous week from Ms. Ward outlining proposed subcommittee 

workstreams. He said that in response, the subcommittee’s co-chairs received feedback 

suggesting the work be streamlined and the number of workstreams reduced. Accordingly, the 

subcommittee will create working groups that will focus on specific issues and report to the 

broader subcommittee. In turn, the subcommittee will decide whether an issue should be brought 

to the full FACI.

Ms. Ward added that a number of regulators and supervisors have adopted measures to provide 

flexibility to insurers to maintain safety and soundness and deliver essential services. She added 

that a number of companies have adopted measures to support the fair treatment of customers, 

including clear disclosure and efficient claims processing in light of COVID-19. Ms. Ward s 

orders issued by governors and other authorities helped professionals maintain income during the 

crisis while expanding access to care and critical services. However, she added that these orders

created some confusion, as businesses and individuals attempted to comply with regulations, and 

the patchwork resulted in uneven distribution of aid and potentially created winners and losers. 

Ms. Ward said the COVID-19 subcommittee will seek to use its risk management experience to 

provide FIO with clear advice on what society can do to better prepare for future pandemics and 

operate more effectively (e.g., how the industry might work more fluidly with state and federal 

regulators to address COVID-related concerns). The subcommittee will have two workstreams

to address and advise on potential insurance solutions to improve the country’s protection and 

preparedness for future pandemic-like events. Ms. Ward announced that the first workstream

would be co-chaired by Chairman Glaser and Mr. Crabb, and it will consider if there should be a 

federal program and/or a public-private partnership tailored to help businesses to meet the 
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financial challenges from future pandemics. Ms. Ward stated that she will chair the second 

workstream, which will consider the problems that have surfaced in the COVID-19 pandemic 

and how the insurance industry can help address them. The second workstream will also review 

changes made to facilitate the delivery of essential insurance services that may make sense for 

ongoing efficiency and preparedness for future disruptions. The second workstream will also 

consider what needs to be done to better prepare for a future pandemic (e.g., digital engagement), 

what innovations should be considered to address ongoing issues and prepare for the next 

pandemic-like event, and what additional products and protections could be offered by the 

industry to better serve the country in future pandemics.

Chairman Glaser named the members of each workstream.

Workstream 1: Greg Crabb, Dan Glaser, Eric Andersen, Birny Birnbaum, Jim 

Kelleher, Sean McGovern, Kent Sullivan and Mark Thresher.

Workstream 2: Betsy Ward, Amy Bach, Jillian Froment, Rob Falzon, George Keiser, 

Peter Kochenburger, Doug Heller and Quincy Branch.

Chairman Glaser commented that the workstreams will likely have one meeting per month.

Chairman Glaser opened the floor for member discussion.

Mr. Thresher voiced his concern that he does not want the subcommittee to begin its work with a

negative assumption that the insurance industry was inefficient and/or ineffective in responding 

to COVID-19. Ms. Bach expressed the opinion that she did not take away that messaging from 

the description of the workstreams but agreed that the subcommittee should avoid qualitative 

statements and judgements. She stated that the NAIC and state data call was one of the most 

important tasks required for each of the workstreams to make informed recommendations, 

because this would allow discussion based on facts and gathered data rather than 

overgeneralizations about the industry response. Mr. Thresher clarified that understanding the 

current impact is important, but also noted that preparing for the future is necessary because 

insurance companies will want to be paid for any new risks they are assuming in the future. 

Member Heller suggested that the subcommittee’s activities should not be entirely forwardlooking. He expressed interest in understanding how underserved communities have been 

treated during COVID-19 and whether that treatment has been different than other communities 

during COVID-19. He noted that FIO has a statutory responsibility to investigate and 

understand how underserved communities are affected by activities in the insurance sector, and 

expressed that this period should be examined to learn whether there were issues that should be 

addressed in future pandemics. Mr. Crabb agreed with Mr. Heller suggestion to determine how 

economic aid can be better directed to the right groups in the future. He added that risk 

management, and potentially insurance, are relevant components to determine a better way to 

allocate resources.

Mr. Crabb suggested that the subcommittee assess the magnitude of COVID-19’s financial 

impact on society, because understanding the cost will influence solutions. Chairman Glaser 
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agreed but suggested this may be difficult given the ongoing financial impact to society; and 

added it could be many months or several years until the actual impact is known. Mr. Crabb 

responded that it might be possible for the subcommittee to perform high-level math about the 

amount of government aid that has gone to businesses as a possible initial methodology to 

determining a financial impact. 

Mr. Keiser recommended that the subcommittee’s examination of fiscal impact should focus as 

much as possible on the impact to the insurance industry, specifically the shift in investments 

based on the yield available in the bond market. Mr. Keiser further recommended examining the 

risk exposure to the insurance industry’s reserves. Chairman Glaser agreed but also suggested 

avoiding evaluating the portfolios of insurers and shifts over time, which is a regulatory 

responsibility.

Member Birnbaum recommended that the subcommittee should also examine the impact of 

COVID-19 on insurance consumers/policyholders. He stated that although some lines of 

business have experienced significant (or even catastrophic) losses, other lines have had risk 

exposure has decrease significantly. He stated that in the absence of regulatory action, this could

result in windfall profits for insurers. Mr. Birnbaum added that data collection is a key issue, 

because although business interruption insurance has been discussed some, there has not been 

discussion about data collection for other lines of business, such as personal and commercial 

auto and business owner insurance. Mr. Birnbaum concluded that this data is very important in 

making informed judgments. Chairman Glaser questioned whether FACI has the authority to 

obtain this data from multiple companies and data sources, and asked Mr. Birnbaum for 

suggestions on obtaining this data. Mr. Birnbaum responded that FIO has the authority to collect 

data if state regulators are not doing so, and FIO has also demonstrated an ability to cooperate 

with state insurance regulators to get the necessary data. He added that FIO has an ongoing 

mandate to monitor the availability of insurance underserved communities. Mr. Birnbaum added 

that he does not believe state regulators have the tools and data available to monitor the 

aftermath of the pandemic, and FIO can therefore contribute based on its mandate to monitor 

underserved communities and modernize insurance regulation. Chairman Glaser agreed with the 

emphasis of looking at the impact on policyholders as well as the impact on the insurance 

industry.

Chairman Glaser suggested that the subcommittee’s significant focus should be forward-looking, 

and he expressed the opinion that the insurance industry will not be able to provide broad-scale 

pandemic insurance, noting that the global industry has $800 billion in policyholder surplus 

however the potential for business interruption losses is trillions of dollars. As a result, 

Chairman Glaser suggested that a public-private partnership is important for the next pandemic, 

which will lead to a more resilient society and ensure policyholders and affected parties receive

money faster. Chairman Glaser suggested that the subcommittee could bring in experts to 

explain why the risk is not broadly insurable and hopefully obtain broad agreement on this 

statement from the subcommittee. He suggested that the subcommittee could also bring in 

experts that would be able to evaluate the potential options for public-private partnerships that 

might be useful in the United States for the next pandemic.
13

Chairman Glaser suggested that a large part of the first workstream’s focus could be evaluating 

the different approaches to a public-private partnership and make recommendations on how to 

best solve for the next pandemic.

Mr. Kelleher responded that many believe that pandemics are completely uninsurable, so there 

needs to be a broad perspective taken. He noted that while there might need to be a government 

program that is serviced by the industry, it is important to take a broad view in discussing the 

future possible solutions.

Mr. Crabb said that based on member feedback, the subcommittee needs to determine the scope 

of its work, noting that different suggestions for areas of focus were offered and each would be 

its own independent task. 

Mr. Birnbaum expressed support for Workstream 1. In response to Mr. Kelleher’s comment on 

uninsurability, he expressed the opinion that it is uninsurable because business interruption 

occurs as a result of government decisions, and it is not possible to predict government action. 

Ms. Bach added that the civil authority language in almost every business interruption policy is 

limited to four weeks/30 days, which creates a starting point of what is “essential coverage” that 

the industry can manage.

Mr. McGovern suggested that the individual workstreams will need to do more work to define 

scope. With respect to Workstream 1, he noted there is a lot of ongoing work that the 

workstream can pick up and help FIO navigate in its role of advising FIO. He suggested that 

expressed concern around the lack of definition of Work Stream Number 2.

Chairman Glaser noted that Ms. Baldwin will reach out to the subcommittee’s members to 

schedule calls for each workstream.

Update from Subcommittee on FIO’s International Work

Mr. Falzon noted that the International Subcommittee decided earlier in 2020 to focus on access 

to markets and ensuring a fair, level playing field. The subcommittee also decided to continue 

monitoring developments at the IAIS. The subcommittee intends to create valuable resources 

that can be used in trade negotiation and representing the U.S. insurance industry. Mr. Falzon 

reported that the subcommittee has identified nine areas it considers to the most important issues 

facing the industry. These issues are:

1. Restrictions on Foreign Direct Investment (FDI) and Forms of Establishment

2. Restrictions on Management Control / Key Foreign Personnel / Other Corporate 

Governance Requirements

3. Cross Border Reinsurance Restrictions

4. Data/IT Localization and Digital Protectionism

5. Discriminatory Screening and Approval Mechanisms, and Other Regulatory Trade 

Barriers

6. Non-Regulatory Barriers

7. Anti-Competitive Advantages of State-Owned Insurers and Reinsurers
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8. Capital Outflow Restrictions

9. Implementation, Enforcement and Contract Sanctity

Mr. Falzon reported that the subcommittee intends to produce three deliverables: (1) a narrative 

around the nine issues to explain the issues more fully; (2) an annex containing a matrix of the 

issues and the status of compliance with these issues in countries where the U.S. insurance 

industry has the most engagement, and (3) a series of recommendations/guidance to FACI that 

can be used in trade negotiation, implementation, and achieving further progress across the nine 

issues in different markets. The subcommittee has created a working group that holds interim 

meetings to make progress on these tasks, and the full subcommittee will hold meetings on a 

monthly basis through December, when the subcommittee will provide FACI with a more 

complete report. Mr. Falzon also noted that APCIA and ACLI have assisted by providing 

resources to the subcommittee.

Mr. Falzon stated that the Subcommittee discussed the impact of COVID on the IAIS related to 

the first year of the ICS monitoring period. Members expressed some concern about conducting 

data collection and whether appropriate modification has been made to capture balance sheets as 

of the end of March 2020 and capture the market stress associated with the COVID-19 crisis. He 

added that although the IAIS has adjusted dates to provide some relief, the supervisory colleges 

will meet before data becomes available, and regulators will not be able to get together to look at 

the data due to social distancing restrictions. Mr. Falzon suggested that this data is probably 

going to be among the most important to be gathered during the monitoring period. Mr. Falzon 

requested that FACI ask Treasury to inquire as to how the IAIS will modify the process for the 

monitoring period in order to be able to study, share, and react to the data that is being collected 

this year. Mr. Falzon also suggested extending the monitoring period as an alternative.

Mr. Birnbaum expressed support for the subcommittee’s workplan and Mr. Falzon’s 

recommendation regarding IAIS data collection.

Mr. Falzon noted that due to the departure of Tom Leonardi from the FACI, the International 

Subcommittee has an opening for a Co-Chair if any members are interested.

Update from the Subcommittee on the Availability of Insurance Products

Mr. Birnbaum and Mr. Keiser, co-chairs of the subcommittee, provided an update on the 

subcommittee’s activities.

Mr. Birnbaum read statements by Kirt Walker, Chief Executive Officer of Nationwide, and Jack 

Salzwedel, CEO of American Family Insurance, and Supreme Court Justice Anthony Kennedy 

regarding the death of George Floyd, inherent bias, systemic racism, and disparate impact. Mr. 

Birnbaum urged explicit recognition of disparate impact/proxy discrimination as unfair 

discrimination as an action needed by the insurance industry. Mr. Birnbaum also emphasized the 

importance of supporting efforts to identify and minimize disparate impact or unintentional 

proxy discrimination.
15

Mr. Birnbaum reported that the subcommittee considered two draft recommendations:

 FACI recommends that FIO support disparate impact as unfair discrimination against 

protected classes in residential property insurance under the Fair Housing Act, as 

currently recognized by the Department of Housing and Urban Development, and oppose 

the proposed revisions to HUD's disparate impact rule.

 FACI recommends that FIO encourage states to modernize insurance regulation by 

explicit recognition of disparate impact as unfair discrimination against protected classes 

and further encourage states to develop statutory or regulatory guidance for insurers to 

identify and minimize disparate impact against protected classes, and for safe harbors for 

insurers to demonstrate compliance.

Mr. Birnbaum stated that proponents of the recommendations provided examples about how 

disparate impact analysis complaints have led to more accurate cost-based pricing and greater 

economic development opportunities in communities that have historically been underserved and 

whose economic development was hindered by historical unfair discrimination. Mr. Birnbaum 

also expressed the opinion that APCIA did not provide examples of how efforts to minimize 

disparate impact has forced insurers to depart from cost-based pricing. Mr. Birnbaum stated that 

proponents of the recommendations also noted an increase in potential for proxy discrimination 

against minority communities by virtue of algorithms based on third-party data.

Mr. Birnbaum suggested that insurers and regulators would want to know if vendors have taken 

steps to identify and minimize proxy discrimination against minority communities, but he 

alleged that the proposed HUD rule would prohibit such an inquiry and would also effectively 

eliminate disparate impact claims. Mr. Birnbaum stated his opinion that there is an urgent need 

to modernize state insurance regulations to address these issues. 

Mr. Birnbaum reported that the subcommittee voted against adopting the two proposed 

recommendations by a margin of 6-4. He requested that the topic be discussed by the full FACI.

Mr. Keiser stated that his concern about the recommendations was that the proposed language 

was too general and needed to be slightly refined/further developed. He expressed his opinion 

that there is not disagreement that disparate impact occurs and should be correct, nor a vote in 

favor of the HUD position on disparate impact, but rather a desire to better understand the 

recommendation and ensure that the language recommended would not create a more difficult 

situation. that he believed that the language proposed in the recommendations was too general 

and needed refinement. Mr. Keiser said it was important to ensure the language was not limiting 

industry’s ability to generate underwriting algorithms that are creative and valid, and suggested 

that a company could attempt a unique algorithm that would be judged as disparate (despite 

having a valid underwriting basis) because there would be a differential impact on any group 

(not just minorities). Mr. Keiser expressed his belief that the topic is important enough that the 

full FACI should be fully informed on the issue and therefore have a comfort level with its vote. 
16

Mr. Thresher commented that Nationwide believes strongly in this issue and its treatment of 

people across the country. He agreed with Mr. Keiser’s comment that the language could be 

narrowed to a point where it would be able to obtain the whole subcommittee’s support.

Mr. Birnbaum asked Chairman Glaser for guidance on whether FACI should hold an extended 

discussion on the topic at the meeting. He added that he believes the issue is time sensitive 

because the HUD rule is in the process of being finalized, and FACI will need to take action if 

FIO is going to provide input. Mr. Birnbaum also concurred with Mr. Keiser that several 

subcommittee members opposed the recommendation on the basis of the language being too 

broad, but added he has not received specific proposals to modify the language.

Chairman Glaser commented that this is a complex topic where people started with different 

views, and suggested that a process of iteration could be helpful. He added that an extended 

discussion would not be possible because there was insufficient time remaining in to educate the 

full Committee. Chairman Glaser also reviewed the established process for FACI to consider 

issues. He stated that subcommittees are responsible for performing groundwork and having 

detailed debates to develop a consensus on what the entire FACI should consider. At that point, 

FACI will consider the report from the subcommittee and determine whether or not a 

recommendation should be made to FIO. Chairman Glaser suggested that the subcommittee, if 

so inclined, should revisit the matter to determine if compromises and iterations can be reached 

that will result in a majority of the subcommittee’s support. He added that if the subcommittee 

can reach a majority position on language or a recommendation, the full Committee could preread the recommendation and potentially convene an additional meeting to vote on a 

recommendation to FIO.

Chairman Glaser added that FACI also requested that the subcommittee focus on LTCI, and the 

subcommittee will be able to review the federal interagency report which will soon be released, 

and can present on this matter at the September meeting.

Mr. Heller stated that he expressed support for the proposed recommendations, but proposed that 

the FACI may want to consider whether there is a threshold agreement that the subcommittee 

should be examining challenging practices that lead to disparate impact, as this might help 

narrow the scope of the subcommittee’s discussion. Chairman Glaser responded that insufficient 

time remained in the meeting to hold an informed threshold vote. Mr. Kelleher agreed, based on 

his review of the subcommittee’s background materials, that the material is complex and will 

take additional time to review and formulate an opinion.

Mr. Birnbaum provided clarification regarding the topic of disparate impact as regarding whether 

state insurance regulators and the industry have an obligation to take steps to avoid unintentional 

discrimination against protected classes, in addition to intentional discrimination (which is 

already fully-supported and a requirement). Mr. Birnbaum expressed agreement with Mr. 

Heller’s statement that a threshold determination is required. Chairman Glaser reiterated that 

this should be discussed at the subcommittee level, and under FACI’s governance structure 

would need subcommittee support to be reviewed by the full Committee. 
17

Mr. Kochenburger expressed support for reviewing the matter at the subcommittee level to work 

on developing consensus language.

New Business and Closing Remarks

Chairman Glaser expressed his appreciation for everyone’s efforts on each of the subcommittees, 

and emphasized that in addition to benefitting FIO, these discussions are beneficial in informing 

each member on complex topics relevant to their day-to-day work.

Chairman Glaser announced that the next FACI meeting is scheduled for September 29, 2020, 

and the Availability Subcommittee would be provided the majority of time in the meeting to 

present its work. A determination will be made in approximately one month regarding whether 

the meeting will be held in-person or via teleconference. The International Subcommittee will 

be provided the opportunity to lead the year’s final meeting on December 3, 2020. At each of 

these meetings, the other subcommittees will also provide brief updates, similar to the format 

used in this meeting.

No new business was presented.

The meeting concluded by Chairman Glaser at 4:04 p.m.

I hereby certify these minutes of the June 4, 2020 Federal Advisory Committee on Insurance 

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

_____________________________

Dan Glaser

Chair