DEPARTMENT OF THE TREASURY 

FEDERAL INSURANCE OFFICE (FIO) 

FEDERAL ADVISORY COMMITTEE ON INSURANCE (FACI) 

MINUTES - 18 APRIL 2019 

The Federal Advisory Committee on Insurance (FACI) convened at 1:50 pm on 18 April 2019 in 

the Cash Room at the U.S. Department of the Treasury, 1500 Pennsylvania Ave. NW, 

Washington, D.C., 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 

BIRNY BIRNBAUM, Executive Director, Center for Economic Justice 

QUINCY BRANCH, Chief Executive Officer, Branch Benefits Consultants 

GREG CRABB, President & CEO, Amerisure 

JOHN FRANCHINI, Superintendent, New Mexico Office of Superintendent of Insurance* 

MARK GRIER, Vice Chairman, Prudential 

GEORGE KEISER, Representative, North Dakota House of Representatives 

JIM KELLEHER, Executive Vice President & Chief Legal Officer, Liberty Mutual 

SEAN MCGOVERN, General Counsel, AXA XL 

ANDREW STOLFI, Administrator, Oregon Division of Financial Regulation* 

CHRIS SWIFT, Chairman and CEO, The Hartford 

MARK THRESHER, Executive Vice President and Chief Financial Officer, Nationwide* 

*Present via teleconference

Also Present 

STEVEN SEITZ, Director, Federal Insurance Office (FIO) 

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

CRAIG PHILLIPS, Counselor to the Secretary, Treasury 

KIPP KRANBUHL, Acting Assistant Secretary, Financial Institutions, Treasury 

TYLER WILLIAMS, Deputy Assistant Secretary, Financial Institutions Policy, Treasury 

1 
Welcome and Introduction 

Chairman Glaser welcomed the public to the meeting and thanked the Federal Insurance Office 

(FIO) for its important work on the insurance industry and for working with Marsh to convene 

the meeting. 

Chairman Glaser thanked Treasury officials Kipp Kranbuhl, Acting Assistant Secretary for 

Financial Institutions, and Tyler Williams, Deputy Assistant Secretary for Financial Institutions, 

Policy, for attending the meeting and their continued support ofFACI. 

Chairman Glaser noted that this was Director Seitz's first meeting as FIO Director. 

Chairman Glaser welcomed members of the Committee and announced three new members: Eric 

Andersen, Co-President, Aon; Greg Crabb, President and CEO, Amerisure; and Andrew Stolfi, 

Administrator, Oregon Division of Financial Regulation. 

Chairman Glaser described F ACI as a forum for members to continue to openly share and debate 

critical issues, and noted that the Committee is tasked with thinking strategically about issues 

impacting their organizations and the clients they serve, and providing advice and feedback to 

FIO on the state of the insurance marketplace. 

Chairman Glaser announced that the Committee was revising its subcommittee structure to 

encourage an interactive forum of active dialogue between members and provide FIO with 

tangible feedback and recommendations on priority issues facing the industry. He noted that the 

industry is rapidly evolving, and having a diversity of views on important issues ensures the 

Committee's ability to provide substantive advice and recommendations to FIO for 

consideration. 

Chairman Glaser acknowledged the demands on the members' schedules and thanked the 

members for taking the time to attend the meeting, as well as devoting organizational resources 

to the Committee's work. He added that he looks forward to working with the Committee this 

year and complimented the depth of expertise among its members. 

Update on Federal Insurance Office Activities 

Director Seitz thanked the attendees as well as Chairman Glaser for his comments. He expressed 

excitement about the renewed opportunity for FACl's subcommittees to provide FIO with advice 

and recommendations related to the Office's priorities. 

In order to inform the Committee's discussion at the meeting, Director Seitz highlighted FIO's 

current work and provided suggestions on ways that F ACI could provide beneficial feedback. 

Beginning with FIO's domestic work, Director Seitz described a long-term care insurance 

interagency task force convened to develop policies that complement reforms at the state level. 

2 
 

The task force consists of representatives from: Treasury (including FIO), the Department of 

Health and Human Services, the IRS, the Department of Labor, and the Office of Management 

and Budget. The task force is holding regular meetings, has scheduled stakeholder feedback 

sessions, and expects to conclude its work later this year. 

The task force's work includes reviewing federal policy options identified in 2017 by the 

NAIC's Long-Term Care Innovations Subgroup, and considering other recommendations for 

federal policy and regulatory changes to improve access and consumer choice in long-term care 

insurance. Director Seitz recognized this issue as a top priority for the National Association of 

Insurance Commissioners (NAIC) leadership and states, as highlighted at the recent NAIC 

meeting in Orlando, Florida. 

Director Seitz next discussed the administration of the Terrorism Risk Insurance Program, which 

is currently set to expire on December 31, 2020. In preparation for the upcoming reauthorization 

discussion, FIO has engaged in stakeholder outreach to obtain views on the potential 

reauthorization of the Program and any reforms that could be enacted. 

Director Seitz stated that FIO anticipates the Advisory Committee on Risk-Sharing Mechanisms 

will meet soon to provide further analysis and recommendations in this area. He noted that 

although that the Advisory Committee on Risk-Sharing Mechanisms is a dedicated advisory 

committee forcing on the TRIP, FIO believes that F ACI can play an important role in this 

discussion, given its interest in public risk transfer. 

Director Seitz highlighted FIO's annual data calls and Program effectiveness reports produced 

under the 2015 Terrorism Risk Insurance Program Reauthorization Act. The 2019 data call is 

currently underway, and a report on the role of small insurers in the Program will be published 

by the end of June. He added that FIO's prior reports on this topic have established that the 

Program is working as intended by making terrorism risk insurance available and affordable. 

Director Seitz stated that FIO is also focusing on InsurTech, and noted that FIO has addressed 

insurance technology-related issues in its Annual Reports, F ACI meetings, and discussions with 

international policymakers. The Treasury Nonbank Financials, Fintech, and Innovation Report 

(published in July 2018) directly tasked FIO with further exploring InsurTech issues. Director 

Seitz elaborated that FIO is in the process of engaging with stakeholders on four broad topics 

related to InsurTech: 

1. Market overview, including: the availability of capital; and the tradeoffs between

building, buying, or partnering with startups.

2. Regulatory frameworks, including: the impact on innovation and consumers; sandboxes

and insurance accelerators; and regulators' ability to keep pace with technological

developments.

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3. Data management, including: big data; artificial intelligence (AI) in risk modeling and

underwriting; and effects on consumers.

4. New technologies and the future of insurance, including: how the use of new

technologies could transform the sector.

Director Seitz described FIO's involvement in mitigation and resilience efforts throughout the 

federal government, which not only attempt to reduce the likelihood of loss in the first place, but 

lessen the severity of losses after a natural catastrophe occurs. FIO participates in the Mitigation 

Framework Leadership Group, the coordinating structure that organizes mitigation efforts across 

the federal government. In May 2018, FIO, FEMA, and NOAA co-hosted a financial sector 

stakeholder session. The event resulted in several takeaways of actions the insurance sector 

needs to take: better highlight the return on investment for mitigation projects; increase the size 

and scale of investment opportunities to attract investors; and provide better data, information, 

and knowledge on U.S. mitigation efforts. 

Director Seitz said that FIO has also advised FEMA on risk transfer to the private sector. In 

2017, FEMA negotiated a reinsurance agreement that paid over $1 billion to the National Flood 

Insurance Program (NFIP) to help cover the cost of claims filed by the victims of Hurricane 

Harvey. He added that FEMA purchased additional reinsurance and catastrophe bonds in 2018 

and 2019 to transfer more flood risk to the private sector. 

Director Seitz then discussed FIO's international work. He first described Treasury's and the 

United States Trade Representative's (USTR) efforts to continue to promote the U.S. regulatory 

system abroad and enhance opportunities for the U.S. insurance industry through FIO's authority 

to enter covered agreements. In 2017, the United States started the U.S.-EU Covered 

Agreement, which resolved several long-standing prudential issues affecting the activities of 

U.S. and European insurers and reinsurers that operate on both sides of the Atlantic. 

Director Seitz stated that this mechanism allows for agreement on a path forward that advances 

the U.S. process to reduce the collateral reform efforts at the NAIC and resolves difficult issues 

faced by multi-national insurers as a result of the EU approach to group supervision under 

Solvency II. 

Director Seitz added that Treasury and USTR signed a separate agreement with the United 

Kingdom in December 2018. The agreement essentially replicates the terms of the U.S.-EU 

agreement, and will assist in providing regulatory certainty and market continuity as the United 

Kingdom prepares to leave the European Union. 

Director Seitz described the current state of activities related to these agreements. The U.S. 

states, through the NAIC, have been working to amend the Credit for Reinsurance Model Law 

and Regulation as a basis for the states to conform their laws to the commitments made in the 

U.S.-EU covered agreement. FIO has been monitoring this process and engaging with state

regulatory colleagues and the NAIC on this work.

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FIO is also closely following the NAIC's ongoing efforts to develop the group capital 

calculation, which is currently in field testing. Director Seitz encouraged the NAIC to continue 

its work in this area. 

Director Seitz described the April 2019 joint committee meeting between the EU and the United 

States to discuss implementation of the agreement. The meeting was attended by the President 

of the NAIC, Eric Cioppa, as well as the incoming president, Ray Farmer. Director Seitz 

reported that, at the meeting, both sides reaffirmed their commitment to the timely and full 

implementation of the agreement. 

Director Seitz stated that both sides of the U.S.-UK covered agreement have completed their 

internal processes, and the United States is maintaining close contact with its UK counterparts on 

next steps. He said that by virtue of this agreement, insurers and reinsurers from both 

jurisdictions can have the same benefits they would have if the UK had remained within the EU. 

Director Seitz added that FIO will be starting a collaborative project with the UK to increase 

mutual understanding and enhance cooperation between the United States and the UK. The 

project is modeled after the EU-U.S. Insurance Project. 

Director Seitz described FIO's work to develop a mutually-beneficial working relationship with 

the Indian Insurance and Regulatory Development Authority (IRDAI) as an example ofFIO's 

work to strengthen bilateral relationships with certain insurance jurisdictions. FIO recently held 

a webinar with Indian colleagues on risk-based financial supervision, which is one ofIRDAI's 

key priorities. This webinar is expected to be the first in a series of engagements with India, and 

Director Seitz welcomed F ACI member input on these dialogues. 

Director Seitz provided updates on the EU-U.S. Insurance Project, which FIO works on with 

state regulators and the NAIC, EIOPA, the European Commission, and member states of the EU. 

Throughout 2018, the project looked at topics such as cyber risk, big data, and cross-border intragroup transactions. The project published a series of papers on these topics at the end of 2018 

and held a public forum after the International Association oflnsurance Supervisors (IAIS) 

meeting in Luxembourg. In 2019, the project will continue to review big data and cyber risk, 

with a focus on both the EU and U.S. cyber insurance market as well as each market's approach 

to cybersecurity within the insurance sector. 

Director Seitz next reviewed a number of the issues currently being addressed by the IAIS. He 

identified several critical issues: the development of the International Capital Standard (ICS); the 

holistic framework (also known as the activities-based approach for assessing systemic risk); and 

completion of the Insurance Core Principles (ICPs) and ComFrame. He added that the IAIS is 

aiming to achieve milestones on each of these projects at its Annual General Meeting in Abu 

Dhabi in November 2019. 

5 
At last year's Annual General Meeting, the IAIS membership approved a new governance 

structure. As a result, FIO and the United States now have a permanent seat on the Executive 

Committee for the first time. By statute, FIO represents the United States at the IAIS, and in this 

role, Director Seitz said that the office is actively engaged with its state and federal colleagues as 

part of "Team USA." 

Director Seitz highlighted FIO's participation in several key projects that FIO is currently 

working on at the IAIS, and noted that a complete description of FIO's participation on multiple 

IAIS committees, working groups, and task forces at the IAIS is provided in FIO's annual report 

to Congress. 

With respect to the ICS, FIO is continuing its work to advocate that the IAIS begin to focus more 

on comparability of outcomes with the ICS in order to enhance compatibility with the U.S. 

domestic framework (including the NAIC's work on the group capital calculation and the 

Federal Reserve's work on the Building Block Approach). 

Director Seitz said that FIO is also advocating for an ICS that is appropriately designed so that 

U.S. insurers can continue to offer long-term savings and protection products that are critical to 

Americans' financial security. He noted that many U.S. insurers are active around the world in 

places where some version of the ICS could be adopted. 

Director Seitz said that FIO is continuing to push for the IAIS to better develop the parameters of 

the work that will be conducted during the monitoring period of 2020 to 2024. In particular, he 

said there are a number of outstanding ICS design and calibration issues that are still unresolved, 

and emphasized that some level of field testing, analysis, and participation must occur by 

stakeholders, supervisors, and the industry. 

Director Seitz concluded his discussion of the ICS by noting that FIO is monitoring the Federal 

Reserve's implementation of the Building Block Approach for its supervised entities, and the 

NAIC's work on the group capital calculation. He identified this domestic work as critical to the 

United States' advocacy at the IAIS. 

Director Seitz summarized FIO's efforts on the work to shift towards an activities-based 

approach (holistic framework) to assess potential systemic risk. This approach focuses on 

insurance activities and products rather than individual insurance entities. Director Seitz said 

that Treasury believes entity-based evaluations at the IAIS are not the best approach for 

mitigating risk in the insurance sector, and FIO supports the IAIS work to develop a credible 

framework for the shift away from entity-based approach to the activities-based approach. 

Director Seitz specifically highlighted FIO's support for liquidity management practices and the 

need to improve cross-sectoral analysis across the financial system, and approve sector-wide 

monitoring. He added that this is a priority project for the IAIS in considering the tight 

timeframes in 2019. 

6 
Director Seitz said that a member ofFI O's senior staff chairs the IAIS's Financial Crime Task 

Force, which drafted the first issue paper on insurer cybersecurity last year. This work

complements a range of Treasury's domestic work. FIO also chairs the Resolution Working 

Group, which recently completed revisions to the ICPs and ComFrame to address recovery 

planning and resolution. 

Director Seitz noted the engagement of FIO and its U.S. colleagues at the Organisation for 

Economic Cooperation and Development (OECD). The OECD services as a source of advice for 

the G-20 and the public on various policymaking and implementation matters, and it collects and 

publishes data and analysis on a range of topics. 

Director Seitz summarized FIO's annual reporting requirements. FIO must submit an annual 

report to Congress on September 30 which describes the industry's financial activities and 

analyzes various insurance topics. 

In addition, in May 2018, Congress passed the Economic Growth, Regulatory Relief, and

Consumer Protection Act (also referred to as S. 2155), which placed additional reporting 

requirements on FIO. Among these, Treasury and the Federal Reserve submitted a joint report in 

November 2018 describing efforts to increase transparency at IAIS meetings. FIO and the 

Federal Reserve are also required to submit an annual report to Congress on global insurance 

regulatory and supervisory forums, including a description ofregulatory or supervisory standardsetting issues under discussion, the effects that these proposals could have on consumers and

insurance markets in the United States, and positions taken in international discussions. FIO and 

Federal Reserve staff are currently working on this year's report. S.2155 also requires a study 

and corresponding report on the impact to U.S. consumers and markets before supporting or 

consenting to a final international insurance capital standard. Work on this study has not started 

because the ICS is not yet final.

Director Seitz reiterated his belief that these are areas where the Committee could be valuable 

and expressed his hope that it would serve as a starting point for the meeting's discussion. He

added that once each subcommittee finalizes its topics for review, FIO will be happy to engage 

with each subcommittee on those issues. 

Director Seitz closed by thanking Committee members in advance for their expertise and 

insights. 

Re-Establishment of F ACI Subcommittees 

Chairman Glaser welcomed Counselor Craig Phillips to the meeting, and reported that Counselor 

Phillips led a closed administrative session before the day's meeting. Chairman Glaser

summarized Counsellor Phillips' comments as focusing on the importance ofFACI's mission as 

an advisor to FIO, due to its makeup of industry leaders and experts. Chairman Glaser reiterated 

that a diversity of views offers the opportunity for rich discussion, and helps FACI and FIO fully 

7 
grasp complex issues and develop a roadmap to navigate the dynamically changing insurance 

industry. 

Chairman Glaser emphasized that member participation in F ACI meetings has a material 

influence on the Committee's work as well as new initiatives resulting from the meetings, and 

encouraged members to express their opinions in the discussion. Chairman Glaser expressed a 

desire to move the meetings from the presentation-focused structure used over the past several 

years to a more dialogue-focused structure that focuses on outcomes over information-sharing. 

Chairman Glaser expressed the subcommittee structure as a way to effectively examine a broad 

range of industry priorities, encourage a strong dialogue, and provide substantive 

recommendations for FIO's consideration. He stated that the subcommittees will report directly 

to F ACI and the format of their recommendations could come in a variety of formats. 

Three subcommittees were announced: 

1. The Availability of Insurance Products

2. FIO's International Work

3. Addressing the Protection Gap

Chairman Glaser stated that empowering Americans to make independent and informed financial 

decisions is a key theme in Treasury's core principles. One important aspect of this principle is 

retirement security and how the private sector can play a leading role in facilitating the 

availability of retirement products for Americans. Therefore, Chairman Glaser said that the first 

subcommittee will examine the availability of insurance products and take a closer look at the 

role that life insurers (and the private sector as a whole) can play in addressing current and future 

retirement security challenges. 

He said that the second subcommittee will focus on FIO's international work, which is a key part 

of its mission to represent the United States in international forums. He highlighted FI O's 

international work at standard-bodies such as the IAIS, the covered agreements signed with the 

EU and UK, and S.2155's requirement for FIO to produce annual reports to Congress describing 

its activities at the IAIS and other international forums. Chairman Glaser stated that he believes 

the subcommittee can provide valuable feedback on this year's report, which Director Seitz 

noted is currently in process. 

Chairman Glaser said that the third subcommittee would address the U.S. insurance protection 

gap, specifically examining effective strategies to manage the federal government's risk 

exposure. He expressed his hope that the subcommittee would initially explore opportunities to 

expand public sector risk transfer opportunities and build on successful programs already in 

place. He added that the third subcommittee would also consider other ways in which the public 

and private sectors could coordinate on innovative ways to adequately prepare for the everchanging risks to our nation. 

8 
oted that several new FACI members should be joining the Committee in the

near future, pending completion oftheir background checks. The membership ofthe

subcommittees will therefore grow, and FlO decided that subcommittee work should not

commence until the membership of these individuals (and therefore subcommittee membership)

is finalized.

Chairman Glaser asked members to volunteer for each subcommittee, after which any resulting

imbalances on the subcommittees could be addressed, if necessary.

Subcommittee membership was finalized as follows:

The Availability of Insurance Products

Amy Bach

Bimy Bimbaum

Quincy Branch

John Franchini

Mark Grier

George Keiser

Jim Kelleher

Mark Thresher

Kent SullivanChris Swift

FlO’s International Work

Mark Grier

Jim Kelleher

Sean McGovern

Andrew Stolfi

Addressing the Protection Gap

Eric Andersen

Amy Bach

Birny Bimbaum

Greg Crabb

John Franchini

Dan Glaser

George Keiser

Sean McGovern

In response to a question from Mr. Andersen about the type of work that would be undertaken by

the International Work subcommittee, Director Seitz replied that the focus ofthis work could go

a variety of ways, due to the standard-setting work at the IAI$, which is important to large multi

national firms and related to market access and bilateral relationship issues (such as with the

Indian authority). He said it could also include work related to the EU-U.S. Insurance Project

and the U.S.-UK Insurance Project, so the focus would not necessarily be solely on standard

setting work (which is not relevant to certain Committee members). Mr. Andersen said Aon

would likely have resources that it could offer to the International subcommittee, if needed.

9
Committee Priorities for 2019

Chairman Glaser opened discussion on topics for the subcommittees’ attention, noting that thediscussion as not meant to be final, but rather a starting point for identifying the members’

interests.

Chairman Glaser asked Ms. Bach for her ideas related to the availability of insurance products.

Ms. Bach identified three areas. She replied that state regulators have been having challenges

with long-term care rates for many years, which demonstrates the pressing need to address longterm care insurance as a topic. She noted that this topic would also relate to the subcommittee on

addressing the protection gap, because a large government risk exposure is created when

individuals have not established safety nets for end-of-life care. She added that retirement

security has been another area of focus in which a lot more needs to be done, and concluded by

identifying the availability of home insurance as another big challenge.

Mr. Grier said the subcommittee should focus on outdated regulations that are impediments to

the availability of products. Specifically, there are restrictions that don’t reflect contemporary

availability of information, technology, product design, and capabilities. Therefore, he said the

subcommittee should think about what is preventing more accessible markets (on the company

side) and more accessible products (on the consumer side). I\4r. Grier said this subject would

have many applications, including retirement, auto insurance, and long-term care.

Mr. Swift suggested there may be a need for two separate workstreams/subcommittees forlife/health and property/casualty (P&C) due to differences in the markets. He said that there are

more private market solutions for P&C to apply its capital, whether to flood or other broad-based

catastrophes where take-up rates are too low and insurers are not collecting enough premiums to

fund losses. Chairman Glaser responded that this could be applicable to the subcommittee on the

protection gap.

Mr. Swift raised the question of how to distinguish the missions of the first (availability) and

third (protection gap) subcommittees. He suggested that the first subcommittee could be

anchored around more private market activities, as opposed to government-sponsored programs.

Ms. Bach added that a possible theme to examine would be existing public-private partnerships

that deliver insurance products to the public. She said this could serve as a unifying theme

because of the attempts to create a long-term care partnership, as well as the existence of residual

market mechanisms.

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partnerships globally. Based on this, he believes there is something that FACT can learn from

existing programs both in the United States and elsewhere. He suggested that many companies

have performed thought leadership in this area, and they could be tapped as resources.

Mr. Swift referenced prior conversations with the Treasury Secretary about the concept of using

infrastructure money (if available) to help risk mitigation and remediation. He suggested thecommittee could look at the fundamental generational things that would need to occur to begin

remediating risk.

Mr. Bimbaum said that availability of insurance products and addressing the protection gap are

effectively the same thing. He suggested the committee needed to be more precise, and that

regulatory impediments is a broad topic; it would be more clear to define the insurance gap

subcommittee as looking at government programs and risk transfer issues.

Mr. Bimbaum said he would not recommend focusing on long-term care insurance, because stateregulators are already closely looking at the issue. However, he said broader retirement security

needs attention because many products are in the market, and the Center for Economic Justice’s

work has identified issues related to consumer understanding and value. He said this is relevantwhether an individual wants retirement income to pay for long-term care or to pay for household

items.

Mr. Bimbaum said he would also recommend focusing on the P&C track addressing the issues

mentioned by Ms. Bach and building on FlO’s previous work on auto insurance availability,

since there is already a foundation to that work.

With respect to addressing the protection gap, Mr. Bimbaum recommended focusing on specificgovernment programs that can be improved, such as the NfIP.

Chairman Glaser responded that it would make sense to have some clarification that protection

gap issues would be P&C related, focus on government programs, and identify how private

sector solutions could be used to improve outcomes.

With respect to availability, Chairman Glaser suggested the subcommittee itself should decide

the best approach. He added that initial subcommittee discussions may want to select two or

three areas of focus, because a wider focus would likely spread the subcommittee too thinly.

11
Chairman Glaser also agreed that the first and third subcommittees should not have convergence, 

and the third subcommittee should focus on government programs and P&C matters, as stated by 

Mr. Birnbaum. 

Mr. Birnbaum added that his primary reason for serving on F ACI is to help FIO carry out its 

responsibilities, and recommended that the subcommittee work should be driven by FIO's work 

needs. Chairman Glaser agreed and said that he would work with Director Seitz to ensure that 

the subcommittees are aligned with FIO's priorities. 

Acting Assistant Secretary Kranbuhl encouraged the Committee to put all items of discussion on 

a list of topics to cover, and from meeting-to-meeting, select a specific topic to prioritize for a 

discussion and presentation. He noted that this approach is taken by other Treasury advisory 

committees. Acting Assistant Secretary Kranbuhl suggested that Chairman Glaser and Director 

Seitz would assist in selecting the topics that should be detailed at each meeting. He supported 

the Committee's approach of discussing many topics, which FIO can then distill down and 

provide direct feedback on.

Mr. Crabb said the availability discussion reminded him oflnsurTech and changes in distribution 

and products. He questioned whether this was something the Committee was interested in 

examining. Director Seitz replied that this topic could fit with the availability subcommittee, 

particularly when examining distribution channels and new market entrants. He suggested there 

was an opportunity to discuss InsurTech both with respect to consumers as well as how the 

broader market effects could impact the sector. He added that InsurTech is a near-term focus of 

FIO. 

Mr. Keiser identified consumer confidentiality, privacy, and transparency as an emerging trend 

that will impact access and affordability. He referenced the EU' s General Data Protection 

Regulation (GDPR), and added that similar legislation is emerging in the United States. Mr. 

Keiser said businesses and insurers will need to address this risk factor, because failure to 

comply will make them vulnerable to legal action. He suggested that the compliance costs 

associated with these measures will eliminate small emerging regional insurance companies, 

citing small community banks as an example (unable to write mortgages anymore, the business 

transferred to larger banks). Mr. Keiser said that the federal government should be looking at this 

to ensure there is a consistent standard across the country. Chairman Glaser agreed that this is a 

critical topic to address, and suggested that Director Seitz could determine whether it would fit 

into one of the three subcommittees, or require a separate workstream. 

Mr. Andersen suggested that Mr. Keiser's point fits into the concept of new products, because so 

much product development is built around understanding risk characteristics which are generally 

either personal or property driven. If the ability to access this information is restricted, the 

ability to create a new product that meets a policyholder's needs is very limited. 

Chairman Glaser asked Ms. Bach and Mr. Birnbaum for a consumer interest perspective on the 

issue of data privacy.

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Ms. Bach said this reduced availability is showing up in some new products. In a mobile

distribution channel which issues micro policies with parametric products (e.g., $10,000 if you

are in the epicenter of an earthquake or near a flood), the payments are generally not sufficient to

allow people to recover from the loss. She suggested that a tangible topic of discussion for the

subcommittee on availability would relate to technological challenges to affordability.

Mr. Swift suggested that availability should not be conflated with price, and that from a data

analysis side, a more precise measure of risk translates, theoretically, into a more precise price.

When price and risk aren’t aligned, a long-term mismatch results.

Ms. Bach responded that in California, there is a concern that brand-name P&C companies are

pulling out of areas, making it an availability issue rather than a pricing issue. Mr. Swift

countered that availability is driven by price, because when a price is suppressed, the insurer

can’t earn an adequate return on capital and thus faces a constraining factor. Mr. McGovern

added that the distortion in government programs occurs because they do not permit risk-based

pricing.

Mr. McGovern raised cyber as an issue that could be addressed by the third subcommittee,

stating there is a natural partnership between government and the industry in addressing thegrowing risk of cybersecurity issues. He added that insurance can incentivize individuals,

businesses, and others to become more resilient, in addition to serving as a solution when cyber

events occur.

Mr. Bimbaum compared auto safety loss mitigation efforts to loss mitigation for homes, noting

that although auto manufacturers finance auto safety improvements, individual homeowners,

businesses, and communities (rather than home builders) are responsible for financing loss

mitigation. He suggested that this creates a role for government to partner with consumers,

business, and industry to finance loss mitigation.

Mr. Bimbaum stated that no insurance program (public or private) will be able to finance losses

from ever-increasing frequent and severe storms resulting from climate change. He said

effective loss mitigation is the only long-term solution, which requires effective use ofgovernment resources (which in turn requires leveraging consumer, business, and insurer

resources). He suggested that addressing the National flood Insurance Program would be a wayto implement massive change very quickly.

13
 

 

Chairman Glaser suggested that the subcommittee would need to select from the options 

discussed as they would not have the capacity to address every subject at once. 

Moving to discussion of the second subcommittee on FIO's international work, Chairman Glaser 

suggested that FIo could help U.S. insurers level the playing field in other countries by raising 

issues with foreign regulatory counterparts. 

Mr. Kelleher commended Fro for its role on Team USA in providing transparency and the 

giving affected insurers the opportunity to provide input on international issues (specifically in 

Europe). He identified the international capital standard (ICS) as having technical flaws with no 

clear resolution, and said it would have significant ramifications to internationally active 

insurance companies, given the difference between a capital standard driven out of Europe 

versus capital standards based upon state laws (which would be the only restrictions that a noninternationally active insurance company would need to comply with). He said that this topic is 

not getting sufficient attention and suggested that this, and other sub-issues within the res, could 

be addressed by the subcommittee. 

Mr. Kelleher stated that cyber is an international problem, and the international aspects of

building cyber resilience and the availability of cyber insurance should be a component of the 

work being performed by the first subcommittee. Chairman Glaser added that finding common 

agreement on the treatment of war exclusions as applied to cyber incidents could be a related 

topic to discuss. 

Mr. Andersen noted that many F ACr members have relationships with international regulators 

and would be able to provide insight to Fro if the office needs to prepare to meet with a 

regulator in another country. Mr. McGovern added Treasury could help promote the industry's 

ability to access international markets through reinforcing messages (e.g., issues of market 

access protectionism) through its own relationships with those regulators and governments. 

Mr. Grier agreed with Mr. Kelleher's assessment of the challenges with the res and global 

capital standards, and noted there is also bilateral importance, because a local country could seek 

to model its own standards after the res even if a global standard is not adopted. He said local 

standards modeled after the res could be very painful for U.S. companies. 

Director Seitz said that the subcommittee could be helpful in providing Fro with clarity on the 

numerous facets of res, such as those described by Mr. Kelleher and Mr. Grier, to help Fro 

prepare for decision points happening in November. 

Mr. Birnbaum expressed interest in the rArS's proposed holistic framework, and suggested that 

Team USA should encourage the rArS to focus resources on matters other than the res, because 

those other resources could have tangible benefits. He said the holistic framework provides an 

opportunity to learn from the causes of the (2008) financial crisis, and noted that the failure of 

private mortgage insurers and bond insurers was not due to insufficient capital, but rather a 

failure to engage in risk management. As a result, he suggested that the holistic framework 

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problems, and suggested that it would be interesting to review these products.

Chairman Glaser framed the discussion for the subcommittee on addressing the protection gap

around topics related to P&C insurance and interactions between the private sector and

government programs. He suggested that the protection gap in a broader sense (such as with

matters like retirement) should be handled by the first subcommittee, and the third subcommittee

should focus on topics such as flood and cyber.

Mr. Bimbaum stated that his prior comments on financing loss mitigation fit primarily into the

third subcommittee.

Mr. McGovern expressed a desire to have the subcommittee provide feedback on the Terrorism

Risk Insurance Act (TRIA).

Ms. Bach suggested that the concept of best practices and interaction between public and private

programs seems to be a better fit for the first subcommittee, because lack of private sector

availability drives the creation of government programs. She also noted that the Rutgers School

of Law recently held a conference entitled “The Protection Gap” and said she would review the

agenda to see what topics were discussed.

Mr. Andersen suggested that many of the Committee’s discussions had been focused on risk

insight/risk-based pricing and where the private market helps or the government steps in. He

said that understanding the overall dynamics of why a private market enters the market, and how

adequate pricing impacts availability, would offer underlying conclusions to address a variety of

risks. He clarified that although risks may be localized (flood, earthquake, or wildfire, for

example), there are similar underlying factors that can be used for analysis.

Mr. Glaser added that the subcommittee should explore whether lack of non-insurance /

underinsurance is driven primarily by price or education. He asked Mr. Sullivan for feedback

based on Texas’s experience with Hurricane Harvey. Mr. Sullivan suggested it was important to

discuss adequacy of communication, disclosure, and explanation of insurance products,

particularly in the intersection with financial literacy. He stated that intelligent, well-informed

financial decisions include decisions about the purchase of insurance.

Mr. Sullivan added that he has an ongoing dialogue with the industry about plain language and

finding better ways to interact with consumers. He said that Texas has had “form freedom” in a

number of areas which has resulted in the proliferation of different products. The subject matter

for these is frequently dense and hard to navigate, and consumers tend to reflexively look for the

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Mr. Bimbaum stated that TRIA is an important subject because FlO is the entity delivering the

product. He added that although he is interested in reforming the NFIP, he is not sure what

FlO’s role is with respect to the NFIP’s work; but there are many opportunities to improve

people’s lives so it would nonetheless be worthwhile to explore. He also added that cyber is a

major topic as is the related topic of insurance use of big data. He said that all three topics are

equally important and it would be difficult to choose between them.

Mr. Glaser concluded the discussion and asked Committee members to notify Director Seitz and

him ifthey had an interest in serving as a subcommittee chair. He also asked that members

identify any organizational resources that might be helpful to any of the subcommittees (even if

they are personally not serving on that subcommittee). He expressed his beliefthat it is

important for FlO to have access to these resources.

Mr. Glaser announced that the next meeting would be a call in June, and in the meeting thecommittee would provide updates on the subcommittees, name subcommittee chairs, and

develop agendas. He added that the subcommittees would report to the full FACI on stated

objectives, agenda, and mission throughout the year.

Director Seitz agreed with Mr. Glaser’s proposed plan of action and thanked the members again

for their engagement on topics which will help FlO map out its work in upcoming years.

Mr. Keiser said that he found great value in many of the presentations that were made during

previous meetings. He suggested that subcommittees could identify topics appropriate forprograms and refer these topics to Director Seitz and the FlO staff, so that both the subcommittee

and all members have access to additional information. Chairman Glaser agreed and suggested

that presentations will be driven by the work done by the subcommittees.

New Business and Closing Remarks

No new business was presented.

Chairman Glaser announced that the next FACT meeting will be held via teleconference on June

18. 2019 at 2:00pm eastern time. This will be a public meeting with open attendance, and FlO

will provide details on accessing the meeting in its Federal Register Notice and on its website.

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Chairman Glaser said that before this meeting, he and FIO would work to ensure each 

subcommittee is fully populated, and FIO will issue information on the subcommittee chairs and 

membership. In June, the subcommittee will outline their project plans and develop timelines for 

the remainder of the year. 

At 3 :29 pm, Chairman Glaser concluded the meeting. 

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

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

Dan Glaser

Chair 

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