UNITED STATES DEPARTMENT OF THE TREASURY
FEDERAL ADVISORY COMMITTEE ON INSURANCE
SUMMARY OF PUBLIC MEETING

November 6, 2014

The Federal Advisory Committee on Insurance was convened at 1:00 P.M. on November 6,
2014, in the Cash Room at the U.S. Department of the Treasury, 1500 Pennsylvania Avenue,
NW, Washington, D.C., with Daniel Glaser, Chair, presiding.

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

Committee Members Present:

DANIEL GLASER, President and Chief Executive Officer, Marsh & McLennan
Companies, Inc., Chair
DAVID (BIRNY) BIRNBAUM, Executive Director, Center for Economic Justice
GARY BHOJWANI, Chairman, Allianz Life Insurance Company of North America (represented
by proxy Gretchen Cepek)
ELIZABETH BROWN, Professor, Georgia State University
MICHAEL CONSEDINE, Commissioner, Pennsylvania Department of Insurance
BRENDA CUDE, Professor, University of Georgia
JACQUELINE CUNNINGHAM, Commissioner, Virginia Bureau of Insurance
THEODORE MATHAS, New York Life Insurance Company
JOHN FRANCHINI, Superintendent, New Mexico Office of the Superintendent of
Insurance
LORETTA FULLER, Chief Executive Officer and Chief Financial Officer, Insurance
Solutions Associates
NICHOLAS GERHART, Commissioner, Iowa Insurance Division
MARK GRIER, Vice Chairman, Prudential Financial, Inc. (represented by proxy, Susan Blount)
DAVID HERZOG, Executive Vice President and Chief Financial Officer, American
International Group, Inc.
GEORGE KEISER, Representative, North Dakota House of Representatives
JAMES KELLEHER, Executive Vice President and Chief Legal Officer, Liberty Mutual
Insurance
SCOTT KIPPER, Commissioner, Nevada Division of Insurance
BENJAMIN LAWSKY, Superintendent, New York Department of Financial Services
SEAN MCGOVERN, Chief Risk Officer & General Counsel, Lloyd’s of London
JULIE MCPEAK, Commissioner, Tennessee Department of Commerce and Insurance
(represented by proxy, Chlora Lindley-Myers)
FRANKLIN (TAD) MONTROSS, Chairman, President, and Chief Executive Officer,
General Re Corporation
THEODORE NICKEL, Commissioner, Wisconsin Office of the Commissioner of
Insurance


Also Present:

MICHAEL MCRAITH, Director, Federal Insurance Office, U.S. Department of the Treasury

MICHAEL NEWMAN, Designated Federal Officer, Federal Insurance Office, U.S. Department
of the Treasury

TOM FINNELL, Federal Insurance Office, U.S. Department of the Treasury

ADAM SEDGEWICK, National Institute of Standards and Technology (NIST), U.S.

Department of Commerce

CATHERINE MULLIGAN, Zurich

TOM FELTNER, Consumer Federation of America

BOB HUNTER, Consumer Federation of America

*Participating via teleconference
Introduction and New Business

Director McRaith welcomed the members of the Federal Advisory Committee on Insurance
(FACI) and convened the meeting. Chairman Glaser then raised the only item of new business,
certifying the minutes from the August 7, 2014 FACI meeting. The minutes were certified.

Role of Cyber Risk Insurance in Cyber Security

Chairman Glaser introduced the topic of cyber risk insurance and cybersecurity, noting that the
issue is prevalent and important. He stated that the purchase of insurance and investment in
good cybersecurity are both elements of risk management that complement each other.
Chairman Glaser also noted that standards, such as the NIST Cybersecurity Framework
(“Framework”), can assist companies in gauging its performance and find areas for
improvement. He then introduced Adam Sedgewick from NIST to discuss the Framework. Mr.
Sedgewick presented on the Framework, its development, and NIST’s next steps. Chairman
Glaser then introduced Catherine Mulligan from Zurich to discuss the cyber insurance market.
Ms. Mulligan provided an overview the cyber insurance market, the risks cyber risk insurance
are intended to cover, and the regulatory environment for data breaches. The members and
presenters then engaged in a discussion with the presenters about the NIST Framework,
cybersecurity, and cyber risk insurance, with contributions from Chairman Glaser, Director
McRaith, Mr. McGovern, Representative Keiser, Mr. Kelleher, Ms. Fuller, Mr. Herzog, and
Superintendent Lawsky.

Affordability of Auto Insurance

Following a ten minute break, Chairman Glaser introduced the topic of the affordability of auto
insurance. He then introduced Bob Hunter and Tom Feltner from the Consumer Federation of
America (CFA) to discuss the CFA’s recent report, The High Price of Mandatory Auto Insurance
For Lower Income Households: Premium Price Data for 50 Urban Regions. Mr. Hunter and
Mr. Feltner provided background on CFA and explained the methodology of the report. They
explained that the report concludes that low- and moderate-income drivers from urban areas are
often charged more for auto insurance than what many consider to be affordable, and requested


additional data be collected to aid the CFA’s research. Chairman Glaser then led the members
and presenters in a discussion of this topic, with contributions from Mr. Birnbaum, Director
McRaith, Commissioner Franchini, Professor Brown, Ms. Fuller, and Representative Keiser.

International Supervisory Standards for Insurers, Including Capital

Chairman Glaser introduced the third topic of discussion: international supervisory standards for
insurers, explaining that the FACI would be discussing capital standards, the identification of
global systemically important insurers, and the development of a common framework for the
supervision of internationally active insurance groups, or ComFrame. He then introduced Tom
Finnell, the Deputy Director of Regulatory Policy for the Federal Insurance Office (FIO), who
presented on international work streams in which FIO engages. Mr. Finnell provided an update
to the FACI on IAIS workstreams, particularly ComFrame and the development of capital
standards, and the EU-U.S. Insurance Project. Mr. Finnell and Director McRaith noted that this
work was done jointly with the Federal Reserve Board staff and state regulators. The members
then engaged in discussion with Mr. Finnell and Director McRaith, with contributions from
Chairman Glaser, Commissioner Gerhart, Representative Keiser, Mr. McGovern, Mr. Birnbaum,
Mr. Mathas, and Mr. Herzog.

Subcommittee Discussion

Chairman Glaser provided a reminder on the membership of the Affordability and Accessibility
Subcommittee, led by Mr. Birnbaum, and the International Developments Subcommittee, led by
Commissioner McPeak. He then noted that he and Director McRaith agreed that the FACI
should have a third subcommittee focused on domestic prudential issues, and tasked Mr. Mathas
with chairing this new subcommittee. Chairman Glaser invited members to let Director McRaith
and his staff know if they were interested in joining any of the three subcommittees.

At 3:56 P.M., Director McRaith concluded the meeting.

I hereby certify these minutes of the November 6, 2014 Federal Advisory Committee on
Insurance public meeting are true and correct to the best of my knowledge.

C29 fl —

Daniel S. Glaser, FACI Chair