Its. American Insurance Companies regulation it is historic and it ensures local markets and needs are taken into consideration. The naic coordinates state commissioners to identify risks. Congress created the federal sherbet two promote national coordination. I am pleased to have the mariner maryland commissioner on behalf of on the naic and darrell sykes if we are going to keep hard earned money safe, blockade specializing in Life Insurance and owned by the private equity firm. Overnight, Lockheed Martin employed retirees and notified their pensions would be managed by a fee. Many employees are very nervous about that. One example of private equity giants expansion into peoples pension. We note workers and up worse off when wall street private equity firms get involved. We have seen it over and over. I asked naic and f ill look into private equities and expansion into similar pension risk. We need to understand the risks to workers. Naic and f i provided letters. Fio has done similar work. Those connections have added it risk concerns. Taken together, insurance authorities are focused on emerging risks to safeguard the economy. Argument needs rely on insurance to protect level 1s loved ones. We cant ignore when risks are built up. We know who pays the price and it is rarely insurance and executives. It is workers and families. Taxpayers who are forced to bail out companies. We have to make sure industries and agencies are prepared for risks as more americans based climate catastrophes every year. We need to ensure that insurance watchdogs are prepared. In the aftermath of disasters, we have leaving families and businesses struggling to find affordable coverage as they work to rebuild their lives. We know the industry is along has a long history of Racial Discrimination and many other industries. Black and brown families make have more difficulty in getting insurance. The New York Times reported that the customer insurance agencies and employees sued state farm and eight discrimination in the workplace in discrimination in the workplace. They requested information about large life in pnc insurance involvement. I am glad they are working on this and the naic is investigating. I look forward to reviewing fios report. I hope it will shed more light on racial equity. Later this year, the International Association of insurance supervisors will need to conserve whether the u. S. Insurance Systems Review up sanders meets International Criteria because we regulate up to meets International Criteria of standards meets International Criteria now the fed vice chair has been confirmed. Michael barr is testifying today. We will get to work with international counterparts. These issues show how critical the work you to do is to be economy. I expect fio and naic to pry our best prioritize the risks to prioritize the risks. It has been a while since our committee has held a hearing on the Insurance Industry. There are topics i would like to touch on. One is the importance of the statebased insurance regulation problem we have. Avarice to develop international and insurance efforts to develop International Insurance standards. The importance of riskbased pricing. It is important to remind everyone as the chairman alluded to that Insurance Firms are likely a at the state level are regulated at the state level. The federal government has a limited regulatory role. The system works for consumers and the industry. That is why we need to pay close attention for efforts to develop interNational Standards. I worry that the insurance capital standards developed by the International Association of insurance supervisors is incompatible with the u. S. Insurance market. There is why said widespread concern that the this not take into account certain aspects that insurance holds. The result is the implementation of it would harm the availability of longterm Insurance Products that americans rely on. Our u. S. Representatives at i ais needs to make sure that it works for the u. S. Market. I would like to touch on troubling efforts to use the Financial System to address Climate Change. There are liberal activist who want to pressure Insurance Companies to deny services to Traditional Energy companies. Those efforts are misguided. Addressing the difficult challenges posed by Global Warming soaring Energy Prices european nations have made plans to open coal plants. We have seen the Biden Administration hostility to oil production. In a democratic society, those choices and the tradeoffs must be made by elected representatives who are accountable to the american people. Not insurance executives. Ensure space financial risk in the form of financial disasters. It is the core of the business. Insurers they are going need to adjust their prices accordingly. Higher premiums are a important signal. They create a financial incentive to mitigate risks which lead to safer and more resilient communities in society. A wellfunctioning Insurance Industry is capable of addressing the National Disaster risk that it faces today and in the future. I would like to address plants plans this program would be akin to the terrorism risk program. It mandates that insurance offered terrorism insurance and in the event of a tap attack, the federal government has an increasing share. Similar programs will be problematic. It in a matter of months, the paycheck by banks and other Financial Institutions participated on a voluntary basis. Compare that to the disaster claims process after hurricane sandy. The Insurance Program but encouraged states and local governments to impose economic devastating shutdowns in the future. With the assurance of the federal government risk Insurance Program would bail them out instead of considering policy that would facilitate. Lockdowns. We should be thinking of future and dont harm the children education. A wellfunctioning Insurance Industry is a critical of pop component of economic prosperity. Everyone will be better off if we resist efforts to use insurance as a tool to have private system insurance goals. Lets happen insurers stick to the business of insurance and i look forward to discussing these issues today. I would like to introduce todays witnesses. The honorable Kathleen Birrane is testifying on the behalf of naic. Mr. Steven seitz joined fios Director Office previously. Welcome to both of you. Members of the committee, thank you for the information invitation to testify. I will touch briefly on several issues. We have been actively monitoring the growth and private Equity Growth insurance. We have checks and balances to protect policyholders. As insurers of all types are searching for an vesting yield to avoid racing raising prices considering new requirements to ensure our facility ability to to address policyholders. We are working with 13 regulatory considerations and other insurance with similar features. We have extensive data reporting and analytical capability to review and assess alternative investments or unique structures and are continuing to apply those tools. We are confident in the system to oversee and insurers. We will keep the committee apprised of our work. Next, insurance regulators recognize the importance of cybersecurity Risk Management and continue to operate data security. That naic Insurance DataSecurity Model law updates regulatory requirements related to security, the investment of cyber event and the notification of cyber events. States adopt the model, which covers 83 of the market. The naic created a new innovation Cybersecurity Committee to address the insurance implications of emerging technologies in cybersecurity and to ensure consistency among insurance regulators. Feet see facilitates exercises with insurers to explore Cyber Incidents response. Another priority is climate risk. The naic facilitated which is now aligned to be these disclosures cover 80 of the market by premium help insurance assess risk and actions to mitigate crime climates risk. We recommended that wildfires be explicitly added to the framework for catastrophe risk exposure. We are creating a Catastrophe Model Center of excellence to provide insurance regulators to access of information and training. Another area of activity is the intersection of race and insurance. The nics work focuses on evaluating issues of race and diversity. The nic formed a new avenue to help foster instruments in the insurance careers swept a focus on students from underserved communities. State insurance regulators continue to engage on a variety of issues including the development of an insurance capital standards. The naic along with partners are clear that the best outwork for the u. S. Market and they have developed an aggregation method to that iac f. Finally, we will like to highlight a few of our federal priorities. We urge congress to pass a reauthorization that encourages investment in flood mitigation efforts and we support government scots pat act. We are working on legislation to helpers protect policy owners during an insurance receivership. I am pleased to take questions. Thank you. Thank you for the opportunity to testify today about current issues. I am the director of the federal Insurance Office. I would like to begin by outlining files role fios role and responsibilities. We provide a range of projects to help needs of businesses. Iao fio advises the treasury secretary on major domestic policy issues have access to affordable Insurance Products, assists in negotiating agreements with performance foreign jurisdictions. As fios director, i also served with a nonvoting member with the National Security building council. I would like to highlight five current fio priorities. Climate financial risk is a top priority. We are focus our with three areas. First, we plan to publish a report assessing climate related issues and gaps in the superman supervision and regulation of insurance. We are evaluating the potential of major disruptions of private insurance. Third, we are increasing engagement domestically and internationally on climate financial risk issues. As we move forward with efforts, we will see data to increase understanding on the wrist to Climate Change to policy owners. The second focus area is the growing role of alternative asset managers. This evolution is one that our office has highlighted for several years. It warrants increased intention to ensure mechanisms are designed to address activities that we outlined in our recent letter. We encourage continued focus. Fio continued to prioritize four areas of research and action. Liquidity risk, credit risk and capital addicts advocacy, offshore potential conflicts of interest. We are focused on fiber related risks, which is a top priority of the federal government. We have been examining our own cyber resistance. We have increased Data Collection and have supported the development of treasuries counter ransom strategy. We have worked with agencies in connection with the recommendation that we assess the need for federal backstop for Cyber Insurance. We are coordinating closely with the white house cyber director on issues. Our fourth priority is the representation of the United States with closed carnation with the naic coordination with the naic. We are considering topics and the related comparability work and evolving involving the application method. These topics are important initiatives that will affect the u. S. Insurance sector and is critical for fio in the u. S. To engage with these issues. We are prioritizing our work on diversity, equity and inclusion. Fio looks at these issues through the lens of affordability with Insurance Products. We are working to update our study on personal Auto Insurance portability. These issues are key components of our climate work. On all of these topics, fio values are close relationship and ordination with state regulators, are federal partners and international counterparts. Thank you for the opportunity to testify. Thank you. Thank you for files fios response. You mentioned that once a Company Transfers its pension obligations in eight pension risk in a pension Risk Transfer what problems arise when pensions are transferred to life insurers and how do they pose risks to workers i do have that concerns about the broader Financial System and the impact. Thank you for that question. We share your interest. The u. S. Insurance sector and the life and retirement sector is critical for working americans that rely on these products. We highlighted the four key areas. Enhancing files monitoring of the Liquidity Risk of the financial sector. We are looking at regulatory measures and whether they are designed to accommodate and regulate this business model. We are looking at the officer reinsurance implications, particularly the increase entered interconnectedness with the u. S. And europe markets. We are looking at potential conflicts of interest. We will look with the naic and the states going forward. My interests in this issue has increased because Congress Worked a year ago and was able to fix in the congress pension system. We know that human cost of failing pensions close to workers who have the expectations. It is imperative that insurers and become a full we count on both of you commissioner, thank you for being here. I have heard from nonprofit associations greasing to state insurance about difficulties of finding finding affordable properties. What are tools available for state Insurance Commissioners to solve this market fairly earlier failure . The in ic has long opposed the expansion of the act to allow our r. G. s to buy commercial property insurance. We have serious concerns that nonprofits that are vulnerable to be could be put at greater risk by if they are allowed to purchase their property insurance from a into see that is not subject to the same rigorous standards and multistate enforcement as other carriers and that creates an uneven playing field. Most states have a residual market for property insurance. In my state, i have queried our nonprofits and this is not an issue that we see in the state of maryland. Other commissioners are making efforts to look at their markets to see where issues exist and we would be happy to know about specific circumstances and make ourselves available to work with nonprofits that are having difficulty getting commercial property insurance. Your assess students assessment differs from ours. It is a serious problem that has not been solved in the past with faced with similar issues. I am working to amend things to address the issue affecting communitybased nonprofits. Director sykes, are you concerned . Thank you for that question. We have also been tracking this issue. We have been engaging with various stakeholders on the topic. We will look forward to working with the naic and your team as we look into this issue. We have a working with naic to find a solution with retention groups under nrc regulations and commissioner, i wanted to ask, can we Work Together to find a solution that responsibly increases insurance capacity for rrgs to address the problem . We want to Work Together to construct an solution and we are happy to work with you. Thank you. I wanted to ask if their questions a third question about climate catastrophe risk and we will submit something in mind writing. Thank you. That chairman brought up the circumstances that occur occasionally where pension Risk Transfer occurs and by understanding is the nature of this is when a company has a defined benefit obligation to insert retirees, it can purchase an annuity from an Insurance Company that transfers the management of this to an Insurance Company. In that scenario, it is my understanding that the pp d. C. Guarantee no longer of class. There are insurance funds. What i be correct in assuring the assuming that the insurance guarantee would be there as a backstop for companies to honor their obligations . That is correct. After the transfer concerns, something no longer applies but the no longer applies to be risk because what is happening is that the pension fund is find an insurance product buying a insurance product. Your experience and you will probably agree with me that Insurance Companies have extensive experience in managing longterm liabilities. That is what they do. The idea of whether they are in a good position to manage the longterm liabilities of a defined benefit pension plan suggests to me