A more thorough explanation:

Introduction: The insurance industry is mainly regulated at the state level by state agencies. Title V of the Dodd-Frank Act creates a Federal Insurance Office (FIO) within the Department of the Treasury to promote national coordination in the insurance sector. The FIO has authority over all types of insurance, except health, long-term care, and crop insurance, but does not supervise insurance providers. The supervisory authority of the insurance industry remains with state regulators. Additionally, Title V streamlines the regulation of surplus lines insurance and reinsurance through state-based reforms.

Purpose: Title V’s main purpose is to promote national coordination in the insurance sector. It is also intended to streamline the regulation of surplus lines insurance and reinsurance through state-based reforms.

Provisions:

• Federal Insurance Office: Title V establishes the Federal Insurance Office (FIO) within the Department of the Treasury to monitor all aspects of the insurance industry. The FIO has the authority to collect data and information from the insurance industry and issue reports on all lines of insurance except health insurance. The FIO also has the power to identify issues or gaps in the regulation of insurers that could contribute to a systemic crisis in the United States, monitor the access to affordable insurance of traditionally underserved communities, recommend when insurance companies should be designated as entities subject to regulation as nonbank financial companies supervised by the Federal Reserve Board, assist in administering the Terrorist Insurance Program, develop federal policy on aspects of international insurance matters, represent the United States in the International Association of Insurance Supervisors, determine when state insurance actions are preempted, and consult with the states regarding insurance matters of national or international importance.
• State-Based Insurance Reform: Title V gives the policyholder’s home state sole authority to require the collection of premium tax obligations related to nonadmitted insurance. Additionally, the placement of nonadmitted insurance is subject to the laws and regulations of the policyholder’s state. Thus, only the policyholder’s home state can require a surplus lines broker to be licensed to sell, solicit, or negotiate nonadmitted insurance with respect to the policyholder.
• Reinsurance: The Act does not allow states to deny credit for reinsurance to an insurer whose state of domicile is an NAIC-accredited state or has solvency requirements that are substantially similar to those required for NAIC accreditation. Additionally, the non-domicile states are preempted from restricting or eliminating the rights of the insurer to resolve disputes pursuant to contractual arbitration, requiring that a certain state’s laws will govern the reinsurance contract, attempting to enforce a reinsurance contract on terms different than those set forth in the reinsurance contract, or otherwise applying the laws of the state to reinsurance agreements. Finally, if the reinsurer’s state of domicile is an NAIC-accredited state or has solvency requirements that are substantially similar to those required for NAIC accreditation, then the domicile state is solely responsible for regulating the financial solvency of the reinsurer.

Implementation: The FIO has been established within the Department of the Treasury.

Example: Title V of the Dodd-Frank Act establishes the Federal Insurance Office (FIO) to monitor all aspects of the insurance industry. The FIO has the authority to collect data and information from the insurance industry and issue reports on all lines of insurance except health insurance. For example, the FIO can collect data on the number of car insurance policies sold in a particular state and issue a report on the affordability of car insurance for low-income families in that state. This information can be used by state regulators to make policy decisions that benefit consumers.