The Federal Insurance Office (FIO), a division within the U.S. Department of the Treasury, issued a notice on July 13 announcing its intent to adopt a methodology to “monitor the affordability of personal automobile insurance.”

The move is intended to protect low and moderate-income (LMI) consumers as well as communities that are considered to be underserved.

The FIO affordability index will be determined by dividing the average (or mean) annual written personal automobile liability premium in the voluntary market by the median household income for U.S. Postal Service ZIP Codes (ZIP Codes) identified as being majority-minority or majority-LMI.

insurance autoIf the affordability index for personal automobile liability insurance measures 2 percent or less, FIO will consider the insurance to be affordable.

As part of formulating the index, FIO borrowed a dictionary-based definition of affordability as “being within the financial means of most people.”

Index data will be reported annually. FIO intends to collect and analyze information on auto insurance premiums from various sources as part of this effort.

Public comment on the matter was solicited in July 2015. Input was sought from state insurance regulators, consumer organizations, industry representatives, policyholders, academics, and others.

Legislative authority for the initiative is derived from the Dodd-Frank Wall Street Reform and Consumer Protection Act, which, in part, established the Federal Insurance Office. The FIO is granted the following authority under the Act:

  • Monitor all aspects of the insurance sector.
  • Monitor access to affordable non-health insurance products in traditionally underserved communities.
  • Represent the U.S. in certain international insurance matters, including at the International Association of Insurance Supervisors.

Additional information is contained in the July 13 notice published in the Federal Register by the Treasury Department titled, “Monitoring Availability and Affordability of Automobile Insurance.”

Auto Policy Experience of Insurance Expert Bill Hager

Bill Hager has had extensive and substantive experience relating directly to personal automobile insurance policies (inclusive of commercial auto policies) including interpreting policy language and determining the insurer’s obligations under such policies.

As a regulator for eight years in five positions ((i) Assistant Attorney General assigned to the Department of Insurance, (ii) First Deputy Commissioner of Insurance, (iii) Iowa Commissioner of Insurance, (iv) Administrative Law Judge, and (v) Executive and Member of the National Association of Insurance Commissioners), Mr. Hager, along with his staff, approved (or disapproved) of the language of personal automobile insurance policies used by each of the 1,000 personal automobile insurance companies doing business in Iowa.

This regulatory action also included the approval of most all policy application forms and policy forms. In addition, he regularly served as an Administrative Law Judge in matters relating directly to personal automobile insurance policies.

Mr. Hager testifies frequently as an expert witness on personal and commercial auto insurance policies, and has been qualified to do so in several states.

Click on the link to read more about Mr. Hager’s experience as an auto insurance expert.


Material for this article was taken from a collection of industry sources relating to the subject.

In all of the general statements here, see the state law of the controlling jurisdiction. Every case is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.

This blog is provided for educational purposes only. It is not intended to provide legal advice or an opinion in regard to any topic discussed. The blog should not be used as a substitute for legal advice from a licensed attorney in your state.