The Obama administration was expected soon to name an Illinois state insurance regulator to head the new Federal Insurance Office, said sources familiar with the matter on Thursday.
Michael McRaith, seen as the front-runner for the job, is now head of the Illinois Department of Insurance.
The Federal Insurance Office is being set up to monitor insurers, such as Allstate and Travelers, but not to regulate them, under 2010’s Dodd-Frank Wall Street and financial industry reforms. The industry is presently regulated only by state governments.
The FIO was put into Dodd-Frank to appease opponents of central regulation by keeping real power out of Washington’s hands, but giving big insurers that want a single regulator a foothold they may be able to expand later.
McRaith could not immediately be reached for comment. Nor could the U.S. Treasury Department, which is tasked with naming the FIO director under Dodd-Frank.
McRaith worked for 15 years in private practice as an attorney in Chicago, representing financial institutions, including insurers, before being named to his present post, according to the Illinois insurance department’s website.
Besides McRaith, two others are rumored to be contenders for either the FIO job or a spot for an insurance expert on the new inter-agency Financial Stability Oversight Council. They are former Treasury official Roy Woodall and current Treasury staffer Chris Ledoux, industry officials have said.
The naming of the new FIO chief will occur as large insurers try to minimize restrictions under another Dodd-Frank rule. It orders U.S. regulators to consider whether some large insurers should be labeled as systemically significant financial institutions that would be subjected to tighter government oversight.