The FIO initiative is driven in part by concerns that the data collected by the National Association of Insurance Commissioners may not be adequate and that "other data sources will likely be needed," according to a regulatory bulletin from industry law firm Nelson Levine de Luca & Hamilton, LLC.

Nelson Levine lawyers say the FIO has the authority to collect information directly from the insurance industry that "it may reasonably require" in carrying out its duties.

Before it can do that, the bulletin says, the FIO must determine that the information is not available in a timely manner from relevant federal agencies, state regulators and publicly available sources. The FIO also has subpoena power in certain circumstances, Nelson Levine says in the bulletin.

Regarding its interest in auto insurance, the FIO notes that auto liability is mandatory in all states except New Hampshire, and that owning an automobile "is likely associated with a higher probability of employment and other factors associated with economic wellbeing." Furthermore, the FIO says the percentage of uninsured motorists nationwide has "hovered around 14% between 2002 and 2009."

The FIO also says, "Industry representatives assert that auto insurance has become more affordable over time but consumer representatives assert auto insurance has become less affordable for low-income consumers and minorities."

On the question of affordability, the FIO says, "While the definition of availability is largely settled, the definition of the affordability of personal auto insurance remains unclear."

The FIO says the Availability and Affordability Subcommittee of the Treasury Department's Federal Advisory Committee on Insurance (FACI Subcommittee) suggested a definition for affordability could be ensuring the cost of personal auto insurance is "a reasonable percentage of a consumer's income." But the FIO says that can be subjective and difficult to discern.

"One approach may be to interpret personal auto insurance premium payments as affordable if such payments do not prohibit individuals and/or families from purchasing other required necessities," the FIO says. "Or, personal auto insurance may be interpreted as affordable if it is actually purchased by individuals and/or families."

Insurance consumer advocates have been pressing for FIO involvement since December 2012, when they brought the issue up at an NAIC winter meeting.

The NAIC responded by issuing a report at its recent Spring National Meeting in Orlando which concluded that that states and territories could take a variety of actions to address the issue, according to lawyers at Colodny, Fass, Talenfeld, Karlinsky, Abate & Webb, P.A., in Florida.

CFTKAW lawyers say the NAIC report proposed that these actions should range from activities common to most states, such as the creation of rate comparison guides or the implementation of restrictions on underwriting guidelines, to initiatives unique to a small number of states such as comprehensive programs to provide low-cost liability policies to low-income drivers.

Regarding the FIO taking up the issue now, Consumer Federation of America's Director of Insurance Bob Hunter says, "With millions of low- and moderate-income Americans struggling to afford state-required auto insurance and insurers constantly adding new highly questionable factors like education, occupation and elasticity of demand that drive up the cost to those least able to afford coverage, FIO's interest is not only necessary, it is urgent."

Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, says, "We can appreciate that the FIO is seeking input to help establish a metric for determining availability and affordability of insurance, which went undefined in the Dodd-Frank Act. Unfortunately, this is an exercise in defining the highly subjective. There are no authoritative standards that determine what constitutes a properly available or affordable insurance product. 

"Whenever anyone has tried to force a definition, by necessity it has resulted in extremely vague criteria, which are open to wide regulatory and judicial interpretation, and which have been used to subject the industry to arbitrary rules. That said, we understand that that the FIO has a job to do and NAMIC will work to provide FIO with our views on approaching the issue, and how such a definition should and should not be applied with regard to FIO's duties."   

The FIO says comments may be submitted electronically through the Federal eRulemaking Portal: http://www.regulations.gov, or by mail to the Federal Insurance Office, Attention: Lindy Gustafson, Room 1319 MT, Department of the Treasury, 1500 Pennsylvania Avenue NW., Washington, DC 20220.