Congress rarely does anything on a bipartisan basis but a bipartisan bill has been introduced to keep the Consumer Financial Protection Agency (CFPB) out of the regulation of insurance.
The Business of Insurance Regulatory Reform Act of 2024 was introduced by South Carolina Republican, Sen. Tim Scott and West Virginia Democrat, Sen. Joe Manchin and it has been sent to the Senate Committee on Banking, Housing, and Urban Affairs.
For those not knowing, the CFPB was created by 2010’s Dodd-Frank Act. It was not intended to give the CFPB authority on insurance issues. Insurance has been regulated by the states since the McCarran-Ferguson Act was passed in 1945.
For years the PIA has been a staunch defender of the regulation of insurance being done by the states and not the federal government. PIA National has not issued comments on the bill at this point but the association supports the bill and state regulation of insurance.
“The insurance industry is regulated by individual state oversight of members of the insurance industry licensed by each state, rather than by a federal bureaucracy,” the PIA said about state regulation on its state regulation of insurance page on the PIA National website. “This structure helps to ensure fairness for consumers by allowing state insurance regulatory authorities to design and refine their system of supervision so that it is tailored to meet the needs of that state’s policyholders.”
The PIA also has pushed for the abolition of the Federal Insurance Office. It was also set up as part of Dodd-Frank.
“Many of FIO’s duties are examples of federal overreach and are duplicative of existing activities within our state-based insurance regulatory system. Additionally, like most federal offices, the FIO’s power has consistently expanded since its creation,” PIA National notes on its website. “In the decade since, the FIO has sought to federally regulate mortgage insurance; to be included in international supervisory colleges; and to promulgate uniform national standards for state guaranty associations. Every one of these acts is well outside the FIO’s mandate. In addition, over the years, it has been identified as a potential overseer of the National Association of Registered Agents and Brokers (NARAB).”
Jimi Grande of the National Association of Mutual Insurance Companies (NAMIC) was among the first to comment on the bill.
“Congress made clear when it crafted the Dodd-Frank Act that the Consumer Financial Protection Bureau does not have regulatory authority over the business of insurance,” Grande said. “Since then, the bureau has continued to encroach on issues involving insurance products and services that are rightfully under the authority of the states. State regulators have expertise about the risks and conditions in their individual markets and have been the gold standard for consumer protection for more than 150 years. Congress should take this opportunity to set a clear boundary for the CFPB. Doing so will prevent confusion for consumers and their insurers as well as the potential for duplicative or conflicting regulations.”
Nat Wienecke, senior vice president of federal government relations for the American Property Casualty Insurance Association (APCIA) agrees.
“Senator Scott’s Business of Insurance Regulatory Reform Act recognizes that the state-based system for insurance regulation has been effective in protecting consumers and fostering competitive insurance markets for over 150 years. APCIA supports the reintroduction of this important legislation to provide increased clarity on the insurance exemption and the CFPB’s boundaries,” he said.
Other groups supporting the bill include:
- The National Association of Insurance Commissioners (NAIC)
- The Council of Insurance Agents and Brokers
- The R Street Institute
- The Surety and Fidelity Association of America
- The U.S. Chamber of Commerce
- The Defense Credit Union Council
- The Consumer Credit Industry Association
- The American Council of Life Insurers
- The American Land Title Association
- The National Association of Insurance and Financial Advisors
CFPB declined to comment.
Congressman Bryan Steil, a Republican from Wisconsin, is introducing a companion bill in the U.S. House.
Source link: Insurance Journal — https://bit.ly/498of6f