The House Financial Services Committee has passed two bills out of committee to help insurers saddled with regulatory burdens. One bill is H.R. 3746, the Business of Insurance Regulatory Reform Act of 2017. It amends the Consumer Financial Protection Act of 2010 — which is part of the Dodd-Frank Act — and if complaints arise it exempts insurers from the bureau’s enforcement.
The reason for the change is because insurers are already regulated by state regulators. It passed 37 to 18.
Dirk Kempthorne is the president and CEO of the American Council of Life Insurers. He said the bill creates a certainty for insurers — and for consumers — that there will not be conflicting or duplicative consumer protection regulations.
“This bipartisan legislation clarifies that the Consumer Financial Protection Bureau should only exercise regulatory jurisdiction over the business of insurance where it has clear authority from Congress, and that deference should be given to state insurance regulators when it comes to the business of insurance,” he said.
The other bill passed out of the House Financial Services Committee is H.R. 4061. It is known as the Financial Stability Oversight Council Improvement Act. This one amends the Dodd-Frank Act to make the Financial Stability Oversight Council (FSOC) consider the how appropriate it is to impose heightened standards on non-bank financial companies supervised by the Federal Reserve instead of other forms of regulation designed to mitigate risk.
That one passed 45 to10.
By the way, this bill is based on Section 151 of H.R. 10. That is the Financial CHOICE Act of 2017. It eliminates Dodd-Frank’s too-big-to-fail tag from insurers and does a lot of other things supported by the PIA like:
• Replacing the non-voting, independent insurance member of the FSOC with a voting member
• Requiring the federal government to consult with state insurance regulators when looking at national and International matters of insurance
What PIA National doesn’t like about The CHOICE Act is the creation of the Independent Insurance Advocate. PIA National Executive Vice President Mike Becker said it will be housed in the Treasury and is the only thing PIA doesn’t like about CHOICE.
“The Independent Insurance Advocate could quickly become a federal insurance czar with no supervision, positioned to usurp our strong and effective system of state insurance regulation. It runs counter to the purpose of shrinking the federal footprint,” Becker said.
Speaking of changes in Dodd Frank, Office of Management and Budget Director Mick Mulvaney is the new head of the Consumer Financial Protection Bureau (CFPB). The bureau has been — if they are to be believed — the bane of the existence of financial institutions like banks, credit card companies, loan and other financial businesses and to some extent insurers which is why the House Financial Committee made its change in the CFPB regulations.
Mulvaney is making changes in the CFPB and wants these institutions to file complaints about how they have been treated. Mulvaney — like many financial institutions— thinks the CFPB has overstepped its authority in some cases and he is looking “for evidence to ensure the bureau is fulfilling its proper and appropriate functions to best protect consumers.”
Translation: He’s cutting the aggressive regulatory and enforcement actions of the bureau.
Responding to criticism that he’s supporting business over consumers, Mulvaney said it’s “natural for the Bureau to critically examine its policies and practices to ensure they align with the Bureau’s statutory mandate. Moving forward, the Bureau will consistently seek out constructive feedback and welcome ideas for improvement. Much can be done to facilitate greater consumer choice and efficient markets, while vigorously enforcing consumer financial law in a way that guarantees due process.”
The complaints of financial institutions under the Obama presidency — which is when the bureau was created by the Dodd-Frank Act — is they were automatically assumed guilty when any complaint was filed. The contention being that due process was violated and they had no way to prove it when they’d done nothing wrong.
Mulvaney said he’s going to shift the focus of the CFPB to deregulation and more choices for consumers. He plans sweeping changes based on what he’s going to hear from business.
Source links: The Hill, Business Insurance, PIA National