Earlier this year, the Trump administration issued a stop-work order for the bureau, but it was blocked by a U.S. district judge. (Credit: Diego M. Radzinschi/ALM)
A new bill seeks to bar the Consumer Financial Protection Bureau (CFPB) from overseeing insurers.
The Business of Insurance Regulatory Reform Act would prevent the CFPB from applying any of its regulations to insurers and reaffirm the state-based insurance regulatory system. The bureau would also be barred from regulating non-insurance consumer products and services offered by insurers.
“With 23 years of experience in the insurance industry, I’ve seen first-hand the value of our state-based insurance system,” said Sen. Tim Scott (R-S.C.), one of the bill’s sponsors, in a statement. “As the CFPB continues to overstep its authority and operate beyond its jurisdiction, this bill will protect our unique system of state-based insurance regulation that has resulted in highly competitive, fair markets across the country from unchecked bureaucrats in Washington.”
Rep. Bryan Steil (R-Wis.) introduced a companion bill in the U.S. House of Representatives.
The Dodd-Frank Act already prohibits the CFPB from overseeing the “business of insurance” and any organizations overseen by a state insurance commissioner. But supporters of the bill argue that language is too ambiguous and has allowed the CFPB to exceed its authority.
The CFPB was created in the wake of the 2008 financial crisis as a single agency responsible for enforcing consumer protection laws. Over the last several years, it has worked to cap bank overdraft fees, regulate payment apps and resolve consumer complaints.
The bill comes as the CFPB is under fire from the Trump administration. The bureau’s work was suspended in early February. In March, a U.S. District judge blocked the administration from firing 1,500 of the bureau’s 1,700 employees. She also struck down the stop-work order aimed at the CFPB. Employees say the future of the bureau and its work is still up in the air.
The bill has received the support of the American Council of Life Insurers, the American Land Title Association, the American Property Casualty Insurance Association, the Consumer Credit Industry Association, the Council of Insurance Agents and Brokers, the Independent Insurance Agents & Brokers of America, the National Association of Insurance and Financial Advisors and the National Association of Mutual Insurance Companies, among others.
“State regulators are accountable to consumers and best know their communities, laws and markets,” said Jimi Grande, senior vice president of federal and political affairs for NAMIC. “Congress tried to make it clear in establishing the CFPB that the states, not the bureau, have authority over the insurance industry. Unfortunately, as is all too common in Washington, the bureau has tried to overstep its limits and expand its powers. The Business of Insurance Regulatory Reform Act will reassert those boundaries and ensure a better system for American consumers.”
A similar proposal to the Business of Insurance Regulatory Reform Act was introduced during the 2017-2018 legislative session but did not make it to a vote.
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