On Jan. 16, the Senate announced new bipartisan legislation aimed at keeping insurance corporations regulated by state regulators.
The Business of Insurance Regulatory Reform Act of 2024 from senators Tim Scott, R-S.C., and Joe Manchin, D-W.V., was referred to the U.S. Senate’s Committee on Banking, Housing, and Urban Affairs to make sure the Consumer Financial Protection Bureau (CFPB) “does not overstep their statutory authority.”
The CFPB was established as part of the Dodd-Frank Act in 2010, but has since—according to the bill’s authors and industry lobbying groups—cut into state-regulated insurance activity, which was exempt from the CFPB’s authority when it was created.
“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,” said Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies (NAMIC).
“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) added: “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.”
According to Scott and Manchin, the proposed legislation is also supported by the National Association of Insurance Commissioners (NAIC), Council of Insurance Agents and Brokers, Independent Insurance Agents and Brokers of America, National Association of Professional Insurance Agents, R Street Institute, Surety and Fidelity Association of America, U.S. Chamber of Commerce, Defense Credit Union Council, Consumer Credit Industry Association, and American Council of Life Insurers.
Congressman Bryan Steil (R-Wis.) is leading similar legislation in the United States House of Representatives.
Scott and Manchin have already attempted to curtail the CFPB’s regulatory authority over insurance. Scott and Manchin co-sponsored the Business of Insurance Regulatory Reform Act of 2018, which was proposed six years ago. The bill was blocked in the 115th Congress.
At the time, the NAIC stated that it was “understandable that some unintended overlap or duplication of effort with other regulators can occur,” but that the measure would clear the meaning of the business insurance exemption.