Career Center Powered by GreatInsuranceJobs.com
NU Online News Service, June 30, 1:25 p.m. EDT
WASHINGTON—Insurance products would be mostly exempt from oversight by the proposed Consumer Financial Protection Agency under legislation submitted to Congress this morning by the Treasury Department.
Under the proposed measure, “the business of insurance” would be exempt from oversight by the new agency except for credit insurance, mortgage insurance and title insurance.
Cliston Brown, a staff official of the Property Casualty Insurers Association of America, said the trade group was “pleased” by the specifics of the new bill.
“The property and casualty industry offers the strongest consumer protections of all financial services sectors and does not need additional consumer products regulation," he said.
But, those agencies licensed as “broker-dealers” by the Securities and Exchange Commission would be subject to oversight by the new agency.
Specifically, under the legislation, personal lines products, life insurance, annuities, disability income insurance and long-term care insurance would be exempt from oversight.
At the same time, officials of the Association for Advanced Life Underwriting said that one “question/concern” about the proposed legislation is what the implications for AALU members could be of the apparent coverage of “financial advisors” by the new agency.
Sarah Spear, AALU director of policy and public affairs, explained that unlike the definition of “investment advisors,” the proposed legislation does not appear to contain a carve-out for those regulated by the Securities and Exchange Commission.
Ms. Spear said AALU’s analysis is based only on a “cursory review” of the more than 100-page legislation.
Specifically, she said, “the term financial product means any product related to a financial activity, and the term financial activity explicitly excludes insurance.”
The proposed bill would split off consumer protection of financial products from existing federal agencies and shift it to an independent agency.
The five-member agency would have a mandate to “promote transparency, simplicity, fairness, accountability and access in the market for consumer financial products and services.”
But, according to recent testimony, the new agency will primarily rely on state consumer protection agencies and attorneys general to carry out its enforcement activities.