The state of regulation and military sales practices are the two main life insurance issues the Senate Banking Committee will deal with this year, said panel chairman Sen. Richard Shelby, R-Ala., last week.
Shelby also said the committee is in the process of drafting a bill that would establish standards for notifying consumers of unauthorized disclosure of their financial information in certain circumstances.
The bill will be designed to complement existing data security protections established in the Gramm-Leach-Bliley Act and the Fair Credit Reporting Act.
Regarding regulation, Shelby said the committee intends to hold comprehensive hearings “on the state of insurance regulation, including issues of solvency, consumer protection and optional federal charter.”
His comments come as some segments of the insurance industry, including large property-casualty insurers and most life insurers, are pressing for legislation that would create an optional federal charter. Legislation creating such an option is expected to be introduced by two members of the committee, Sen. John Sununu, R-N.H., and Sen. Tim Johnson, D-S.D., later this month.
Regarding sales of insurance to the military, Shelby said the committee “continues to work on bipartisan legislation to address mutual fund sales abuses to military personnel.”
The House passed a bill, H.R. 458, tightening control of sales of insurance and allied products on military bases by an overwhelming majority last year. The bill included a provision barring sales of so-called “contractual mutual fund plans” but called for far broader reforms than just barring the sale of this product. It is unclear whether Shelby’s panel will use the House bill as the basis for its action this year.
A companion to the House bill has been introduced in the Senate by Sen. Michael Enzi, R-Wyo.
At the same time, as expected by the industry, Shelby said the panel “will continue its thorough series of hearings on terror finance.”
Shelby said, “As part of our country’s anti-terror efforts, the committee will continue to conduct hearings and a review of our national money laundering strategy.”
The hearings will come against the background that, for the first time since anti-money laundering disclosure regulations have been mandated for financial institutions, life insurers will be required to comply.