WASHINGTON–Life insurance industry trade groups and a state regulator all voiced strong opposition in testimony before Congress today to the Obama administration’s proposal that a separate federal agency be created to oversee consumer protection of financial products.
The testimony before the House Financial Services Committee dealt with suggestions by some officials of the Obama administration that a new federal Consumer Financial Products Protection Agency be given oversight over variable annuities and perhaps other life products.
The hearing was significant because an Obama administration white paper outlining its proposed changes is silent on whether oversight of insurance products should be authorized for the new agency.
Under provisions outlined in the white paper, the new agency would assume the authority now held by a unit of the Federal Reserve Board.
Industry groups that testified included the American Council of Life Insurers, the National Association of Insurance and Financial Advisors and NAVA. In addition, representatives of the Insurance Marketplace Standards Association said in written testimony submitted to the panel that they opposed allowing the proposed new agency to have oversight over life products.
Even representatives of consumer advocacy groups expressed no interest in having the proposed new agency oversee life products. Travis Plunkett, legislative director of the Consumer Federation of America, and Edmund Mierzwinski, consumer program director of the U.S. Public Interest Research Group, said that they would recommend that “strong consideration be given to providing the proposed agency with jurisdiction over insurance products that are central or ancillary to credit transactions, such as credit, title, mortgage and forced place insurance.”
But they made no mention of life products in their testimony.
Testifying for the ACLI, Gary Hughes, executive vice president and general counsel, said, “We do not believe that the interests of life insurance consumers would be well served by subjecting life insurance products to the additional jurisdiction of the CFPA.”
He observed that “unlike most other financial products, the regulation of life insurance products has a direct and fundamental relationship to issuer solvency and therefore cannot prudently be separated from those other aspects of insurance regulation that in the aggregate constitute solvency oversight.”