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3 Ways the Senate Dodd-Frank Bill Could Affect Agents

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S. 2155 — the big Dodd-Frank Act change bill now on the Senate floor —  could lead to changes in the everyday lives of many agents and brokers who sell products such as life insurance, annuities, long-term care insurance and Medicare plans.

Most sections in the “Economic Growth, Regulatory Relief, and Consumer Protection Act” bill relate mainly to banks, credit unions, mortgage lenders and other types of non-insurance businesses, but two relate directly to the life,, health and annuity sectors.

One is Section 212, the International Insurance Capital Standards Accountability section.

The other is Section 303, the Immunity From Suit for Disclosure of Financial Exploitation of Senior Citizens section.

(Related: 3 Ways Training Can Prevent Elder Financial Abuse)

A complete copy of the bill, which was introduced by Sen. Mike Crapo, R-Idaho, is available here.

There’s no guarantee that the bill, or any specific provision in the bill, will get through the Senate, or the House, but the bill as a whole appears to have broad, genuinely bipartisan support. Members of the Senate voted 67-32 Tuesday to let the bill come up on the floor today for formal debate.

All Republicans who participated agreed to let the bill come up on the floor. Sixteen Democrats and one independent who usually caucuses with the Democrats also voted in favor of consideration.

Here’s a look at three facts about the bill that could affect producers, if the bill becomes law as written and works the way the drafters expect.

1. Insurance producers may get federal legal protection when they report some suspicions of elder financial abuse to the authorities.

The financial exploitation reporting immunity section, Section 303, could provide immunity from some types of legal action for insurance producers affiliated with insurance companies, insurance agencies, broker-dealers or investment advisers that empower the producers to report suspicions of wrongdoing.

The provision:

  • Would apply to producers’ efforts to report suspicions of exploitation of people ages 65 and older in the 50 United States, in the District of Columbia, or in any territory or possession of the United States.
  • Would cover producers who disclose their suspicions to state insurance regulators; to other state or federal regulatory or law enforcement agencies; to a law enforcement agency; or to a state or local agency responsible for administering adult protective services laws.
  • Would define “exploitation” to mean “the fraudulent or otherwise illegal, unauthorized, or improper act or process of an individual, including a caregiver or a fiduciary, that uses the resources of a senior citizen for monetary or personal benefit, profit, or gain; or results in depriving a senior citizen of rightful access to or use of benefits, resources, belongings, or assets.”
  • Would shield the covered producers against “any civil or administrative proceeding” for contacting authorities, if the producers were trained, made any disclosures in good faith, and made any disclosures with “reasonable care.”
  • Does not define the term “reasonable care.”

2. Insurers that want to empower producers to report suspicions of elder financial abuse may have to add producer training and credential tracking requirements.

An insurance company, insurance agency or other financial institution that wants to empower producers to report exploitation must offer the producers training on “how to identify and report the suspected exploitation of a senior citizen internally and, as appropriate, to government officials or law enforcement authorities.”

The training program must describe “the common signs that indicate the financial exploitation of a senior citizen” and “discuss the need to protect the privacy and respect the integrity of each individual customer of the covered financial institution.”

The training provided for a producer must be appropriate for the producer’s job responsibilities.

The insurer, insurance agency or other financial institution providing the training must make the training content available to law enforcement agencies that want to see the content. The financial institution must also keep records documenting that a producer received the training.

A producer may count as being trained to report senior financial exploitation “regardless of whether the training was…. completed before, on or after the date of enactment of this act,” according to the bill text.

3. Producers may be able to get interesting annual reports about international insurance regulatory developments from the federal government.

Section 212 of S. 2155, the International Insurance Capital Standards Accountability section, is a response to allegations that Obama administration officials shut many state insurance regulators, and insurance groups, out when officials negotiated a new international insurance trade agreement.

One provision would require the Treasury secretary, the Federal Reserve board and the Federal Insurance Office director to consult with state insurance regulators before taking a position, or reasonably intending to take a position, with respect to insurance proposal by a global insurance regulatory or supervisory forum.

The provision would require the Treasury secretary, the Federal Reserve board or the FIO director to “achieve consensus positions with state insurance regulators through the National Association of Insurance Commissioners, when they are United States participants in negotiations on insurance issues” before international financial regulatory forums.

Section 212 does not define the term “consensus positions.” In the past, some critics of earlier versions of the international insurance regulation  provision have wondered if federal regulators will have to get unanimous support from NAIC members before taking positions on international insurance regulatory matters.

For insurance agents and brokers, the concrete effect of the provision could be a series of new reports about the state of international insurance regulation.

Section 212 would require the Treasury secretary and the Federal Reserve board to produce annual reports on “global insurance regulatory or supervisory forums.”

Each annual report would have to describe the insurance proposals under discussion at the international forums; the effects the proposals could have on U.S. insurance markets; the positions the Treasury secretary, the Federal Reserve board and the FIO director had taken on the proposals; and U.S. efforts to increase transparency at the Financial Stability Board and at the International Association of Insurance Supervisors.

Before the Treasury secretary, the Federal Reserve board or the FIO director took a position on an international insurance issue, the federal regulators would have to work with the NAIC to give Congress an analysis of the possible impact of the proposal on consumers and insurance markets in the United States.

Members of the public would get at least 60 days to comment on the impact analysis reports.

— Read Insurance Trade Negotiation Bill May Split Industry on ThinkAdvisor.

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