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Regulation and Compliance > Legislation

Bill Could Limit Treasury Unit's Ability to Probe Insurers

By Allison Bell

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A group of House Republicans wants to keep federal financial regulators out of insurers’ hair.

The lawmakers introduced H.R. 5535, the Insurance Data Protection Act bill, last week.

The bill would discourage the Federal Insurance Office and some other federal agencies, such as the Office of Financial Research, from getting data directly from insurers.

What It Means

The bill could help hold down the cost of insurance and annuities for your clients by lowering insurers’ administrative costs and aggravation levels.

Opponents argue that restrictions on federal regulators’ insurance company data calls could add to U.S. financial system risk by reducing federal regulators’ ability to get quick answers about insurance industry trends.

The History

Traditionally, Congress has left regulation over the business of insurance to the states.

Over the years, agencies such as the IRS and the U.S. Securities and Exchange Commission have gained the authority to oversee some aspects of insurance companies’ activities.

Congress set up the Federal Insurance Office and several other agencies when it adopted the Dodd-Frank Wall Street Reform and Consumer Protection Act in an effort to help federal regulators understand the insurance industry and prevent a recurrence of the kinds of problems that led to the 2007-2009 Great Recession.

H.R. 5535

H.R. 5535 would restrict federal agencies’ ability to ask insurers for information without eliminating all data calls.

The bill would require federal agencies that want data to start by seeing if they could get the information from public sources, state insurance regulators or other federal agencies, such as the IRS, that have an existing process for getting data from insurers.

Once the federal agencies obtained the data, they would have to abide by any confidentiality rules governing the entities that originally collected it.

If the Federal Insurance Office or federal bank regulators needed insurance company data that was not available from data vendors, state regulators or other federal agencies, they would have to put the requests for information through a formal Paperwork Reduction Act review process.

The Paperwork Reduction Act requires many federal agencies to post draft information collection forms and give affected entities a chance to comment on the forms.

H.R. 5535 was introduced by Rep. Scott Fitzgerald, R-Wis. It has five Republican co-sponsors and no Democratic co-sponsors.

The bill is under the jurisdiction of the House Financial Services Committee and the House Agriculture Committee.

The US Capitol building in Washington. (Image: Bloomberg)

Allison Bell

Think_Allison

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