Insurance Groups Seek To Escape Regulation Under New Agency
Monday, Jul 20,2009, 8:22:11 PM Click:
WASHINGTON (Dow Jones)--The insurance industry is seeking changes to legislation to create the new Consumer Financial Protection Agency that would prevent insurers from being swept into the agency's purview.
Thirteen insurance trade groups, in a letter to key lawmakers, asked to exclude mortgage, title and credit insurance from the agency's oversight. They also want lawmakers to tighten legislative language they fear will place certain insurance products under the agency.
The agency, as proposed by House Financial Services Chairman Barney Frank, D-Mass., would have oversight over all consumer credit products, including mortgages and credit cards, but not over securities and most insurance products. Mortgage, title and credit insurance are explicitly covered, however.
The proposed agency would have broad powers to write rules protecting consumers who use financial products and banning certain practices. Insurers breathed a collective sigh of relief when they largely escaped being covered by the agency in legislative drafts. Now they are lobbying to make sure they are excluded entirely.
The industry argues it is already regulated by state insurance commissioners that see consumer protection as their top priority.
"Inclusion of insurance products will result in a duplicative regulatory regime with insurers, producers and consumers caught in the middle," the groups wrote to Frank and Rep. Spencer Bachus, R-Ala., the panel's No. 2 lawmaker.
Sens. Christopher Dodd, D-Conn., and Richard Shelby of Alabama, the chairman and top Republican of the Banking Committee, were also addressed by the letter.
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