Insurance Industry Supports Legislation Designed to Restrict Federal Insurance Office's Regulatory Authority

The proposed Insurance Data Protection Act would require the FIO and other federal regulators to obtain information about insurance companies from state regulators rather than directly.
A panel of the House Financial Services Committee approved the Insurance Data Protection Act[1], legislation designed to restrict the ability of federal regulators to get financial information from insurance companies.[2]

As currently configured, the Insurance Data Protection Act is intended to clearly delineate the FIO's role as an "information-gathering entity" and restrict its ability to act as a regulator.
The bill would revoke the authority of the FIO and the Office of Financial Research (OFR), two new entities created by the Dodd-Frank Act, to subpoena data from insurance companies.

The bill also would require the FIO, the OFR, the Financial Stability Oversight Council, and any other federal entity that seeks data about insurance companies to obtain that data through the insurance company's state regulator, another federal agency, or a public source.[3]
Further, the Act would require both federal entities and state regulators to preserve the confidentiality of private information collected from other state and federal agencies.[4]

The Property Casualty Insurers Association of America (PCI), an insurance industry trade association composed of more than 1,000 member companies nationwide, issued a press release last week applauding the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity for passing the Insurance Data Protection Act.

According to Ben McKay, senior vice president of federal government relations at PCI:
This commonsense bill will help reduce costly, duplicative information requests on insurers... The Insurance Data Protection Act reinforces the Dodd-Frank Act that specifically required the Federal Insurance Office to seek data from state regulators first before imposing burdensome data demands on insurance companies.[5]
R.J. Lehmann, deputy director of the Heartland Institute's Center on Finance, Insurance and Real Estate, suggests that the bill increases the protection afforded insurer information from the restrictions on sharing "confidential" information to a higher level because the bill includes limits on the sharing of "non-publicly available data" by or among state and federal regulators. While Lehmann has his own theories about the who and why behind this provision, he makes an important point:
The bill’s language refers not to “confidential” information, but to non-public information. That’s a key distinction. The statutory financial reports that insurers file with their state regulators and the NAIC are not confidential... That data is not confidential. It just isn’t made available to the public.[6]

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