Sen. Tim Scott has reintroduced legislation, the Business of Insurance Regulatory Reform Act, drafted to protect the U.S. state-based insurance regulatory system, and ensures that future administrations cannot weaponize the Consumer Financial Protection Bureau (CFPB) against the insurance industry.
Sens. Mike Rounds of South Dakota, Cynthia Lummis of Wyoming, Pete Ricketts of Nebraska, and Bernie Moreno of Ohio all join Sen. Scott, Chair of the Senate Committee on Banking, Housing & Urban Affairs, on the Act, which clarifies the jurisdiction granted to the CFPB by the Dodd–Frank Wall Street Reform and Consumer Protection Act and affirms that state insurance regulators are best positioned to oversee insurers and safeguard the interests of consumers.
“With over two decades of experience in the insurance industry, I understand the importance of our state-based insurance system,” said Sen. Scott. “This bill is critical to building on Senate Republicans’ recent efforts to curb CFPB overreach and will help prevent future administrations from weaponizing the Bureau. By providing regulatory clarity to state regulators, insurers, agents, and consumers, we are ensuring that fair and competitive markets remain free from bureaucratic overreach in Washington.”
Rep. Bryan Steil of Wisconsin is leading companion legislation in the U.S. House of Representatives.
“State insurance regulators have a strong track record of effective regulation of the insurance industry,” said Rep. Steil. “When Congress created the CFPB, it excluded the insurance business from the Bureau’s mandate, avoiding a top down, one-size fits all approach from Washington. Unfortunately, the CFPB has tried to expand its authority without any accountability. This legislation makes it clear to the CFPB that it has no authority to regulate the business of insurance. It’s time for the Bureau to return to the boundaries set by Congress, and this bill is a step forward in making sure it does.”
Title X of the Dodd–Frank Wall Street Reform and Consumer Protection Act created the CFPB and granted the Bureau the authority to regulate “financial products or services.” Congress preserved the regulatory power over the business of insurance to the states through the McCarran-Ferguson Act of 1945, and in Dodd-Frank, excluded the “business of insurance” from the CFPB’s purview over “financial products or services.”
However, under the Biden administration, the CFPB acted outside the scope of its authority by taking action against state-regulated insurance entities engaged in the business of insurance. The Business of Insurance Regulatory Reform Act will clarify that enforcement of the insurance industry remains the power of state regulators, not the CFPB.
“States have successfully overseen insurance markets, fostering innovation while protecting consumers through local expertise and accountability for more than a century,” said Senator Lummis. “This legislation reinforces that proven framework by establishing clear boundaries for federal agencies and ensuring that insurance regulation remains where it belongs: with state commissioners who best understand their markets. I’m pleased to support this bipartisan effort to preserve the regulatory structure that has served American families and businesses so well.”
Click here for more on the Business of Insurance Regulatory Reform Act.
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