“Federal creep” on oversight of insurance and financial services is a key concern in legislation written by the Republican majority and approved Wednesday by the House Appropriations subcommittee that controls the purse for the Departments of Labor and Treasury.
The panel included that motivation in a report that accompanied a bill that the subcommittee sent to the full committee. The bill would specifically bar the Department of Labor from proceeding in crafting a rule establishing an updated fiduciary standard.
The bill would also remove the Office of Financial Research’s funding from the Treasury Department and made subject to congressional appropriation. The report explains that House Republicans want to control OFR funding because it provides the data used by the Treasury and the Federal Insurance Office to impose oversight on insurance.
The report says the committee notes that the state-based system of insurance regulation has served the United States well for more than 150 years, and that the authority to regulate insurance lies with the individual states.
“Any federal regulation of insurance can take final form only with explicit approval of Congress,” the report adds. “It is important to note that other international financial agreements have had deleterious impacts on some of our nation’s financial institutions.”
It then says that the committee is “concerned’ about the ongoing negotiations to create international capital standards “and believes the U.S. agencies party to those negotiations must appropriately fulfill their duties to advocate for the U.S. insurance market and state-based regulatory regime.”
The report language also takes the Financial Stability Oversight Council to task for its decisions to designate insurance companies as systemically important and therefore subject to regulation by the Federal Reserve Board. The FSOC is another federal agency within Treasury.
The Treasury Department did not respond to request for comment, and a DOL spokesman said the agency would not comment.
The OFR assembles the statistical data used by the FSOC and FIO to fulfill their duties, including providing an annual report on the health of the insurance industry. Recently, these reports have focused on broad use of captives by insurers, the decline in life insurance sales, as well as the precipitous drop in the number of insurance agents.
The reports have also reported to Congress that the lack of uniform standards on reinsurance collateral by the states is potentially raising the cost of insurance to U.S. consumers.
“When conducting research to support regulation of large swaths of the economy, both OFR and FSOC should be more receptive to the concerns, oversight and counsel from the legislative branch,” the report says.
The bill also would:
- Give Congress the authority to defund the Consumer Financial Protection Bureau, which is funded through the Federal Reserve budget, under the House Appropriations Subcommittee bill.
- Defund the implementation of the Affordable Care Act. The bill would seek to stop the ACA by rescinding prior-year mandatory funds and prohibiting the use of any new discretionary funding to implement Obamacare.
- Restrict or shut down programs dealing with abortion. These include the Health Care Conscience Rights Act, which bars an insurance company from requiring anyone to buy individual health insurance coverage that includes coverage of an abortion or other item or service “to which the individual has a moral or religious objection, or prevent an issuer from offering or issuing, to that individual, individual coverage excluding such item or service.” These have also been contained in recent Appropriations Committee funding bills, but later removed.
InsuranceNewsNet Washington Bureau Chief Arthur D. Postal has covered regulatory and legislative issues for more than 30 years. He can be reached at [email protected].
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