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New Threat: Bill To Give FTC Authority to Investigate Insurance Industry

Just as financial services regulatory reform was finally been signed into law and the Senate wrapped up its final week of work before the annual...
August 9, 2010

Just as financial services regulatory reform was finally been signed into law and the Senate wrapped up its final week of work before the annual August recess, a bill was introduced that once again poses a major challenge to the property/casualty insurance industry.

The Insurance Competition and Transparency Act (S. 3685) introduced by Sens. John Rockefeller (D-W.Va.), and Mark Pryor (D-Ark.), would give the Federal Trade Commission the ability to conduct studies, prepare reports, and release information relating to insurance companies without first receiving a congressional request to do so. Currently, the FTC does not have jurisdiction over the business of insurance - insurance industry trade practices are regulated by the states. As part of this, the FTC is banned under a 1979 law from undertaking any study of the insurance industry on its own - it may only undertake a study of insurance industry practices if it is first requested to do so by Congress.

S. 3685 is targeted at health insurers and goes back to the debate on the healthcare reform package, when a last-minute provision was added to the House healthcare package that would have also given the FTC the authority to investigate the insurance industry. That provision was removed, but now it is back as a stand-alone bill. Like this earlier House provision, the language of the new Senate bill - while aimed at health insurers - would include all insurers, including property/casualty.

This bill is a back-door attempt to involve the federal government in insurance regulation in a very big way. Since 1979, the FTC has periodically attempted to gain regulatory authority over insurance, but has always been rebuffed by Congress. This bill also contradicts the financial services overhaul recently signed into law creating a new Federal Insurance Office specifically charged with becoming a federal clearinghouse for information on the insurance industry - with the specific exception of health insurance. The FIO is also prohibited from regulating insurance. Expanding FTC authority into this new office's jurisdiction would be duplicative and contrary to the congressional intent for creating the FIO.

What It Means to Agents: This is yet another attempt to usurp the authority of the states to regulate insurance and empower the federal government to do so. PIA vehemently opposes S. 3685, the Insurance Competition and Transparency Act.