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Insurance Data Protection Act proposes barring federal oversight of insurance, ‘overstepping’ data collection

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Insurance | Legal
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U.S. Senator Katie Britt (R-Ala.) and 16 co-sponsors have introduced the “Insurance Data Protection Act” to amend current law and mitigate what they call overstepping by the Federal Insurance Office (FIO) into state-regulated insurance.

The bill would prohibit the FIO and other financial regulators from collecting data directly from insurance companies and eliminate the FIO director’s subpoena authority.

Currently, federal law allows the FIO to request data and information to monitor all insurance activity, including regulation issues and affordable insurance access for minorities and underserved communities.

Britt contends that the law isn’t meant to give the FIO general supervisory or regulatory authority over state-by-state insurance business but is only to function as an informational body. Her proposed act seeks to make that clarification.

The bill would require the FIO to check all publicly available data first for information that might address its concerns before submitting data inquiries to “limit unnecessary data inquiries and prevent duplicative efforts across the state and federal landscapes.”

Any confidentiality agreements between the parties already in effect would apply, according to the bill. The information would only be shared with a state or federal agency or any other entity if an information-sharing agreement is in effect that lays out how the data can be used, complies with federal law, and won’t preempt any existing federal or state laws or court rules that make the information privileged. Britt says doing so ensures consumer information remains secure.

“Our state insurance regulators have more than proven their ability to effectively and responsibly supervise the American insurance industry for over a century,” said Britt. “FIO should work with, not around, state insurance officials. Not only is FIO overstepping its lawful authority and trampling on Congressional intent, but the office is also utilizing private insurance data to advance the Biden Administration’s leftwing Green New Deal agenda.”

The Biden Administration’s efforts to reduce greenhouse gas emissions by transitioning to clean energy have been dubbed the “Green New Deal” by both activists and opposition. Biden used his executive authority in September to create the American Climate Corps, a green jobs training program, that had been proposed in early versions of the Inflation Reduction Act approved last year. It was “jettisoned amid strong opposition from Republicans and concerns about cost,” according to the Associated Press.

Calling her bill “commonsense legislation,” Britt said it would bar needless spending and unnecessary data reporting to ensure the state-regulated insurance market remains strong while also protecting consumers’ sensitive information.

The National Association of Mutual Insurance Companies (NAMIC), American Property Casualty Insurance Association (APCIA), Association for Independent Agents (Big I), and Professional Insurance Agents (PIA) have endorsed the bill.

“As a former insurance agent, I know firsthand the importance of our state-based insurance regulation regime that has resulted in highly competitive and fair markets across the country — addressing local issues with local solutions,” said Sen. Tim Scott (R-S.C.), one of the co-sponsors of the bill. “That’s why I’ve been alarmed by the Federal Insurance Office’s (FIO) efforts to overstep its authority and push the Biden administration’s radical climate agenda. This important bill will reign in the administration’s climate activists, ensure greater coordination between FIO and state insurance regulators, and protect both consumers’ and insurers’ data.”

The bill backers contend that the Biden Administration has pressured the FIO to overstep into the state-regulated insurance industry, including through a “Climate-Related Financial Risk Data Collection” issued in the president’s October 2022 climate executive order.

The data collection would require more than 200 private homeowner insurance companies to provide highly detailed data broken down by zip code to the FIO regarding the effect of climate-related catastrophes on insurance availability and affordability for Americans, according to Britt.

On Nov. 1, the Treasury Department announced its intention to move ahead with the data call.

“Americans are facing growing challenges from extreme weather events caused by climate change,” said Secretary of the Treasury Janet L. Yellen, on Nov. 1. “The Treasury Department’s insurer data collection is the first of its kind and will provide critical information at a local level to assess the increasing impacts of climate change on household budgets. The resulting data and analyses will help policymakers inform potential approaches to improving insurance availability and affordability for consumers.”


Featured image: Mikhail Makarov/iStock

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