Insurance mostly dodges financial reform

Exemption from Consumer Financial Protection Bureau
5 of 8
Exemption from Consumer Financial Protection Bureau

The insurance industry successfully won a "carve-out" in the act that exempts it from scrutiny by the Consumer Financial Protection Bureau, the newly created watchdog agency meant to monitor consumer financial practices. Giant insurance companies like AIG would still be monitored under the new 10-member Financial Stability Oversight Council designed to end "too-big-to-fail" bailouts.

"We tried to get at least credit-related insurance products like credit life covered, but they even fought that," says the Hunter.

But Zielezienski says: "The structure of insurance companies and holding companies are different from banks. With insurance companies, capital is held at the operating company level so they can pay claims when they come due. By contrast, there is no real capital held at the holding company level; that would be inefficient and wouldn't be consistent with the concept of making sure that capital is available to the operating company's policyholders."

Impact on consumers: No change.




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