S. 1544: Insurance Data Protection Act

The 2010 Dodd-Frank law created two federal offices that watch the insurance industry from Treasury. The Federal Insurance Office monitors insurers and advises on national insurance policy. The Office of Financial Research gathers data on risks that could spread through the whole financial system.

Both offices can subpoena data from companies today, though only after their director puts in writing that the data is needed for the office's work. S. 1544 would end that subpoena power over insurance companies at both offices. The Federal Insurance Office loses its subpoena and enforcement authority outright; the Office of Financial Research keeps it for banks and other financial firms, but not for insurers.

Neither office is abolished, and neither is barred from asking. Insurers could still share data voluntarily, and state insurance commissioners could still pass along what they collect. What changes is who has the final say: an insurer that declines a federal request could not be compelled to comply.

The rest of the bill deals with data that does get shared. It extends existing confidentiality protections to nonpublic insurance information passed between the Federal Insurance Office, other federal agencies, state regulators, and their agents, and keeps legal privileges attached to that information when it changes hands. It also adds a new confidentiality provision covering financial regulators more broadly.

Sponsors frame the bill as protecting insurers' sensitive data and keeping insurance oversight with the states. Critics of the approach argue federal regulators need the ability to see into the industry directly when trouble is building across the financial system.