MR. WATSON: In 1945, the McCarran-Ferguson Act gave insurance regulation back to the states. Once again, states battled regulation with the feds, and they put it to bed with the McCarran-Ferguson Act.
MR. WATSON: Now, the Fair Credit Reporting Act -- we will touch on it in another chapter, but the Fair Credit Reporting Act is to protect people from what? Well, people who are doing a credit check on them. You need to know what your rights are. You need to know what is in that report. You have the right to have any errors corrected, things like that. We will go more into these details in chapter nine.
- You have to be notified within three days that the report has been requested.
- You must be provided with the names of all the people contacted during the preceding six months, unless it’s in regard to former employment, then it’s two years.
- *** If, based on the inspection report, you are rejected, the insurance company must provide you the name and address of the consumer reporting agency that supplied the report ***
- If the credit report is requested by the applicant, they have the right to know what's in it. This is supplied by the reporting agency, not the insurance company, the insurance company never supplies the credit report to the applicant.
- You have the right to have any corrections made, that kind of stuff. That just protects consumers.
1999 - Financial Services Modernization Act ***
MR. WATSON: This ACT allows banks to sell insurance products.
MR. WATSON: Insurance companies are second only to what in the financial services arena?
STUDENTS: Commercial banking.
MR. WATSON: So, you had this big glass barrier. Actually, the Glass-Steagall Act of 1933. Banks couldn't engage in insurance, and insurance companies couldn't engage in banking. In 1999, however, congress repealed this. The glass barrier was called the Glass-Steagall Act. When I say glass what are you thinking of? A glass barrier. So in 1999, the Financial Services Modernization Act (also known as the Gramm-Leach-Bliley Act) shattered the barrier by repealing the Glass-Steagall Act. So what did that allow?
STUDENTS: No barriers.
STUDENT: Banks to sell insurance, insurance companies to sell bank products.
MR. WATSON: All right. What did the 1999 Financial Services Modernization Act (also known as the Gramm-Leach-Bliley Act) do?
STUDENT: Broke the glass wall.
MR. WATSON: So now insurance and banking can do each other's thing.
STUDENT: Means no barriers. Right?
MR. WATSON: You could say that. Whatever triggers your imagination. You need to know that it repealed the Glass Steagall Act, so now banks are allowed to sell insurance and insurance companies are allowed to sell bank products.
2001 - USA PATRIOT ACT (Uniting & Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism) ***
MR. WATSON: This is concerned with money-laundering & terrorism financing.
MR. WATSON: WOW!!! This "little" piece of legislation has stirred some controversy. This gives different federal agencies broad powers to curtail attempts to launder money & finance terrorism. It's very important to remember that. For our purposes it is concerned with money laundering & terrorism. It is the agent's and the insurance company's responsibility to report suspicious activity. Financial institutions must at the very least:
- develop new compliance systems & training
- designate anti-money laundering officers ***
- share information with other financial institutions and enforcement agencies
- adopt procedures to verify the identity of any person opening an account
State Regulation of the Insurance Industry ***
MR. WATSON: State regulation of insurance: Each state
- regulates the issuance and enforcement of state insurance laws.
- licenses and supervises companies.
- licenses and supervises agents.
- controls the kind of insurance contracts that are sold.
- determines the amount of reserves the company must maintain.
- regulates insurance companies’ investments and they oversee insurance companies' marketing practices.
MR. WATSON: Aren't you all tired of this?
STUDENTS: Yes!