Business of Insurance Regulatory Reform Act of 2025
- Sponsor
- Rep. Steil, Bryan [R-WI-1]
- Committees
- Financial Services Committee (primary)
- Last action
- Jul 23, 2025
Bottom line
This bill aims to reduce federal regulatory overlap and reinforce the primacy of state authority in regulating the business of insurance, thereby limiting the CFPB's jurisdiction over state-regulated insurance entities.
What it actually does
This bill amends the Consumer Financial Protection Act of 2010 to explicitly clarify and limit the authority of the Consumer Financial Protection Bureau (CFPB) over entities that are regulated by a State insurance regulator. It restricts the CFPB's enforcement powers when these entities are engaged in the 'business of insurance' and mandates that the CFPB's authority under other consumer laws be narrowly construed in such cases. Additionally, it establishes a rule of construction favoring the authority of State insurance regulators.
Proponents argue
Proponents argue that this bill prevents federal overreach into the well-established state-based insurance regulatory system, reduces duplicative regulation, and ensures that insurance products are regulated by experts familiar with their unique characteristics. They contend it provides regulatory certainty for insurance companies and protects consumers by maintaining a clear, consistent regulatory framework at the state level.
Opponents contend
Opponents might argue that this bill creates a loophole for certain financial products offered by insurance companies, potentially leaving consumers vulnerable to predatory practices if the CFPB's oversight is curtailed. They may contend that some financial products offered by insurance companies are functionally similar to those offered by other financial institutions and should therefore be subject to the same federal consumer protections.
The bill text is very short and can be read quickly, but understanding its full implications requires familiarity with existing financial regulatory frameworks and the historical context of insurance regulation.
Section 2(1) of H.R. 4735, amending 12 U.S.C. 5517(f)(2)
Restriction on CFPB Enforcement for Insurance Business
This provision amends the Consumer Financial Protection Act to explicitly limit the CFPB's power to enforce its regulations against entities that are already regulated by a state insurance authority. Specifically, it states that the CFPB cannot enforce its rules against these entities when they are engaged in the 'business of insurance,' even if they are also offering a consumer financial product or service. It further mandates that the CFPB's authority to enforce other consumer laws against these entities must be 'narrowly construed' to the extent they are engaged in the business of insurance.
Supporters argue
Supporters argue this clarifies existing law, preventing duplicative and potentially conflicting regulation between federal and state authorities. They contend that state insurance regulators are best equipped to oversee the business of insurance, ensuring consumer protection without unnecessary federal interference.
Critics contend
Critics may argue that this provision could create regulatory gaps, particularly for hybrid financial products offered by insurance companies that resemble banking or lending products. They might assert that limiting CFPB authority could weaken consumer protections for these products, as state insurance regulators may not have the same mandate or resources for broader consumer financial protection.
Tradeoffs
The bill balances the desire for streamlined, non-duplicative regulation for insurance companies against concerns that some financial products offered by these companies might fall outside robust consumer protection if federal oversight is removed. It highlights the tension between state-based insurance regulation and federal financial consumer protection.
Section 2(2) of H.R. 4735, adding 12 U.S.C. 5517(f)(4)
Broad Construction of State Authority
This provision adds a new rule of construction stating that the enforcement of the Consumer Financial Protection Act's title (Title X) must be 'broadly construed in favor of the authority of a State insurance regulator' when dealing with a person regulated by such a regulator. This means that in any legal interpretation, the default should be to empower the state insurance regulator's authority over the CFPB's.