Banks Selling Insurance Products to Face More Scrutiny

Washington Post
October 2, 2011
Douglas, Danielle

According to speakers at the American Bankers Insurance Association conference, while insurance companies may not receive much oversight from the new Consumer Financial Protection Bureau (CFPB), banks that sell insurance and debt protection products will not escape such scrutiny and could, in fact, see it increased. Banks opted to sell insurance products as a way to shore up their bottom lines as income from fees and loans fell. The Dodd-Frank financial law provided the CFPB with jurisdiction over banks offering these insurance products and whether those firms are disclosing terms to consumers. Some have said that language on disclosure information made available by the bureau could dissuade consumers from purchasing these insurance products and could impact long-term demand. According to a U.S. GAO report released in March, the nine largest credit card issuers earned $2.4 billion in fees for debt protection products in 2009, but only paid out $518 million in benefits to consumers. Critics of the CFPB language say that it is too biased against the products and are looking for language that is more neutral.
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