NAIC Draws Line In CFPB Sand Box

The National Association of Insurance Commissioners has taken a firm stance on the Consumer Financial Protection Bureau's proposed ban of "mandatory arbitration" clauses that make financial product consumers waive their right to join class actions.

Because consumer loans are generally financial products within the CFPB's purview, the CFPB stated that the proposed ban would extend to arbitration clauses used for whole life insurance policy loans, if (a) the insurance company is a "creditor" under the Equal Credit Opportunity Act (ECOA) and (b) the activity is not the "business of insurance" under the Dodd –Frank Act. In a comment letter, however, the NAIC has urged the agency to remove altogether policy loan features from the scope of the rule.