Texas Property and Casualty License Practice Exam

Which of the following is a source of Federal regulation?

1. Consumer Protection Act

2. Gramm Leach Bliley Act

3. Insurance Industry Reform Act

4. Insurance Modernization Act

The correct answer is: Gramm Leach Bliley Act

The Gramm-Leach-Bliley Act is a pivotal piece of legislation that serves as a source of federal regulation. Enacted in 1999, this act is primarily designed to facilitate the ability of financial institutions to consolidate and provide a wider array of financial services, including banking, securities, and insurance. One of its significant provisions is the requirement for financial institutions to establish privacy policies and practices, thereby protecting consumers' personal financial information. This act marks a major shift in how financial services can be offered and has implications for the regulation of insurance when it is bundled with other financial products. Therefore, its classification as a source of federal regulation is clearly supported by its broad reach across various sectors, including insurance. In the context of the other options, while consumer protection laws, industry reform, and modernization efforts exist at both the federal and state levels, they may not serve as primary sources of federal regulation in the same manner that the Gramm-Leach-Bliley Act does. Each of those other acts or laws might address assorted concerns within the insurance industry, but they are not framed as comprehensive federal statutes similar to the Gramm-Leach-Bliley Act.