[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1373 Introduced in Senate (IS)]


108th CONGRESS
  1st Session
                                S. 1373

     To authorize and direct the Secretary of Commerce, through an 
 independent commission within the Department of Commerce, to protect 
consumers by regulating the interstate sale of insurance, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              July 8, 2003

 Mr. Hollings introduced the following bill; which was read twice and 
   referred to the Committee on Commerce, Science, and Transportation

_______________________________________________________________________

                                 A BILL


 
     To authorize and direct the Secretary of Commerce, through an 
 independent commission within the Department of Commerce, to protect 
consumers by regulating the interstate sale of insurance, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Insurance Consumer Protection Act of 
2003''.

SEC. 2. TABLE OF CONTENTS.

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Definitions.
                TITLE I--INSURANCE REGULATORY COMMISSION

Sec. 101. Insurance Regulatory Commission established.
Sec. 102. Powers of the Commission; compensation; personnel.
Sec. 103. Office and place of meeting.
Sec. 104. Delegation of functions by the Commission.
Sec. 105. Rules and regulations.
Sec. 106. Investigative powers of the Commission.
Sec. 107. Annual and special reports.
Sec. 108. Examination of insurance companies.
Sec. 109. Central depository for insurance data.
Sec. 110. Referral of matters to enforcement authorities.
               TITLE II--FEDERAL LICENSING AND STANDARDS

                  Subtitle A--Licensing and standards

Sec. 201. Federal licensing of interstate insurers.
Sec. 202. United States branches of foreign insurers.
Sec. 203. Minimum capital and surplus requirements.
Sec. 204. Corporate governance.
Sec. 205. Powers of interstate insurers.
Sec. 206. International regulatory support.
              Subtitle B--Regulation of Rates and Policies

Sec. 221. Approval of insurance rates.
Sec. 222. Applications.
Sec. 223. Approval procedure.
Sec. 224. Reports.
                       Subtitle C--Market Conduct

Sec. 231. Purposes and regulations.
Sec. 232. Insurance fraud.
Sec. 233. Unfair or deceptive practices.
Sec. 234. Replacement of life insurance policies.
Sec. 235. Unfair discrimination, unfair claims settlement practices, 
                            and unlawful inducements.
Sec. 236. HIV written informed consent, discrimination against abuse
Sec. 237. Minimum national standards.
Sec. 238. Enforcement.
                  Subtitle D--Accounting and Auditing

Sec. 251. Accounting principles and auditing standards.
Sec. 252. Investments.
Sec. 253. Asset valuation and rating.
Sec. 254. Valuation of liabilities.
Sec. 255. Continuing and alternate benefits.
Sec. 256. Risk-based capital standards.
Sec. 257. Dividends to shareholders.
Sec. 258. Insurance holding company systems.
Sec. 259. Risk limitations.
Sec. 260. Investment regulations.
Sec. 261. Admissible assets.
Sec. 262. Liabilities and reserves.
Sec. 263. Independent CPA audits.
Sec. 264. Qualified actuarial analysis.
Sec. 265. Transfer of policies.
Sec. 266. Restrictions on ownership and transfer of ownership.
Sec. 267. Real estate valuation.
Sec. 268. Reinsurance.
Sec. 269. Surplus notes.
                    Subtitle E--Consumer Protection

Sec. 281. Office of Consumer Protection.
Sec. 282. Consumer disclosure.
Sec. 283. Repeal of antitrust exemption for business of insurance.
                         TITLE III--REINSURANCE

Sec. 301. Authority of the Commission.
Sec. 302. Rules and regulations.
Sec. 303. Information, records, and meetings.
Sec. 304. License of professional reinsurers.
Sec. 305. License for other providers of reinsurance.
Sec. 306. Suspension and revocation of Federal license to provide 
                            reinsurance.
Sec. 307. Credit for reinsurance.
Sec. 308. Relationship to State law.
Sec. 309. Financial reports by reinsurers.
Sec. 310. Accounting standards.
Sec. 311. Examinations.
Sec. 312. Actuaries.
Sec. 313. Limitation on subsequent employment.
Sec. 314. Exchange of information.
Sec. 315. Arbitration clauses.
Sec. 316. Reinsurance intermediaries.
Sec. 317. Appointment of receivers.
Sec. 318. Order appointing receiver.
Sec. 319. Effect of order.
Sec. 320. Jurisdiction over property of reinsurer.
Sec. 321. Examinations.
Sec. 322. Expenses of establishing receivership.
Sec. 323. Compensation of receiver and employees.
Sec. 324. Standing of guaranty associations.
Sec. 325. Applicability of receivership to foreign reinsurer.
Sec. 326. Stay of actions.
Sec. 327. Cooperation of officers, owners, and employees.
Sec. 328. Injunctions and orders.
Sec. 329. Pending litigation.
Sec. 330. Conflicts of interest and financial disclosure.
Sec. 331. Proceeding against culpable persons.
Sec. 332. Liability protection for receivers.
Sec. 333. Powers of examination; subpoenas.
Sec. 334. Grounds for the appointment of receiver for rehabilitation.
Sec. 335. Rehabilitation orders.
Sec. 336. Powers of receiver for purposes of rehabilitation.
Sec. 337. Termination of the receivership for rehabilitation.
Sec. 338. Liquidation.
Sec. 339. Liquidation orders.
Sec. 340. Powers of the Commission as receiver for liquidation.
Sec. 341. Dissolution of reinsurer.
Sec. 342. Obligation of reinsurer.
Sec. 343. reinsurer's liability.
Sec. 344. Notice to creditors and others.
Sec. 345. Proof of claims.
Sec. 346. Payment of claims.
Sec. 347. Duties of agents and intermediaries.
Sec. 348. Fraudulent transfers.
Sec. 349. Voidable preferences and liens.
Sec. 350. Setoffs.
Sec. 351. Recovery of premiums owed.
Sec. 352. Priority of distribution.
Sec. 353. Unclaimed and withheld funds.
Sec. 354. Termination of proceedings.
Sec. 355. Construction.
Sec. 356. Limitation on transaction of reinsurance.
Sec. 357. Preemption.
Sec. 358. Existing licenses and contracts.
Sec. 359. Protection of confidential information.
           TITLE IV--NATIONAL INSURANCE GUARANTY CORPORATION

Sec. 401. Establishment of the Corporation.
Sec. 402. Definitions.
Sec. 403. Board of directors.
Sec. 404. Duties and responsibilities of the Board.
Sec. 405. National Insurance Guaranty Fund.
Sec. 406. Corporate powers.
Sec. 407. Membership.
Sec. 408. Assessments.
Sec. 409. Exchange of information.
Sec. 410. Liability of Directors and Officers of the Corporation.
Sec. 411. Tax exemption.
Sec. 412. Reports by the Corporation.
Sec. 413. Preemption.
                TITLE V--LIQUIDATION OF MEMBER INSURERS

Sec. 501. Corporation as liquidator. 
Sec. 502. Definitions. 
Sec. 503. Petition for appointment. 
Sec. 504. Order appointing corporation liquidator.
Sec. 505. Effect of order.
Sec. 506. Jurisdiction over property of insurer.
Sec. 507. Stay of actions.
Sec. 508. Cooperation of officers, owners and employees.
Sec. 509. Evidence of wrongdoing.
Sec. 510. Continuance of coverage.
Sec. 511. Powers of the Corporation as liquidator.
Sec. 512. Notice to creditors and others.
Sec. 513. Proof of claims.
Sec. 514. Payment of claims.
Sec. 515. Duties of agents.
Sec. 516. Fraudulent transfers.
Sec. 517. Voidable preferences and liens.
Sec. 518. Setoffs and counterclaims.
Sec. 519. Recovery of premiums owed.
Sec. 520. Priority of distribution.
Sec. 521. Unclaimed and withheld funds.
Sec. 522. Termination of proceedings.
Sec. 523. Study by the Board.
Sec. 524. Preemption.
                 TITLE VI--CRIMINAL AND CIVIL PENALTIES

Sec. 601. Crimes by or affecting persons engaged in the business of 
                            insurance whose activities affect 
                            interstate commerce.
Sec. 602. Miscellaneous amendments to title 18, United States Code.
                         TITLE VII--PREEMPTIONS

Sec. 701. General prohibition.
Sec. 702. State license not required.
Sec. 703. State insurance law.
Sec. 704. Prohibition of discrimination.
Sec. 705. Permissible state regulation.
Sec. 706. Sales activities by State-licensed insurance producers.
Sec. 707. State taxation.
Sec. 708. Definitions.

SEC. 3. DEFINITIONS.

    In this Act:
            (1)(A) Commission.--The term ``Commission'' means the 
        Insurance Regulatory Commission established by section 101.
            (B) Interstate insurer.--
                    (i) In general.--The term ``interstate insurer'' 
                means an insurer that offers contracts of insurance or 
                reinsurance for sale in or affecting interstate 
                commerce.
                    (ii) Exclusively intrastate insurers.--The term 
                ``interstate insurer'' does not include an insurer that 
                does not offer contracts of insurance or reinsurance 
                for sale in or affecting interstate commerce.
            (C) Transition period.--The term ``transition period'' 
        means the period beginning on January 31, 2004, and ending on 
        January 31, 2007.
            (D) Transition termination date.--The term ``termination 
        transition date'' means January 31, 2007.
            (E) Assuming insurer.--The term ``assuming insurer'' means 
        a national insurer that is the assuming insurer in an 
        acquisition of assets or an assumption of liabilities pursuant 
        to subsection (a) of section 382.
            (2) Affiliate.--Except as specifically provided otherwise 
        in this Act, the term ``affiliate'' means any person that 
        controls, is controlled by, or is under common control with, a 
        national insurer.
            (3) Business entity.--The term ``business entity'' means a 
        corporation, association, partnership, limited liability 
        company, limited liability partnership, or other legal entity.
            (4) Conduct.--The term ``conduct'' includes acts, action, 
        omissions, and inaction.
            (5) Control.--The terms ``control'', ``controlling'', 
        ``controlled by'', and ``under common control with'', means the 
        possession, direct or indirect, of the power to direct or cause 
        the direction of the management and policies of a business 
        entity, whether through the ownership of voting securities, by 
        contract or otherwise, unless the power is the result of an 
official position with or corporate office held by a person. For 
purposes of section 381 and title VI, control shall be presumed to 
exist if any person, directly or indirectly, owns, controls, holds with 
the power to vote, or holds proxies representing, 10 percent or more of 
the voting securities of any other person.
            (6) Federal license.--The term ``Federal license'' means a 
        license issued under section 303.
            (7) Foreign governmental authority.--The term ``foreign 
        governmental authority'' means a governmental authority of a 
        foreign jurisdiction.
            (8) Foreign jurisdiction.--The term ``foreign 
        jurisdiction'' means any jurisdiction other than the United 
        States or a State.
            (9) Insurance.--Except as specifically provided otherwise 
        in this Act, the term ``insurance'' includes life insurance and 
        property and casualty insurance. Such term does not include 
        health insurance.
            (10) Insurance operations.--The term ``insurance 
        operations'' includes the business of insurance.
            (11) Insurance producer.--The term ``insurance producer'' 
        means any person that sells, solicits or negotiates policies of 
        insurance, except that none of the following is an insurance 
        producer:
                    (A) A national insurer.
                    (B) An officer, director or employee of a national 
                insurer or of an insurance producer, if--
                            (i) the officer, director or employee does 
                        not receive any commission or other 
                        compensation on insurance policies written or 
                        sold by the national insurer which commission 
                        or other compensation is directly dependent 
                        upon the amount of insurance policies written 
                        or sold; and
                            (ii)(I) the officer, director or employee's 
                        activities are executive, administrative, 
                        managerial, clerical or a combination of these, 
                        and are only indirectly related to the sale, 
                        solicitation or negotiation of insurance;
                            (II) the officer, director or employee's 
                        function relates to underwriting, loss control, 
                        inspection or the processing, adjusting, 
                        investigating or settling of a claim on a 
                        policy of insurance; or
                            (III) the officer, director or employee is 
                        acting in the capacity of a special agent or 
                        agency supervisor assisting insurance producers 
                        where the person's activities are limited to 
                        providing technical advice and assistance to 
                        State licensed insurance producers and do not 
                        include the sale, solicitation or negotiation 
                        of insurance.
                    (C) A person who secures and furnishes information 
                for the purpose of group insurance policies; or for the 
                purpose of enrolling individuals under plans, or 
                issuing certificates under plans or otherwise assisting 
                in administering plans, where no commission or other 
                compensation directly dependent upon the amount of 
                insurance policies written or sold is paid to the 
                person for the service.
                    (D) An employer or association or its officers, 
                directors, employees, or the trustees of an employee 
                trust plan, to the extent that the employer, officer, 
                employee, director or trustee is engaged in the 
                administration or operation of a program of employee 
                benefits for the employer's or association's own 
                employees or the employees of its subsidiaries or 
                affiliates, which program involves the use of insurance 
                written by the national insurer, as long as the 
                employers, associations, officers, directors, employees 
                or trustees are not in any manner compensated, directly 
                or indirectly, by the national insurer.
                    (E) An employee of a national insurer or an 
                organization employed by a national insurer that is 
                engaging in the inspection, rating or classification of 
                risks, or in the supervision of the training of 
                insurance producers and that is not individually 
                engaged in the sale, solicitation or negotiation of 
                insurance.
                    (F) A person whose activities are limited to 
                advertising without the intent to solicit insurance 
                through communications in printed publications or other 
                forms of electronic mass media, provided that the 
                person does not sell, solicit or negotiate insurance.
                    (G) A salaried full-time employee who counsels or 
                advises his or her employer relative to the insurance 
                interests of the employer or of the subsidiaries or 
                business affiliates of the employer provided that the 
                employee does not sell or solicit insurance or receive 
                a commission or other compensation directly dependent 
                upon the amount of insurance policies written or sold.
                    (H) A person that sells, solicits or negotiates a 
                funding agreement.
                    (I) Any other kind of person identified by the 
                Director, by regulation, as not being an insurance 
                producer within the meaning of this paragraph.
            (12) Insurance securitization.--The term ``insurance 
        securitization'' means the issuance of debt instruments, the 
        proceeds from which support the exposures attributed to a 
        protected cell, by a national insurer where repayment of 
        principal or interest, or both, to investors pursuant to the 
        transaction terms is contingent upon the occurrence or 
        nonoccurrence of an event with respect to which the national 
        insurer is exposed to loss under insurance policies or 
        reinsurance contracts it has written.
            (13) Insurer-affiliated party.--The term ``insurer-
        affiliated party'' means--
                    (A) any director, officer, employee, or controlling 
                shareholder (other than a holding company) of, or agent 
                for, a national insurer;
                    (B) any other person who has filed or is required 
                to file a statement with the Director under section 
                381;
                    (C) any shareholder (other than a holding company), 
                consultant, joint venture partner, and any other person 
                as determined by the Director (by regulation or case-
                by-case) who participates in the conduct of the affairs 
                of a national insurer; and
                    (D) any independent contractor (including any 
                attorney, actuary, or accountant) of a national insurer 
                who in that capacity knowingly or recklessly 
                participates in--
                            (i) any violation of any law or regulation;
                            (ii) any breach of fiduciary duty; or
                            (iii) any conduct that involves an undue 
                        risk of loss to a national insurer's 
                        policyholders as a whole, which violation, 
                        breach or conduct caused or is likely to cause 
                        more than a minimal financial loss to, or a 
                        significant adverse effect on, a national 
                        insurer or the policyholders of a national 
                        insurer.
            (14) Life insurance.--
                    (A) In general.--The term ``life insurance'' means 
                insurance for which the probabilities of the duration 
                of human life or the rate of mortality are an element 
                or condition of insurance.
                    (B) Included insurance.--Life insurance includes 
                the granting of--
                            (i) endowment benefits;
                            (ii) additional benefits in the event of 
                        death by accident or accidental means;
                            (iii) disability income benefits;
                            (iv) additional disability benefits that 
                        operate to safeguard the contract from lapse or 
                        to provide a special surrender value, or 
                        special benefit in the event of total and 
                        permanent disability;
                            (v) benefits that provide payment or 
                        reimbursement for long-term home health care, 
                        or long-term care in a nursing home or other 
                        related facility;
                            (vi) burial insurance; and
                            (vii) optional modes of settlement of 
                        proceeds of life insurance.
                    (C) Exclusions.--Life insurance does not include 
                workers compensation insurance.
            (15) Main office.--The term ``main office'' means the 
        office of a national insurer designated as its main office in 
        accordance with section 305.
            (16) NAIC.--The term ``NAIC'' means the National 
        Association of Insurance Commissioners.
            (17) National insurer.--The term ``national insurer'' means 
        an insurer chartered under section 301 and the regulations 
        thereunder.
            (18) National life insurer.--The term ``national life 
        insurer'' means a life insurer chartered under section 301 and 
        the regulations thereunder.
            (19) National property and casualty insurer.--The term 
        ``national property and casualty insurer'' means a property and 
        casualty insurer chartered under section 301 and the 
        regulations thereunder.
            (20) Negotiate.--The term ``negotiate'' means, with respect 
        to a policy of insurance, to engage in the act of conferring 
        directly with or offering advice directly to a purchaser or 
        prospective purchaser of a particular policy of insurance 
        concerning any of the substantive benefits, terms or conditions 
        of the contract, provided that the person engaged in that act 
        either sells insurance or obtains insurance from insurers for 
        purchasers.
            (21) Non-u.s. insurer.--The term ``non-U.S. insurer'' means 
        an insurer organized under the laws of a foreign jurisdiction.
            (22) Office.--The term ``Office'' means the Office of 
        National Insurers.
            (23) Parent.--The term ``parent'' means a business entity 
        that, directly or indirectly, controls another business entity.
            (24) Person.--The term ``person'' means any natural person 
        and any corporation, partnership, limited liability company, 
        limited liability partnership, trust, association, governmental 
        body or entity, voluntary organization or similar organization.
            (25) Policy of insurance.--The term ``policy of insurance'' 
        or ``insurance policy'' means a policy, contract, or 
        certificate or evidence of insurance, an annuity contract, and 
        a funding agreement.
            (26) Policyholder.--The term ``policyholder'' of an 
        insurance policy means the person who is identified as the 
        legal owner under the terms of the insurance policy or who is 
        otherwise vested with legal title to the insurance policy 
        through an assignment, absolute on its face, completed in 
        accordance with the terms of the insurance policy and properly 
        recorded as the policyholder on the books of the insurer. Such 
        term does not include a person with a mere beneficial interest 
        in an insurance policy or a person to which an insurance policy 
        is assigned for collateral security purposes.
            (27) Property and casualty insurance.--
                    (A) In general.--The term ``property and casualty 
                insurance'' means insurance for persons or properties 
                in the United States against--
                            (i) loss of or damage to property;
                            (ii) loss of income or extra expense 
                        incurred because of loss of or damage to 
                        property;
                            (iii) third party liability claims caused 
                        by negligence or imposed by statute or 
                        contract, including workers compensation; or
                            (iv) loss resulting from debt or default of 
                        another, including sureties.
                    (B) Exclusions.--Such term does not include health 
                or life insurance, including group life insurance.
            (28) Protected cell.--The term ``protected cell'' means an 
        identified pool of assets and liabilities of a national insurer 
        segregated and insulated from the remainder of the national 
        insurer's assets and liabilities. The remainder of the national 
insurer's assets and liabilities includes general account assets and 
liabilities, separate account assets and liabilities and assets and 
liabilities of other protected cells.
            (29) Protected cell account.--The term ``protected cell 
        account'' means a specifically identified bank or custodial 
        account established by a national insurer for the purpose of 
        segregating the protected cell assets of one protected cell 
        from the protected cell assets of other protected cells and 
        from the assets of the national insurer's general account and 
        separate accounts.
            (30) Relevant state law.--The term ``relevant State law'' 
        means, with respect to a national insurer, the law of the 
        relevant State applicable to an insurer that is chartered under 
        the law of such State and that is of the same corporate form as 
        the national insurer.
            (31) Sell.--The term ``sell'' means, with respect to a 
        policy of insurance, to exchange by any means, for money or its 
        equivalent, on behalf of an insurer.
            (32) Separate account.--The term ``separate account'' means 
        an account established and maintained by a national insurer 
        under which income, gains and losses, whether or not realized, 
        from assets allocated to such account, are, in accordance with 
        the applicable contract, credited to or charged against such 
        account without regard to other income, gains, or losses of the 
        national insurer.
            (33) Solicit.--The term ``solicit'' means, with respect to 
        a policy of insurance, attempting to sell insurance or asking 
        or urging a person to apply for a particular kind of insurance 
        from a particular insurer.
            (34) State.--The term ``State'' means any State of the 
        United States, the District of Columbia, any territory of the 
        United States, Puerto Rico, Guam, American Samoa, the Trust 
        Territory of the Pacific Islands, the Virgin Islands, and the 
        Northern Mariana Islands.
            (35) State insurer.--The term ``State insurer'' means an 
        insurer incorporated or organized under the laws of a State.
            (36) Subsidiary.--The term ``subsidiary'' means a business 
        entity controlled, directly or indirectly, by another business 
        entity. For purposes of this paragraph--
                    (A) a business entity is conclusively presumed to 
                be controlled by a person that, directly or indirectly, 
                with power to vote, owns, controls or holds a majority 
                of the outstanding voting securities of such business 
                entity;
                    (B) no presumption, either of control or of absence 
                of control, arises if such ownership, control or 
                holding of voting securities is less than a majority 
                but more than 5 percent;
                    (C) absence of control is presumed if such 
                ownership, control or holding of voting securities is 5 
                percent or less; and
                    (D) in determining control, voting securities held 
                in separate accounts of a business entity shall be 
                deemed to be owned by the business entity, but voting 
                securities in an investment advisory account that are 
                not owned by a business entity but are held in an 
                account as to which the business entity is an 
                investment adviser shall not be deemed to be controlled 
                or held by such business entity.
            (37) Trusteed surplus.--The term ``trusteed surplus'' 
        means, with respect to a U.S. branch, the value of the 
        insurer's trusteed assets deposited with a trustee in 
        compliance with subsection (b) of section 302, plus accrued 
        investment income thereon where such interest is collected by 
        the States trustees, less the aggregate net amount of all of 
        its reserves and other liabilities in the United States as 
        determined in accordance with subsection (b) of section 302.
            (38) United states branch.--The term ``United States 
        branch'' means the business unit through which business is 
        transacted within the United States by a non-U.S. insurer and 
        the assets and liabilities of the insurer within the United 
        States pertaining to such business.
            (39) Violation.--The term ``violation'' includes any action 
        or inaction (alone or with another or others) for or toward 
        causing, bringing about, participating in, counseling, or 
        aiding or abetting a violation.

                TITLE I--INSURANCE REGULATORY COMMISSION

SEC. 101. INSURANCE REGULATORY COMMISSION ESTABLISHED.

    (a) Establishment.--There is established within the Department of 
Commerce an Insurance Regulatory Commission to be composed of 5 
commissioners to be appointed by the President, by and with the advice 
and consent of the Senate.
    (b) Autonomy of Commission.--Except as otherwise specifically 
provided in this Act, the Secretary of Commerce may not intervene in 
any matter or proceeding before the Commission, including enforcement 
actions.
    (c) Chairman.--The President shall designate 1 of the members as 
Chairman of the Commission.
    (d) Political Parties.--Not more than 3 of such commissioners shall 
be members of the same political party, and in making appointments 
members of different political parties shall be appointed alternately 
as nearly as may be practicable.
    (e) Full-Time Employment.--No commissioner shall engage in any 
other business, vocation, or employment than that of serving as 
commissioner, nor shall any commissioner participate, directly or 
indirectly, in any insurance company operations or transactions of a 
character subject to regulation by the Commission pursuant to this 
title.
    (f) Terms.--Each commissioner shall hold office for a term of 7 
years and until his successor is appointed and has qualified, except 
that--
            (1) a commissioner shall not continue to serve beyond the 
        expiration of the next session of Congress subsequent to the 
        expiration of the fixed term of office;
            (2) any commissioner appointed to fill a vacancy occurring 
        prior to the expiration of the term for which his predecessor 
        was appointed shall be appointed for the remainder of such 
        term; and
            (3) the terms of office of the commissioners first taking 
        office after the enactment of this title shall expire as 
        designated by the President at the time of nomination, 1 at the 
        end of 2 years, 1 at the end of 3 years, 1 at the end of 4 
        years, 1 at the end of 6 years, and 1 at the end of 6 years, 
        after the date of the enactment of this title.

SEC. 102. POWERS OF THE COMMISSION; COMPENSATION; PERSONNEL.

    (a) Hearings.--The Commission may hold such hearings, sit and act 
at such times and places, take such testimony, and receive such 
evidence as the Commission considers advisable to carry out the 
purposes of this Act.
    (b) Information From Federal Agencies.--The Commission may secure 
directly from any Federal department or agency such information as the 
Commission considers necessary to carry out the provisions of this Act. 
Upon request of the Chairman of the Commission, the head of such 
department or agency shall furnish such information to the Commission.
    (c) Postal Services.--The Commission may use the United States 
mails in the same manner and under the same conditions as other 
departments and agencies of the Federal Government.
    (d) Compensation of Members.--Each member of the Commission shall 
be compensated in an amount equal to that prescribed for level IV of 
the Executive Schedule under section 5315 of title 5, United States 
Code.
    (e) Travel Expenses.--The members of the Commission shall be 
allowed travel expenses, including per diem in lieu of subsistence, at 
rates authorized for employees of agencies under subchapter I of 
chapter 57 of title 5, United States Code, while away from their homes 
or regular places of business in the performance of services for the 
Commission.
    (f) Appointments; Compensation.--The Chairman of the Commission may 
appoint and fix the compensation of an executive director and other 
personnel as may be necessary to carry out this Act.
    (g) Detail of Government Employees.--Any Federal Government 
employee may be detailed to the Commission without reimbursement, and 
such detail shall be without interruption or loss of civil service 
status or privilege.
    (h) Procurement of Temporary and Intermittent Services.--The 
Chairman of the Commission may procure temporary and intermittent 
services under section 3109(b) of title 5, United States Code, at rates 
for individuals which do not exceed the daily equivalent of the annual 
rate of basic pay prescribed for level V of the Executive Schedule 
under section 5316 of such title.

SEC. 103. OFFICE AND PLACE OF MEETING.

    The principal office of the Commission shall be in the city of 
Washington, District of Columbia, but it may meet and exercise all its 
powers at any other place. The Commission may, by one or more of its 
members, or by such examiners as it may designate, prosecute any 
inquiry necessary to its duties in any part of the United States.

SEC. 104. DELEGATION OF FUNCTIONS BY THE COMMISSION.

    (a) Authority To Delegate.--The Commission shall have the authority 
to delegate, by published order or rule, any of its functions to a 
division of the Commission, an individual Commissioner, an 
administrative law judge, or an employee or employee board, including 
functions with respect to hearing, determining, ordering, certifying, 
reporting, or otherwise acting as to any work, business, or matter. 
Nothing in this section shall be deemed to supersede the provisions of 
section 556(b) of title 5, United States Code, or to authorize the 
delegation of the function of rule making as defined in subchapter II 
of chapter 5 of title 5, United States Code, with reference to general 
rules as distinguished from rules of particular applicability, or of 
the making of any rule.
    (b) Review.--With respect to the delegation of any of its 
functions, as provided in subsection (a) of this section, the 
Commission shall retain a discretionary right to review the action of 
any such division of the Commission, individual Commissioner, 
administrative law judge, employee, or employee board, upon its own 
initiative or upon petition of a party or intervenor in such action, 
within such time and in such manner as the Commission by rule shall 
prescribe. The vote of one member of the Commission shall be sufficient 
to bring any such action before the Commission for review. A person or 
party shall be entitled to review by the Commission if adversely 
affected by action at a delegated level.
    (c) Action of Commission.--If the right to exercise such review is 
declined, or if no such review is sought within the time stated in the 
rules promulgated by the Commission, then the action of any such 
division of the Commission, individual Commissioner, administrative law 
judge, employee, or employee board, shall, for all purposes, including 
appeal or review thereof, be deemed the action of the Commission.

SEC. 105. RULES AND REGULATIONS.

    (a) In General.--The Commission shall promulgate rules and 
regulations necessary to carry out its responsibilities under this Act.
    (b) Scope of Authority.--The Secretary of Commerce may not delay or 
prevent the issuance of any rule, or the promulgation of any 
regulation, by the Commission.

SEC. 106. INVESTIGATIVE POWERS OF THE COMMISSION.

    The Commission shall have the power to gather and compile 
information concerning, and to investigate from time to time the 
organization, business, conduct, practices and management of any 
person, partnership, or corporation engaged in the business of 
insurance.

SEC. 107. INSURANCE RATE REPORTS.

    (a) In General.--Except as provided by subsection (f), an 
interstate insurer shall report the information specified by the 
Commission that is collected by a licensed advisory organization on an 
annual basis for each class of insurance designated in the prior 
calendar year by the Commission.
    (b) Designation of Unavailability or Unaffordability.--No later 
than October 1 of each year the Commission shall designate those 
classes of insurance that are generally unavailable or unaffordable in 
the United States, certain regions, or to certain groups or businesses 
in the United States, or for which there have been unusually great 
premium increases, or in the case of any class of liability insurance, 
for which reinsurance is generally unavailable or unaffordable in the 
United States or for which there have been unusually great reinsurance 
premium increases. The factors the Commission shall consider in making 
this determination shall include--
            (1) consumer complaints;
            (2) rate complaints;
            (3) surveillance by the Commission; and
            (4) market conduct.
    (c) Retention of Information.--The Commission shall retain the 
information reported pursuant to this section for a period of no less 
than 3 years.
    (d) Consolidated Reporting.--Insurers that are members of the same 
insurance group may aggregate the information required by this section 
in a single report.
    (e) Exemptions.--
            (1) In general.--Except as provided by paragraphs (2) and 
        (3), the reporting requirements of this section do not apply to 
any interstate insurer that--
                    (A) has been established for less than 3 years; or
                    (B) demonstrates to the satisfaction of the 
                Commission that its market share is less than 1 percent 
                of the coverage for which the Commission seeks 
                information.
            (2) Denial of exemption.--The Commission may deny the 
        exemption application if it determines that--
                    (A) the aggregate data, when reported, is less than 
                60 percent of the written premium volume for the class; 
                or
                    (B) unless the aggregate data reported would not be 
                statistically credible or reasonably complete and 
                informative.
            (3) Retroactive revocation of exemption.--An interstate 
        insurer that is exempt under paragraph (1) from reporting 
        shall, upon request of the Commission, report the information 
        required by subsection (a) to cover the 3 most recent calendar 
        years in accordance with subsection (g).
            (4) Duplicate reporting not required.--An interstate 
        insurer that has reported data for a calendar year pursuant to 
        this section may not be required to report that same data in a 
        subsequent year.
    (f) Report Form.--The reports required by this section shall be 
filed on a form provided by the Commission, or through electronic means 
established by the Commission, no later than May 1 of the calendar year 
following the year for which the information is reported.
    (g) Temporary Regulations.--The Commission shall adopt temporary 
regulations implementing this section without regard to the provisions 
of chapter 5 of title 5, United States Code. The temporary regulations 
may not remain in effect for more than 180 days.
    (h) Confidentiality.--The information provided pursuant to 
subsection (a) shall be confidential and not revealed by the 
Commission, except that the Commission may publish an analysis of the 
data in aggregate form or in a manner which does not disclose 
confidential information about identified interstate insurers or 
insureds.

SEC. 108. ANNUAL AND SPECIAL REPORTS.

    The Commission shall have the power to require, by general or 
special orders or by subpoena, any person engaged in the business of 
insurance, to file with the Commission in such form as the Commission 
may prescribe annual or special, or both annual and special, reports, 
or answers in writing to specific questions, furnishing to the 
Commission such information as it may require as to the organization, 
business, conduct, practices, management, and relation to other 
corporations, partnerships, and individuals of the respective persons, 
partnerships, and corporations filing such reports or answers in 
writing. Such reports and answers shall be made under oath, or 
otherwise, as the Commission may prescribe, and shall be filed with the 
Commission within such reasonable period as the Commission may 
prescribe, unless additional time be granted in any case by the 
Commission.

SEC. 109. EXAMINATION OF INSURANCE COMPANIES.

    (a) In General.--The Commission shall examine interstate insurers, 
including an on-site financial examination and an on-site market 
conduct examination no less often than once during each 12-month 
period.
    (b) Exemptions.--The Commission may exempt an interstate insurer 
from an on-site financial examination under subsection (a) in any 12-
month period if the Commission determines that the financial condition 
of the interstate insurer warrants such an exemption. The Commission 
may not grant such an exemption more than once in any 24-month period.
    (c) Special Examinations.--The Commission may order special 
examinations of any insurer which holds an interstate insurance 
license. The examination shall be conducted by examiners chosen by the 
Commission. The Commission shall in all cases approve the form of the 
examination. The expenses of all examinations may, in the discretion of 
the Commission, be assessed against the insurer examined, and when so 
assessed, shall be paid by the insurer examined. Copies of the reports 
of such examinations may, in the discretion of the Commission, be 
furnished to the State insurance departments, to officers and 
directors, or receivers of the insurer, and to any persons as the 
Commission shall deem appropriate.
    (d) Standards.--The Commission shall establish standards for 
determining when a special examination should be conducted.

SEC. 110. CENTRAL DEPOSITORY FOR INSURANCE DATA.

    (a) Annual Statements; Periodic Reports.--The Commission shall 
collect the annual statements and other periodic reports of all 
insurers holding interstate insurance licenses. These statements and 
reports shall be available to the public. The Commission shall compile 
information from these statements and reports in a data base for the 
purpose of studying the insurance industry.
    (b) Data Base.--The Commission shall maintain a data base on 
information concerning any State or Federal regulatory and legal 
actions involving any person engaged in the business of insurance. The 
Commission shall gather any such information from State insurance 
departments and any other source of information.
    (c) Information To Be Made Public.--(1) The Commission shall--
            (A) make public, from time to time, such portions of the 
        information obtained by it as are in the public interest;
            (B) make annual and special reports to the Congress and 
        submit therewith recommendations for additional legislation; 
        and
            (C) provide for the publication of its reports and 
        decisions in such form and manner as may be best adapted for 
        public information and use.
    (2) The Commission shall not have authority to make public any 
information it determines is a trade secret or any commercial or 
financial information which is obtained from any person and which the 
Commission determines is privileged or confidential, except that the 
Commission may disclose such information to officers and employees of 
appropriate Federal law enforcement agencies or to any officer or 
employee of any State law enforcement agency upon the prior 
certification of an officer of any such Federal or State law 
enforcement agency that such information will be maintained in 
confidence and will be used only for official law enforcement purposes.

               TITLE II--FEDERAL LICENSING AND STANDARDS

                  Subtitle A--Licensing and Standards

SEC. 211. FEDERAL LICENSING OF INTERSTATE INSURERS.

    (a) In General.--Notwithstanding any provision of State law, an 
interstate insurer may underwrite and sell in any State any line of 
insurance for which it holds a Federal license. An interstate insurer 
may not underwrite or sell any line of insurance for which it does not 
hold a Federal license.
    (b) Issuance of Federal Licenses.--The Commission may, under such 
regulations as the Commission shall--
            (1) provide for licensing of interstate insurers to 
        underwrite and sell property and casualty, life, and medical 
        malpractice lines of insurance;
            (2) issue to interstate insurers Federal licenses 
        specifying the lines of insurance they may underwrite and sell; 
        and
            (3) submit a report to Congress--
                    (A) making recommendations on whether national 
                insurers should be authorized to underwrite health 
                insurance; and
                    (B) including proposed legislation to authorize 
                such underwriting.
    (c) Duration.--A Federal license issued by the Commission pursuant 
to this section shall remain in effect until surrendered by the 
interstate insurer or until revoked or suspended by the Commission in 
accordance with the provisions of this Act.
    (d) Reinsurance.--
            (1) Limitation.--An interstate insurer may reinsure only 
        the lines of insurance that it is licensed to underwrite and 
        sell under its Federal license or which it is otherwise 
        permitted to reinsure by the terms of its Federal license.
            (2) Authority to sell only reinsurance.--An interstate 
        insurer may confine its business to reinsurance.

SEC. 212. UNITED STATES BRANCHES OF FOREIGN INSURERS.

    (a) National Treatment Required.--
            (1) Fair treatment of subsidiaries and branches.--Except as 
        otherwise provided in this section, the Commission may not 
        impose any condition to the granting of a Federal license under 
        this section to an interstate insurer or the supervision of an 
        interstate insurer granted a Federal license under this section 
        solely because the interstate insurer is a subsidiary of a non-
        United States person, is partially owned by a non-United States 
        person, or is a United States branch of a non-United States 
        insurer.
            (2) Permissible conditions.--Notwithstanding paragraph (1), 
        the Commission may impose conditions to the granting of a 
        Federal license or the supervision of an interstate insurer 
        that are different from those imposed on other interstate 
        insurers if--
                    (A) the conditions attached are imposed on the 
                legal form in which the interstate insurer chooses to 
                operate; or
                    (B) the Commission makes a written finding that the 
                conditions are related to the protection of 
                policyholders and are the minimum necessary to achieve 
                the purposes of this Act.
    (b) Federal Insurance License.--A foreign insurer may obtain a 
Federal license to transact insurance in the United States through a 
United States branch by qualifying that branch as an interstate 
insurer, subject to all legal requirements applicable under regulations 
prescribed by the Commission.
    (c) Trust Accounts Required.--
            (1) In general.--A United States branch of a foreign 
        insurer may not qualify as an interstate insurer unless it 
        establishes trust accounts required by this subsection.
            (2) Assets.--A United States branch of a foreign insurer 
        shall establish a trust account in the United States with a 
        bank in which it maintains assets held in trust for the 
        exclusive benefit, security, and protection of United States 
        policyholders and creditors of that branch in such amount and 
        under such conditions as the Commission may require for as long 
        as there is any outstanding liability of that branch arising 
        out of its insurance transactions in the United States.
            (3) Surplus.--To the extent required by the Commission, a 
        United States branch of a foreign insurer shall maintain any 
        surplus arising out of its United States insurance transactions 
        in a trust account in the United States subject to the same 
        solvency standards as those that apply to other interstate 
        insurers.
            (4) Statements.--The Commission may require the United 
        States branch of a foreign insurer to file such statements, at 
        such times, and containing such information as the Commission 
        may require concerning the trust accounts required by this 
        section.
    (d) Application of Other Requirements.--The provisions of this Act 
applicable to interstate insurers apply to the United States branch of 
a foreign insurer except to the extent that compliance with the 
requirements of the preceding subsections of this section, or of any 
requirement of the Commission promulgated pursuant to such a 
subsection, conflicts with such provisions.

SEC. 213. MINIMUM CAPITAL AND SURPLUS REQUIREMENTS.

    (a) Minimum Capital.--The Commission shall require all insurers to 
maintain at all times minimum amounts of capital and surplus necessary 
for insurers to engage in the business of insurance.
    (b) Additional Capital and Surplus.--The Commission shall require 
all insurers to maintain such additional capital and surplus, based 
upon the type, volume and nature of insurance business transacted, as 
are required to assure the solidity of the insurer.
    (c) Risk.--The Commission shall determine the appropriateness of 
requiring each insurer to maintain amounts of capital and surplus 
depending upon the risk associated with that insurer.
    (d) Regulations During Transition Period.--
            (1) In general.--The initial regulations under subsections 
        (a), (b) and (c) shall be promulgated on or before the 
        transition commencement date and shall provide that the 
        standards be based on NAIC risk-based capital calculations and 
        remedies in the form adopted by the NAIC, each as in effect as 
        of January 1, 2001, and as amended by the NAIC and in effect 
        thereafter from time to time prior to the transition 
        termination date, except that the Commission may by regulation 
        specify that any such amendment by the NAIC shall, in whole or 
        in part, be inapplicable to interstate insurers.
            (2) Regulations after transition period.--The risk-based 
        capital standards for national insurers and the remedies for 
        failure to meet such standards in effect on the transition 
        termination date may thereafter be amended by regulations 
        promulgated pursuant to subsection (a), (b), or (c).

SEC. 214. CORPORATE GOVERNANCE.

    (a) In General.--With respect to corporate governance procedures, 
an interstate insurer shall comply with applicable provisions of this 
Act and applicable regulations issued by the Commission under this Act.
    (b) Other Procedures.--To the extent not inconsistent with 
provisions of this Act or regulations issued by the Commission under 
this Act, an interstate insurer shall adhere to corporate governance 
procedures of the relevant State law of either the State in which its 
main office is located or the State in which its holding company is 
incorporated, except that the Commission may determine that any 
provision of such State law is discriminatory as applied to interstate 
insurers (in which event an interstate insurer shall not be obligated 
to follow such a provision of the relevant State law and may follow 
such other provision of law as the Commission deems appropriate). An 
interstate insurer shall designate in its bylaws the body of relevant 
State law selected for its corporate governance procedures.

SEC. 215. POWERS OF INTERSTATE INSURERS.

    Upon issuance of its license, an interstate insurer shall have the 
power, subject to the provisions of this Act and in accordance with 
such regulations as the Commission may prescribe--
            (1) to have a corporate seal, which may be altered at will, 
        and to use it, or a facsimile of it, impressing or affixing it 
        or in any other manner reproducing it;
            (2) to have perpetual succession until such time as it is 
        liquidated, dissolved, merged or otherwise wound up in 
        accordance with applicable law and regulation;
            (3) to sue or be sued, complain and defend, and otherwise 
        litigate in any court and participate, as a party or otherwise, 
        in any judicial, administrative, arbitral or other proceeding, 
        in its corporate name;
            (4) to make contracts and guarantees, incur liabilities, 
        borrow money, issue notes, bonds, and other obligations (which 
        may be convertible into or include the option to purchase other 
        securities of the interstate insurer), and secure any of its 
        obligations by mortgage or pledge of any of its property, 
        franchises or income;
            (5) to purchase, receive, subscribe for or otherwise 
        acquire, own, hold, vote, improve, employ, use, and otherwise 
        deal in and with real and personal property or other assets, or 
        any interest therein, and to sell, convey, mortgage, lease, 
        exchange, transfer or otherwise dispose of, or mortgage or 
        pledge, all  or any of its property and assets, or any interest 
therein;
            (6) to lend money, invest and reinvest its funds and 
        receive and hold real and personal property as security for 
        repayment;
            (7) to be a promoter, partner, member, associate or manager 
        of any partnership, joint venture, trust or other entity;
            (8) to participate with others in any corporation, 
        partnership, limited partnership, joint venture, or other 
        association of any kind, or in any transaction, undertaking, or 
        arrangement which the participating interstate insurer would 
        have power to conduct by itself, whether or not such 
        participation involves sharing or delegation of control with or 
        to others;
            (9) to elect or appoint directors, officers, employees, and 
        agents of the interstate insurer, define their duties, fix 
        their compensation and lend them money and credit;
            (10) to pay pensions and establish pension plans, pension 
        trusts, profit sharing plans, share bonus plans, share option 
        plans, and other benefit or incentive plans for any or all 
        current or former directors, officers, employees, and agents of 
        the interstate insurer, its subsidiaries, or its affiliates;
            (11) to provide insurance for its benefit on the life of 
        any of its directors, officers, or employees, or on the life of 
        any shareholder for the purpose of acquiring at such 
        shareholder's death shares of its stock owned by such 
        shareholder;
            (12) to adopt, amend and repeal bylaws;
            (13) to engage in the underwriting and sale of insurance; 
        to establish and maintain one or more separate accounts and to 
        allocate amounts to such accounts (including, without 
        limitation, proceeds applied under optional modes of settlement 
        or under dividend options) to provide for insurance; to 
        establish and maintain one or more protected cells in 
        connection with an insurance securitization and attribute to 
        such cells insurance and reinsurance obligations with respect 
        to its general account, obligations relating to the insurance 
        securitization and assets to fund such obligations; to hold and 
        accumulate funds pursuant to funding agreements; to provide 
        investment advice and investment management services; to engage 
        in all other insurance operations; and to exercise all such 
        incidental powers as shall be necessary to carry on insurance 
        operations;
            (14) to provide benefits or payments to directors, 
        officers, and employees of the interstate insurer, its 
        subsidiaries, or its affiliates, and to their estates, 
        families, dependents, or beneficiaries, in recognition of the 
        past services of the directors, officers, and employees to the 
        interstate insurer, its subsidiaries, or its affiliates;
            (15) to make donations and otherwise devote its resources 
        for the public welfare or for charitable, scientific, 
        educational, humanitarian, philanthropic, or religious 
        purposes;
            (16) to be a promoter, partner, member, associate, or 
        manager of any business entity;
            (17) to do all such other things necessary or convenient to 
        further its activities and affairs; and
            (18) to exercise the powers granted by this Act in any 
        State and in any foreign jurisdiction.

SEC. 216. INTERNATIONAL REGULATORY SUPPORT.

    (a) In General.--To ensure the effectiveness of the Commission's 
licensing and supervision of interstate insurers, the Commission may 
engage in international efforts to secure improved bilateral and 
multilateral cooperation, as appropriate, with respect to improved 
insurance regulation in global markets that promotes competition and 
allows foreign participation. Such authority includes provision of 
appropriate technical assistance to and cooperation with individual 
overseas interstate regulators and regional and global regulatory 
organizations in matters, including development and implementation of 
international regulatory standards, and development of bilateral and 
multilateral mutual recognition agreements on licensing, registration, 
and professional standards with the objective of improving the quality 
and uniformity of insurance regulation in all countries.
    (b) Cooperation With State Insurance Regulators.--Whenever 
possible, subsection (a) shall be implemented in cooperation with State 
insurance regulators. In matters of representation, the Commission and 
any interested State insurance regulators shall jointly represent the 
United States market.
    (c) Negotiation of International Trade Agreements.--With respect to 
bilateral and multilateral trade negotiations related to the provision 
of insurance services, the United States Trade Representative shall 
have responsibility for the negotiation of international trade 
agreements associated with trade in insurance. The United States Trade 
Representative shall develop relevant negotiating strategies and 
appropriate concessions in close consultation with the Commission and 
State insurance regulators.

              Subtitle B--Regulation of Rates and Policies

SEC. 221. APPROVAL OF INSURANCE RATES.

    (a) In General.--The Federal Insurance Commission shall regulate 
interstate insurance rates. An interstate insurer may not charge a rate 
for insurance unless the rate has been approved by the Commission.
    (b) Prohibited Rates.--A rate may not be approved by the 
Commission, or remain in effect after the date of enactment of this 
Act, if that rate is excessive, inadequate, unfairly discriminatory, or 
otherwise in violation of this Act. In considering whether a rate is 
prohibited by this subsection, the Commission--
            (1) may not consider the degree of competition among or 
        between insurers; but
            (2) shall consider whether the rate mathematically reflects 
        the insurer's investment income.

SEC. 222. APPLICATIONS.

    (a) In General.--Before establishing or changing an insurance rate, 
an insurer shall file a complete rate application with the Commission 
containing such information as the Commission may require.
    (b) Burden.--An insurer has the burden of establishing to the 
satisfaction of the Commission that a proposed rate or proposed change 
of rate is justified and meets the Commission's requirements.

SEC. 223. APPROVAL PROCEDURE.

    (a) Public Notice.--Upon receiving an application from an insurer 
for a proposed rate or proposed rate change, the Commission shall 
provide public notice by publication and an opportunity to comment on 
the request to the public.
    (b) Deemed Approvals.--
            (1) 60-day rule.--A proposed rate or proposed rate change 
        shall be deemed approved 60 days after the date on which the 
        application was received by the Commission unless--
                    (A) a person requests a hearing on the application 
                within 45 days after such date and the Commission--
                            (i) grants the request; or
                            (ii) denies the request and issues written 
                        findings in support of the denial;
                    (B) the Commission holds a hearing before that 
                date; or
                    (C) in the case of a proposed rate change, the 
                proposed rate exceeds--
                            (i) 7 percent of the existing rate, with 
                        respect to consumer insurance; or
                            (ii) 15 percent of the existing rate, with 
                        respect to commercial insurance,
                in which case a hearing is mandatory.
            (2) 180-day rule.--Except as provided in paragraph (3), an 
        application for a proposed rate or rate change not deemed 
        approved under paragraph (1) shall be deemed approved 180 days 
        after the date on which the application was received by the 
        Commission unless the application has been disapproved by a 
        final order of the Commission.
            (3) Hearings; judicial proceedings.--
                    (A) Hearings.--If a hearing is commenced under 
                paragraph (1) or (2), an application for a proposed 
                rate or rate change that is not disapproved shall be 
                deemed to be approved on the date that is 60 days after 
                the later of--
                            (i) the last day of the 60-day period, or 
                        the 180-day period, respectively; or
                            (ii) the date on which the hearing record 
                        is closed.
                    (B) Judicial proceedings.--If an application for a 
                proposed rate or rate change is the subject of a 
                judicial proceeding directly involving the application 
                that was initiated by the applicant or an intervenor, 
                then the 60-day period under paragraph (1) or the 180-
                day period under paragraph (2), is tolled during the 
                proceeding. Notwithstanding the number of days 
                remaining in the period when it was tolled, such an 
                application shall not be deemed approved less than 30 
                days after conclusion of the judicial proceeding.

                       Subtitle C--Market Conduct

SEC. 231. PURPOSES AND REGULATIONS.

    (a) Purpose.--The purpose of this subtitle is to ensure appropriate 
Federal regulation of sales and marketing practices of interstate 
insurers and insurance producers selling the products of interstate 
insurers to prevent--
            (1) unfair methods of competition and unfair and deceptive 
        acts and practices in the advertising, marketing, solicitation, 
        sale, issuance, distribution, and administration of insurance 
        policies and other products of interstate insurers;
            (2) unfair claims practices related to insurance 
        underwritten and sold by such insurers and producers;
            (3) discrimination in the underwriting of insurance by such 
        insurers and producers; and
            (4) insurance fraud.
    (b) Rulemaking Authority.--The Commission shall promulgate such 
rules and regulations, applicable to interstate insurers and insurance 
producers that sell products of interstate insurers, as the Commission 
deems necessary to carry out the purposes of this subtitle.
    (c) Annual Examinations.--The Commission shall conduct annual 
examinations of the market conduct of interstate insurers and insurance 
producers that sell products of interstate insurers.
    (d) Safe Harbor.--An immaterial clerical error or mathematical 
error made in connection with the advertising, solicitation, sale, 
issuance, distribution, or administration of insurance policies and 
other products of interstate insurers and insurance producers that sell 
products of interstate insurers shall not constitute a violation of 
this subtitle.

SEC. 232. INSURANCE FRAUD.

    (a) Fraud Warning Required.--Claim forms and applications for 
insurance operations, regardless of the form of transmission, shall 
contain a fraud warning as prescribed, by regulation, by the 
Commission.
    (b) Investigative Authority of Commission.--The Commission may 
investigate suspected fraudulent insurance acts and insurance persons 
engaged in insurance operations.
    (c) Mandatory Reporting of Fraudulent Insurance Acts.--An 
interstate insurer or an insurance person engaged in insurance 
operations having knowledge or a reasonable belief that a fraudulent 
insurance act is being, will be, or has been committed, shall provide 
to the Commission the information required by, and in a manner 
prescribed by, the Commission.
    (d) Immunity From Liability.--
            (1) In general.--There shall be no civil liability imposed 
        on, and no cause of action shall arise from, a person's 
        furnishing information concerning suspected, anticipated, or 
        completed fraudulent insurance acts, if the information is 
        provided to or received from--
                    (A) the Commission or the Commission's employees, 
                agents, or representatives;
                    (B) Federal, State, or local law enforcement or 
                regulatory officials or their employees, agents, or 
                representatives;
                    (C) a person involved in the prevention and 
                detection of fraudulent insurance acts or that person's 
                agents, employees, or representatives; or
                    (D) the NAIC or its employees, agents, or 
                representatives.
            (2) Exception for false statements.--Paragraph (1) shall 
        not apply to false statements made with actual malice. In an 
        action brought against a person for filing a report or 
        furnishing other information concerning a fraudulent 
insurance act, the party bringing the action shall plead specifically 
any allegation that paragraph (1) does not apply because the person 
filing the report or furnishing the information did so with actual 
malice.
            (3) Savings provision.--This subsection does not abrogate 
        or modify common law or statutory privileges or immunities 
        enjoyed by a person described in paragraph (1).
    (e) Confidentiality.--
            (1) In general.--Documents, materials or other information 
        in the possession or control of the Commission that is provided 
        pursuant to subsection (c) or obtained by the Commission in an 
        investigation of suspected or actual fraudulent insurance acts 
        shall be confidential by law and privileged, shall not be made 
        available to the public, shall not be subject to subpoena, and 
        shall not be subject to discovery or admissible in evidence in 
        any private civil action. However, the Commission may use the 
        documents, materials, or other information in the furtherance 
        of any regulatory or legal action brought as a part of the 
        Commission's official duties.
            (2) Restrictions on testimony.--Neither the Commission nor 
        any person who received documents, materials or other 
        information while acting under the authority of the Commission 
        shall be permitted or required to testify in any private civil 
        action concerning any documents, materials, or information that 
        are confidential pursuant to paragraph (1).
            (3) Authorized disclosure.--In order to assist in the 
        performance of the Commission's duties, the Commission may--
                    (A) share documents, materials, or other 
                information, including the confidential and privileged 
                documents, materials, or information subject to 
                paragraph (1) with other State, Federal, and 
                international regulatory agencies, with the NAIC and 
                its affiliates and subsidiaries, and with local, State, 
                Federal, and international law enforcement authorities, 
                but only if the recipient agrees to and has the 
                authority to maintain the confidentiality and 
                privileged status of the document, material, or other 
                information;
                    (B) receive documents, materials, or information, 
                including otherwise confidential and privileged 
                documents, materials, or information, from the NAIC and 
                its affiliates and subsidiaries, and from regulatory 
                and law enforcement officials of State or other foreign 
                or domestic jurisdictions, and shall maintain as 
                confidential or privileged any document, material, or 
                information received with notice or the understanding 
                that it is confidential or privileged under the laws of 
                the jurisdiction that is the source of the document, 
                material, or information; and
                    (C) enter into agreements governing sharing and use 
                of information, including the furtherance of any 
                regulatory or legal action brought as part of the 
                recipient's official duties.
            (4) No waiver.--No waiver of any applicable privilege or 
        claim of confidentiality in the documents, materials, or 
        information shall occur as a result of disclosure to the 
        Commission under this subsection or as a result of sharing as 
        authorized in paragraph (3).
    (f) Penalties.--If the person committing an offense under 
subsection (a) or (c) of section 1036(a) of title 18, United States 
Code, is an interstate insurer or an insurer-affiliated party, the 
Commission may, in addition to the punishment set forth in such section 
1036--
            (1) revoke, suspend or restrict the Federal license of such 
        interstate insurer pursuant to section 204 of this Act; and
            (2) order such interstate insurer, insurer-affiliated 
        party, or State licensed insurance producer to make restitution 
        to persons aggrieved by such offenses.
    (g) Definitions.--In this section:
            (1) Fraudulent insurance act.--The term ``fraudulent 
        insurance act'' has the meaning given that term in section 
        1036(d) of title 18, United States Code.
            (2) Insurance person.--The term ``insurance person'' has 
        the meaning given that term in section 1036(d) of title 18, 
        United States Code.

SEC. 233. UNFAIR OR DECEPTIVE PRACTICES.

    (a) General Prohibition.--No person shall engage in any act or 
practice in or affecting the advertising, marketing, solicitation, 
sale, issuance, distribution, or administration of insurance or other 
products of interstate insurers, including such products sold by 
insurance producers, if such act or practice constitutes an unfair or 
deceptive act or practice in or affecting the advertising, 
solicitation, sale, issuance, distribution, or administration of 
insurance or other products of interstate insurers.
    (b) Unfair or Deceptive Acts or Practices Defined.--For purposes of 
this subtitle, the following acts or practices constitute unfair or 
deceptive acts or practices in or affecting the advertising, 
solicitation, sale, issuance, distribution, or administration of 
insurance or other products of interstate insurers, including such 
products sold by insurance producers:
            (1) Misrepresentations and false advertising of insurance 
        or annuity contracts.--Making, issuing, circulating, or causing 
        to be made, issued or circulated, any estimate, illustration, 
        circular or statement, sales presentation or comparison that--
                    (A) misrepresents the benefits, advantages, 
                conditions or terms of any insurance or annuity 
                contract issued by an interstate insurer;
                    (B) misrepresents the dividends to be received on 
                any insurance or annuity contract issued by an 
                interstate insurer;
                    (C) makes a false or misleading statement as to the 
                dividends previously paid on any insurance or annuity 
                contract issued by an interstate insurer;
                    (D) is misleading or is a misrepresentation as to 
                the financial condition of any interstate insurer, or 
                as to the reserves required for an interstate insurer;
                    (E) uses any name or title of any insurance or 
                annuity contract issued by an interstate insurer that 
                misrepresents the true nature of such insurance or 
                annuity contract;
                    (F) is a misrepresentation, including any 
                intentional misquote of a premium rate, for the purpose 
                of inducing or intending to induce the purchase, lapse, 
                forfeiture, exchange, conversion or surrender of any 
                insurance or annuity contract issued by an interstate 
                insurer;
                    (G) is a misrepresentation for the purpose of 
                effecting a pledge or assignment of or effecting a loan 
                against any insurance or annuity contract issued by an 
                interstate insurer; or
                    (H) misrepresents any insurance policy issued by an 
                interstate insurer as stock.
            (2) False, deceptive, or misleading advertising.--Making, 
        publishing, disseminating, circulating, or placing before the 
        public, directly or indirectly, in a newspaper, magazine or 
        other publication, or in the form of a notice, circular, 
        pamphlet, letter or poster, or over the Internet or any radio 
        or television station, or in any other way, any advertisement, 
        announcement, or statement that contains any assertion or 
        representation with respect to any interstate insurer or 
        insurance producer selling products of an interstate insurer 
        which is untrue, deceptive, or misleading.
            (3) Defamation.--Making, publishing, disseminating, or 
        circulating, directly or indirectly, or aiding, abetting, or 
        encouraging the making, publishing, disseminating, or 
        circulating of any oral or written statement or any pamphlet, 
        circular, pamphlet, letter, or poster, which is false or 
        maliciously critical of the financial condition of an 
        interstate insurer or insurance producer selling products of an 
        interstate insurer, and which is calculated to injure such 
        insurer or producer.
            (4) False statements.--Filing with the Commission, or any 
        other public official, or making, publishing, disseminating, 
        circulating, or delivering to any person, or causing, directly 
or indirectly, to be made, published, disseminated, circulated, or 
delivered to any person, or placed before the public, any material 
statement as to the financial condition of an interstate insurer or 
insurance producer selling products of an interstate insurer that is 
false.
            (5) Twisting.--Making, issuing, or causing to be made or 
        issued an oral or written statement that misrepresents or makes 
        incomplete comparisons about the terms, conditions or benefits 
        contained in an insurance or annuity contract issued by an 
        interstate insurer, including such contracts sold by insurance 
        producers, for the purpose of inducing or attempting to or 
        intending to induce the policyholder to forfeit, surrender, 
        retain, exchange, or convert an insurance or annuity contract 
        or allow an insurance or annuity contract to lapse.
            (6) Other acts and practices.--Engaging in any other act or 
        practice that the Commission determines, by regulation or 
        order, to be an unfair or deceptive act or practice in or 
        affecting the advertising, solicitation, sale, issuance, 
        distribution, or administration of insurance and other products 
        of interstate insurers, including such products sold by 
        insurance producers.
    (c) Tie-In Transactions.--
            (1) Real or personal property transaction.--No person 
        engaged in the business of financing the purchase of real or 
        personal property, lending money on the security thereof, or 
        servicing a mortgage thereon, and none of its trustees, 
        directors, officers, agents, or other employees, shall require, 
        as a condition precedent to financing any such purchase or 
        making any such loan or renewing or extending any such loan or 
        mortgage or performing any other act in connection therewith, 
        that the person, firm or corporation for whom the transaction 
        is undertaken negotiate any policy of insurance or renewal 
        thereof covering such property through a particular insurance 
        company, agent, or broker.
            (2) Right to approve insurance company; non-
        discrimination.--This section shall not prevent the exercise of 
        any right to approve or disapprove the insurer selected to 
        underwrite the insurance, except that in exercising such right, 
        whether pursuant to this section or any other law, no person 
        engaged in any such financing, lending or servicing business 
        and none of its trustees, directors, officers, agents, or other 
        employees shall--
                    (A) discriminate against an insurance company which 
                issues a policy of insurance that is non-assessable as 
                to any designated mortgages or any secured creditor 
                designated as a loss payee because of the insurer's 
                type of organization; or
                    (B) refuse to accept an insurance policy because it 
                was not negotiated through a particular insurance 
                company, agent, or broker.
            (3) No fee to change insurance companies.--No person 
        engaged in any such financing, lending, or servicing business, 
        and none of its trustees, directors, officers, agents, or other 
        employees shall, in connection with compliance with a covenant 
        to insure, require that the person, firm, or corporation for 
        whom the purchase of the property is financed or to whom a 
        mortgage loan is made or who owns the property shall pay a fee 
        or other charges as a condition to accepting, during the 
        unexpired term of a policy then held, another policy of 
        insurance in substitution therefore.
            (4) Banking services.--A depository institution (as such 
        term is defined in section 3 of the Federal Deposit Insurance 
        Act (12 U.S.C. 1813)) engaged, directly or indirectly, in the 
        sale of insurance products shall comply with the anti-coercion, 
        disclosure, and other consumer protections provided for in 
        section 47 of the Federal Deposit Insurance Act (12 U.S.C. 
        1831x).

SEC. 234. REPLACEMENT OF LIFE INSURANCE POLICIES.

    (a) In General.--Any replacement of individual life insurance 
policies or individual annuity contracts of an interstate insurer by an 
agent or representative of such insurer shall conform to standards set 
forth in regulations promulgated by the Commission.
    (b) Regulations.--The regulation required by subsection (a) shall--
            (1) specify what constitutes replacement and the disclosure 
        and notification required in order to replace a policy or 
        contract;
            (2) require notification to the interstate insurer whose 
        policies or contracts are intended to be replaced;
            (3) require the timely exchange of illustrative and cost 
        information necessary for completion of a comparison of the 
        proposed and replaced coverage; and
            (4) provide for a period following issuance of the 
        replacement policies or contracts during which the policyholder 
        or contract owner may reinstate the replaced policies or 
        contracts.

SEC. 235. UNFAIR DISCRIMINATION, UNFAIR CLAIMS SETTLEMENT PRACTICES, 
              AND UNLAWFUL INDUCEMENTS.

    (a) Unfair Discrimination.--In underwriting insurance, no 
interstate insurer shall commit any of the following acts:
            (1) Rates, dividends and other benefits associated with 
        life insurance and annuities.--Engage in or allow any unfair 
        discrimination between individuals of the same class and equal 
        expectation of life in the rates charged for any life insurance 
        or annuity contract issued by such interstate insurer or in the 
        dividends or other benefits payable thereon, or in any other 
        terms and conditions of such insurance or annuity contract.
            (2) Rates and benefits associated with accident and health 
        insurance.--Engage in or allow any unfair discrimination 
        between individuals or risks of the same class and of 
        essentially the same hazard in the rates charged for any 
        accident or health insurance issued by an interstate insurer or 
        in the benefits payable thereunder, or in any of the  terms or 
conditions of such insurance, or in any other manner.
            (3) Geographic location of property or casualty risk; age 
        of property.--Engage in or allow unfair discrimination between 
        individuals or risks of the same class and essentially the same 
        hazard by refusing to insure, refusing to renew, canceling, or 
        limiting the amount of insurance coverage--
                    (A) on a property or casualty risk solely because 
                of the geographic location of the risk; or
                    (B) on the residential property risk, or the 
                personal property contained therein solely because of 
                the age of the residential property;
        except that it is not unfairly discriminatory if such action is 
        based on sound actuarial principles or related to actual or 
        reasonably anticipated experience.
            (4) Termination of agent or broker.--Refuse to appoint, or 
        terminate the appointment of, an agent or broker solely because 
        such agent or broker submitted applications for property or 
        casualty risks located in a particular geographical area.
            (5) Gender, martial status, race, religion or national 
        origin.--Refuse to insure, refuse to continue to insure, or 
        limit the amount of coverage available to, an individual 
        because of the gender, marital status, race, religion or 
        national origin of the individual; except that nothing in this 
        paragraph shall prohibit an interstate insurer from taking 
        marital status into account for the purpose of defining persons 
        eligible for dependent benefits.
            (6) Mental or physical impairment.--Terminate or modify 
        coverage under, or refuse to issue or refuse to renew, any 
        insurance, or charge a different rate for the same coverage, 
        solely because the applicant or insured or any employee or 
        dependent of an employee of either is mentally or physically 
        impaired; except that--
                    (A) this paragraph shall not apply to accident and 
                health insurance sold by an interstate insurer that is 
                chartered to issue property and casualty insurance;
                    (B) this paragraph shall not preclude any such 
                action that is based on sound actuarial principles or 
                is related to actual or reasonable anticipated 
                experience, in which case the interstate insurer shall 
                notify the insured or applicant of the right to 
                receive, or designate a medical professional to 
                receive, the specific reason or reasons for such 
                refusal, limitation or differential; and
                    (C) this paragraph shall not be interpreted to 
                modify any other provision of law related to the 
                termination, modification, issuance, or renewal of, or 
                rates charged with respect to, any contract issued by 
                an interstate insurer.
            (7) Refusal by another insurer.--Refuse to insure solely 
        because another interstate insurer or State insurer has refused 
        to write an insurance or annuity contract, or has canceled or 
        has refused to renew an existing insurance or annuity contract 
        in which that person was the named insured. Nothing in this 
        paragraph shall prevent the termination of an excess insurance 
        contract on the account of the failure of the insured to 
        maintain any required underlying insurance.
    (b) Unfair Claims Settlement Practices.--No interstate insurer 
shall engage in any of the following unfair claims settlement practices 
if such practice is committed without just cause and with such 
frequency as to indicate a general practice:
            (1) Knowingly misrepresent material facts or provisions 
        that relate to the claim or coverage at issue.
            (2) Refuse to pay a claim for an arbitrary or capricious 
        reason based on all available information.
            (3) Attempt to settle a claim based on an application that 
        is altered without notice to, or the knowledge or consent of, 
        the insured.
            (4) Fail to include with each claim paid to an insured or 
        beneficiary a statement of the coverage under which payment is 
        being made.
            (5) Fail to settle a claim promptly whenever liability is 
        reasonably clear under one part of an insurance or annuity 
        contract, in order to influence settlements under other parts 
        of the contract.
            (6) Fail to provide promptly on request a reasonable 
        explanation of the basis for a denial of a claim.
            (7) Engage in any other practice that the Commission 
        determines, pursuant to a rule or order, to be an unfair claims 
        settlement practice.
    (c) Unlawful Inducements.--
            (1) In general.--No interstate insurer, nor anyone acting 
        on behalf of an interstate insurer, nor any insurance producer, 
        shall pay, allow, or give, or offer to pay, allow, or give, 
        directly or indirectly, as an inducement to any person to 
        insure, or shall give, sell, or purchase, or offer to give, 
        sell, or purchase, as such inducement, or interdependent with 
        any insurance policy or annuity contract, any stocks, bonds, or 
        other securities, or any dividends or profits accruing or to 
        accrue thereon, any rebate of premium, or any other valuable 
        consideration or inducement whatever having a nominal value in 
        excess of $20, not specified in such policy or contract.
            (2) Affiliates of corporate insureds.--Within the meaning 
        of paragraph (1), the sharing of a commission with the insured 
        shall be deemed to include any case in which an insurance agent 
        or broker which is an affiliate of any corporate insured, 
        received commissions for the negotiation or procurement of any 
        policy or contract of insurance for the insured.
            (3) Dividends permitted.--This subsection shall not 
        prohibit any interstate insurer from equitably distributing to 
        its policyholders, at any time during the term or at the 
        termination of the contract of insurance, dividends payable 
        from such insurer's surplus, nor prohibit any interstate 
        insurer or insurance agent from paying commissions to a 
        licensed insurance broker for negotiating a policy or contract 
        of insurance, nor prohibit any licensed insurance broker from 
        sharing or dividing a commission earned or received by him with 
        any other licensed insurance broker or brokers who shall have 
        aided him in respect to the insurance for the negotiation of 
        which the commission has been earned or paid.
            (4) Temporary contracts permitted.--This subsection shall 
        not prohibit the making of temporary contracts of insurance, 
        either by temporary binders or other memoranda, if the premium 
        applicable to the insurance shall be due and shall be paid for 
        the time during which the insurance is in force by virtue of 
        the temporary contract.

SEC. 236. HIV WRITTEN INFORMED CONSENT, DISCRIMINATION AGAINST ABUSE 
              VICTIMS, AND HOLOCAUST VICTIMS CLAIMS.

    (a) HIV Written Informed Consent.--
            (1) In general.--No interstate insurer or its designee 
        shall request or require an individual proposed for insurance 
        coverage to be the subject of an HIV related test without 
        receiving the written informed consent of such individual prior 
        to such testing and without providing general information about 
        AIDS and the transmission of HIV infection.
            (2) Written consent.--Written informed consent to an HIV 
        related test shall consist of a  written authorization that is 
dated and includes at least the following:
                    (A) A general description of the test.
                    (B) A statement of the purpose of the test.
                    (C) A statement that a positive test result is an 
                indication that the individual may develop AIDS and may 
                wish to consider further independent testing.
                    (D) A statement that the individual may identify on 
                the authorization form the person to whom the specific 
                test results may be disclosed in the event of an 
                adverse underwriting decision, which person may be the 
                individual or a physician or other designee at the 
                discretion of the individual proposed for insurance.
                    (E) The signature of the applicant or individual 
                proposed for insurance, or if such individual lacks 
                capacity to consent, the signature of such other person 
                authorized to consent for such individual.
            (3) Notice to individual.--In the event that an interstate 
        insurer's adverse underwriting decision is based in whole or in 
        part on the result of an HIV related test, the interstate 
        insurer shall notify the individual of the adverse underwriting 
        decision and ask the individual to elect in writing, unless the 
        individual has already done so, whether to have the specific 
        HIV related test results disclosed directly to the individual 
        or to such other person as the individual may designate.
            (4) Definitions.--For purposes of this subsection:
                    (A) Adverse underwriting decision.--The term 
                ``adverse underwriting decision'' means--
                            (i) a declination of insurance coverage as 
                        applied for; or
                            (ii) an offer to issue insurance coverage 
                        at a higher than standard rate.
                    (B) AIDS.--The term ``AIDS'' means acquired immune 
                deficiency syndrome, as may be defined from time to 
                time by the Centers for Disease Control of the United 
                States Public Health Service.
                    (C) HIV infection.--The term ``HIV infection'' 
                means infection with the human immunodeficiency virus 
                or any other related virus identified as a probable 
                causative agent of AIDS.
                    (D) HIV related test.--The term ``HIV related 
                test'' means any laboratory test or series of tests for 
                any virus, antibody, antigen, or etiologic agent 
                whatsoever thought to cause or to indicate the presence 
                of AIDS.
            (5) Authority of director.--Nothing in this subsection 
        shall be construed to create, impair, alter, limit, modify, 
        enlarge, abrogate, or restrict the specific authority of the 
        Commission to allow or prohibit the use of HIV related tests or 
        the consideration of HIV related test results for insurance 
        coverage purposes.
    (b) Discrimination Based on Being a Victim of Abuse.--
            (1) In general.--It is unfairly discriminatory on the part 
        of an interstate insurer to--
                    (A) deny, refuse to issue, renew or reissue, 
                cancel, or otherwise terminate, restrict, or exclude 
                insurance coverage on or add a premium differential to 
                a policy for an applicant or insured on the basis of 
                the applicant's or insured's abuse status; or
                    (B) exclude, limit, or deny benefits on a life 
                insurance policy on the basis of an insured's abuse 
                status except as otherwise permitted or required by 
                law;
        except that the prohibitions contained in this paragraph shall 
        not preclude an interstate insurer from taking any of the 
        actions described in this paragraph so long as the interstate 
        insurer relies on underwriting criteria reasonably related to 
        the physical or mental condition of a person, their property or 
        claim history and the decision was based on sound underwriting 
        and actuarial principles reasonably related to actual or 
        anticipated loss experience. In such case the selection 
        criteria permitted must be based on such principles. The 
        interstate insurer shall notify the insured or applicant of its 
        specific reason or reasons for such decision.
            (2) Disclosure of confidential abuse information.--When an 
        interstate insurer, agency, or agent has confidential abuse 
        information in its possession, the disclosure or transfer of 
        such information by a person employed by or contracting with an 
        interstate insurer, agency, or agent for any purpose or to any 
        person is unfairly discriminatory, except--
                    (A) to the subject of abuse or an individual 
                specifically designated in writing by the subject of 
                abuse;
                    (B) to a health care provider for the direct 
                provision of health care services;
                    (C) to a licensed physician identified and 
                designated by the subject of abuse;
                    (D) when ordered by the Commission or a court of 
                competent jurisdiction or otherwise required by law;
                    (E) when necessary for a valid business purpose to 
                transfer information that includes confidential abuse 
                information that cannot reasonably be segregated 
                without undue hardship; confidential abuse information 
                may be disclosed only if the recipient has executed a 
                written agreement to be bound by the prohibitions of 
                this subsection in all respects and to be subject to 
                the enforcement of this subsection by a court of 
                competent jurisdiction for the benefit of the applicant 
                or the insured, and only to--
                            (i) a reinsurer that seeks to indemnify or 
                        indemnifies all or any part of a policy 
                        covering a subject of abuse and that cannot 
                        underwrite or satisfy its obligations under the 
                        reinsurance agreement without that disclosure;
                            (ii) a party to a proposed or consummated 
                        sale, transfer, merger, or consolidation of all 
                        or part of the business of the interstate 
                        insurer, agency, or agent;
                            (iii) medical or claims personnel 
                        (including affiliates of the interstate 
                        insurer, agency, or agent) contracting with the 
                        interstate insurer, agency, or agent, only 
                        where necessary to process an application or 
                        perform the duties of such interstate insurer, 
                        agency, or agent under the policy or to protect 
                        the safety or privacy of a subject of abuse; or
                            (iv) with respect to address and telephone 
                        number, to entities with whom the interstate 
                        insurer, agency, or agent transacts business 
                        when the business cannot be transacted without 
                        the address and telephone number;
                    (F) to an attorney who needs the information to 
                represent the interstate insurer, agency, or agent 
                effectively, provided, that the interstate insurer, 
                agency, or agent notifies the attorney of its 
                obligations under this subsection and requests that the 
                attorney exercise due diligence  to protect the 
confidential abuse information consistent with the attorney's 
obligation to represent the interstate insurer, agency, or agent;
                    (G) to the policyholder or assignee, in the course 
                of delivery of the policy, if the policy contains 
                information about abuse status; or
                    (H) to any other entities deemed appropriate by the 
                Commission.
            (3) Requests prohibited.--It is unfairly discriminatory on 
        the part of an interstate insurer to request information about 
        acts of abuse or abuse status, or make use of that information, 
        however obtained.
            (4) Exceptions.--Nothing in this subsection shall--
                    (A) preclude a subject of abuse from obtaining his 
                or her insurance records;
                    (B) prohibit an interstate insurer, agency, or 
                agent from declining to issue a life insurance policy 
                if the applicant or prospective owner of the policy is 
                or would be designated as a beneficiary of the policy, 
                and if--
                            (i) the applicant or prospective owner of 
                        the policy lacks an insurable interest in the 
                        insured;
                            (ii) the applicant or prospective owner of 
                        the policy is known, on the basis of medical, 
                        police, or court records, to have committed an 
act of abuse against the proposed insured; or
                            (iii) the insurance or prospective insured 
                        is a subject of abuse, and that person, or a 
                        person who has assumed the care of that person 
                        if a minor or incapacitated, has objected to 
                        the issuance of the policy on the ground that 
                        the policy would be issued to or for the direct 
                        or indirect benefit of the abuser; or
                    (C) prohibit an interstate insurer, agency, or 
                agent from asking about a medical condition or from 
                using medical information to underwrite or to carry out 
                its duties under the policy, even if the medical 
                information is related to a medical condition that the 
                interstate insurer, agency, or agent knows or has 
                reason to know is abuse-related, to the extent 
                otherwise permitted under this subsection and other 
                applicable law.
            (5) Actions taken in good faith.--A interstate insurer, 
        agency, or agent shall not be held civilly or criminally liable 
        for the death of or injury to an insured resulting from any 
        action taken in a good faith effort to comply with the 
        requirements of this subsection; except that this paragraph 
        does not prevent an action to investigate or enforce a 
        violation of this subsection or to assert any other claims 
        authorized by law.
            (6) Definitions.--For purposes of this subsection:
                    (A) Abuse.--The term ``abuse'' means an act that--
                            (i) would constitute a crime in the State 
                        in which the insured or applicant resides, 
                        including acts constituting disorderly conduct, 
                        harassment, menacing, reckless endangerment, 
                        kidnapping, assault, attempted assault, or 
                        attempted murder;
                            (ii) has resulted (or multiple acts that 
                        have resulted) in actual physical or emotional 
                        injury or have created a substantial risk of 
                        physical or emotional harm to such person or 
                        such person's child; and
                            (iii) is alleged (or multiple acts that are 
                        alleged) to have been committed by a family or 
                        household member.
                    (B) Confidential abuse information.--The term 
                ``confidential abuse information'' means information 
                that clearly indicates that the insured or applicant is 
                a subject of abuse.
    (c) Holocaust Victims' Claims.--Any interstate insurer in receipt 
of a claim against it arising from an occurrence during the period 
between January 1, 1929, and December 31, 1945, from an individual that 
such interstate insurer knows, or reasonably should have known, is a 
Holocaust victim shall--
            (1) diligently and expeditiously investigate such claim;
            (2) allow claimants to provide alternative documentation 
        which does not meet the usual standards of proof required by an 
        insurer to substantiate the particular claim, subject to 
        standards established for such documentation as prescribed by 
        regulations promulgated by the Commission; and
            (3) attempt to resolve, settle and, if appropriate, make 
        payments on claims irrespective of any statute of limitations 
        or notice requirements imposed by any law or such insurance 
        policy issued to or covering the life of a Holocaust victim, 
        provided that the claim is submitted to the insurer within 10 
        years from the effective date of this Act.

SEC. 237. MINIMUM NATIONAL STANDARDS.

    (a) Applicability to Insurers.--The provisions of this subtitle and 
any regulations implementing this subtitle shall apply to each 
insurance company (other than an interstate insurer) enforceable 
against each such company by the appropriate State insurance regulator 
of the State that would otherwise have jurisdiction over the 
transaction or activity that is alleged to constitute a violation of 
this subtitle. Each such insurance company shall be subject to the same 
penalties and sanctions that the Commission may impose against an 
interstate insurer for violations of this subtitle.
    (b) Enforcement of More Protective State Laws.--Nothing in this 
section shall be construed to diminish the authority of any State 
insurance regulator to enforce a State statute, order, or regulation 
upon an intrastate insurer that provides greater protection to the 
policyholder, applicant, or claimant alleging a violation of this 
subtitle.

SEC. 238. ENFORCEMENT.

    (a) Federal License Revocation, Suspension, or Restriction.--
            (1) Involuntary revocation or restriction.--
                    (A) Determination required.--The Commission shall 
                take an action described in subparagraph (B) if it 
determines that an interstate insurer's license requires revocation or 
restriction (including restrictions on the lines of insurance covered 
by) because--
                            (i) the interstate insurer or its board of 
                        directors has engaged or are engaging in 
                        conduct involving an undue risk of loss to the 
                        interstate insurer's policyholders as a whole;
                            (ii) the interstate insurer is in a 
                        financial or other condition that is not 
                        consistent with the continuation of its 
                        operations as presently conducted by the 
                        insurer; or
                            (iii) the interstate insurer or its board 
                        of directors has violated any applicable law, 
                        regulation, order, condition imposed in writing 
                        by the Commission in connection with the 
                        approval of an application, filing, statement, 
                        notice or other request by the interstate 
                        insurer, or written agreement entered into 
                        between the interstate insurer and the 
                        Commission,
                    (B) Notice to the interstate insurer.--If the 
                Commission makes a determination described subparagraph 
                (A) with respect to an interstate insurer, then the 
                Commission shall--
                            (i) serve written notice on the interstate 
                        insurer of the Commission's intention to revoke 
                        the license of such interstate insurer;
                            (ii) provide the interstate insurer with a 
                        statement of the basis for the determination to 
                        revoke or restrict the insurer's Federal 
                        license; and
                            (iii) notify the interstate insurer of the 
                        date (not less than 30 days after notice under 
                        this subparagraph) and place for a hearing 
                        before the Commission (or any person designated 
                        by the Commission) with respect to the 
                        revocation or restriction of the interstate 
                        insurer's Federal license.
            (2) Hearing; revocation or restriction.--If, on the basis 
        of the evidence presented at a hearing before the Commission 
        (or any person designated by the Commission for such purpose), 
        in which all issues shall be determined on the record pursuant 
        to section 554 of title 5, United States Code, and the written 
        findings of the Commission (or such designated person) with 
        respect to such evidence (which shall be conclusive), the 
        Commission finds that the conduct, condition, or violation 
        specified in the notice under paragraph (1)(B) has been 
        established, the Commission may issue an order revoking or 
        restricting the Federal license of the interstate insurer 
        effective as of a date subsequent to such finding.
            (3) Appearance; consent to revocation or restriction.--
        Unless the interstate insurer appears at the hearing by a duly 
        authorized representative, it shall be deemed to have consented 
        to the revocation or restriction of its Federal license, and 
        revocation or restriction of its Federal license may be ordered 
        by the Commission.
            (4) Judicial review.--Any interstate insurer whose Federal 
        license has been revoked or restricted by order of the 
        Commission under this subsection shall have the right of 
        judicial review of such order only to the extent provided for 
        the review of orders under subsection (g).
            (5) Publication of notice of revocation or restriction.--
        The Commission may publish notice of such revocation or 
        restriction and the interstate insurer shall give notice of 
        such revocation or restriction to each of its policyholders at 
        the policyholder's last address of record on the books of the 
        interstate insurer, in such manner and at such time as the 
        Commission may find to be necessary for the protection of 
        policyholders.
            (6) Temporary suspension or restriction.--
                    (A) In general.--If the Commission initiates a 
                revocation or restriction proceeding under paragraph 
                (1) with respect to an interstate insurer, and the 
                Commission finds that the interstate insurer poses an 
                immediate threat to its policyholders or the public, 
                the Commission may issue a temporary order suspending 
                or restricting the interstate insurer's Federal 
                license.
                    (B) Effective period of temporary order.--A 
                temporary order issued under subparagraph (A) shall 
                become effective not earlier than 10 days from the date 
                of service upon the interstate insurer and, unless set 
                aside, limited, or suspended by a court in proceedings 
                authorized hereunder, such temporary order shall remain 
                effective and enforceable until an order of the 
                Commission under paragraph (2) or (3) becomes final or 
                until the Commission dismisses the proceedings under 
                paragraph (2).
                    (C) Judicial review.--Before the close of the 10-
                day period beginning on the date any temporary order 
                has been served upon an interstate insurer under 
                subparagraph (A), such interstate insurer may apply to 
                the United States District Court for the District of 
                Columbia, or the United States district court for the 
                judicial district in which the main office of the 
                insurer is located, for an injunction setting aside, 
                limiting, or suspending the enforcement, operation, or 
                effectiveness of such order, and such court shall have 
                jurisdiction to issue such injunction.
                    (D) Publication of order.--The interstate insurer 
                shall give notice of a temporary order issued under 
                this paragraph in such manner and at such times as the 
                Commission may find to be necessary and may order for 
                the protection of policyholders and the public.
            (7) Notice by the commission.--If the Commission shall 
        determine that an interstate insurer has not given notice of an 
        order under this subsection substantially in the manner and at 
        the times ordered by the Commission, the Commission may provide 
such notice in such manner as the Commission may find to be necessary 
and proper.
            (8) Decision to revoke, suspend, or restrict.--Any decision 
        by the Commission to--
                    (A) issue a temporary order suspending or 
                restricting an interstate insurer's Federal license, or
                    (B) issue a final order revoking or restricting an 
                interstate insurer's Federal license,
        shall be made by the Commission and may not be delegated, 
        except that the Commission may, by order, designate an employee 
        of the Office that may make such decision in the event that the 
        Commission is not able to act by reason of recusal or is 
        otherwise disqualified from acting.
    (b) Cease-and-Desist Proceedings.--
            (1) In general.--If, in the opinion of the Commission, any 
        interstate insurer, or any insurer-affiliated party is engaging 
        or has engaged, or the Commission has reasonable cause to 
        believe that any interstate insurer, or any insurer-affiliated 
        party is about to engage, in conduct involving an undue risk of 
        loss to such interstate insurer's policyholders as a whole, or 
        is violating or has violated, or the Commission has reasonable 
        cause to believe that any interstate insurer, or any insurer-
        affiliated party is about to violate, a law, rule, or 
        regulation, or any condition imposed in writing by the 
        Commission in connection with the granting of any application, 
        filing, statement, notice or other request by the interstate 
        insurer any written agreement entered into with the Commission, 
        the Commission may issue and serve upon such interstate 
        insurer, producer or party a notice of charges in respect 
        thereof. The notice shall contain a statement of the facts 
        constituting the alleged violation or violations or the 
        conduct, and shall fix a time and place at which a hearing will 
        be held to determine whether an order to cease and desist 
        therefrom should issue against the interstate insurer or the 
        insurer-affiliated party. Such hearing shall be fixed for a 
        date not earlier than 30 days nor later than 60 days after 
        service of such notice unless an earlier or a later date is set 
        by the Commission at the request of any party so served. Unless 
        the party or parties so served shall appear at the hearing 
        personally or by a duly authorized representative, they shall 
        be deemed to have consented to the issuance of the cease-and-
        desist order. In the event of such consent, or if upon the 
        record made at any such hearing, the Commission shall find that 
        any violation or conduct specified in the notice of charges has 
        been established, the Commission may issue and serve upon the 
        interstate insurer, or the insurer-affiliated party, as the 
        case may be, an order to cease and desist from any such 
        violation or conduct. Such order may, by provisions which may 
        be mandatory or otherwise, require the interstate insurer or 
        the insurer-affiliated party to cease and desist from the same, 
        and, further, to take affirmative action to correct the 
        conditions resulting from any such violation or conduct.
            (2) Effective date.--A cease-and-desist order shall become 
        effective at the expiration of 30 days after the service of 
        such order upon the interstate insurer, the State licensed 
        insurance producer or the insurer-affiliated party, as the case 
        may be (except in the case of a cease-and-desist order issued 
        upon consent, which shall become effective at the time 
        specified therein), and shall remain effective and enforceable 
        as provided therein, except to such extent as it is stayed, 
        modified, terminated, or set aside by action of the Commission 
        or a reviewing court.
            (3) Affirmative action to correct conditions resulting from 
        violations or conduct.--The authority under this subsection and 
        subsection (c) to issue an order that requires an interstate 
        insurer or an insurer-affiliated party to take affirmative 
        action to correct or remedy any conditions resulting from any 
        violation or conduct with respect to which such order is issued 
        includes the authority to require such interstate insurer, 
        producer or such party to--
                    (A) make restitution or provide reimbursement, 
                indemnification, or guarantee against loss;
                    (B) restrict the growth of the interstate insurer;
                    (C) dispose of any asset or insurance contract 
                (including any insurance policy);
                    (D) rescind any other agreements or contracts, 
                other than insurance contracts (including insurance 
                policies) as to which the interstate insurer is the 
                issuer;
                    (E) employ qualified officers or employees (who may 
                be subject to approval by the Commission in its 
                direction); and
                    (F) take such other action as the Commission 
                determines to be appropriate.
            (4) Authority to limit activities.--The authority to issue 
        an order under this subsection or subsection (c) includes the 
        authority to place limitations on the activities or functions 
        of an interstate insurer or an insurer-affiliated party.
            (5) Standard for certain orders.--No authority under this 
        subsection or subsection (c) to prohibit any insurer-affiliated 
        party from withdrawing, transferring, removing, dissipating, or 
        disposing of any funds, assets, or other property may be 
        exercised unless the Commission meets the standards of Rule 65 
        of the Federal Rules of Civil Procedure, without regard to the 
        requirement of such rule that the applicant show that the 
        injury, loss, or damage is irreparable and immediate.
    (c) Temporary Cease-and-Desist Orders.--
            (1) In general.--Whenever the Commission shall determine 
        that the violation or threatened violation or the conduct 
        specified in the notice of charges served upon an interstate 
        insurer or an insurer-affiliated party pursuant to subsection 
        (b)(1), or the continuation thereof, is likely to cause 
        insolvency or significant dissipation of assets or earnings of 
an interstate insurer, or is likely to weaken the condition of an 
interstate insurer or otherwise prejudice the interests of the 
policyholders of an interstate insurer prior to the completion of the 
proceedings conducted pursuant to subsection (b)(1), the Commission may 
issue a temporary order requiring such interstate insurer, producer or 
party to cease and desist from any such violation or conduct and to 
take affirmative action to prevent or remedy such insolvency, 
dissipation, condition, or prejudice pending completion of such 
proceedings. Such order may include any requirement authorized under 
subsection (b)(3). Such order shall become effective upon service upon 
the interstate insurer, producer or party and, unless set aside, 
limited, or suspended by a court in proceedings authorized by paragraph 
(2), shall remain effective and enforceable pending the completion of 
the administrative proceedings pursuant to such notice and until such 
time as the Commission shall dismiss the charges specified in such 
notice or, if a cease-and-desist order is issued against such 
interstate insurer, producer or party, until the effective date of such 
order.
            (2) Injunction.--Within 10 days after an interstate insurer 
        or an insurer-affiliated party has been served with a temporary 
        cease-and-desist order, the interstate insurer, producer or 
        party may apply to the United States district court for the 
        judicial district in which the main office of the interstate 
        insurer is located or in which the producer of party is 
        located, as the case may be, or to the United States District 
        Court for the District of Columbia, for an injunction setting 
        aside, limiting, or suspending the enforcement, operation, or 
        effectiveness of such order pending the completion of the 
        administrative proceedings pursuant to the notice of charges 
        served upon the interstate insurer or such party under 
        subsection (b)(1), and such court shall have jurisdiction to 
        issue such injunction.
            (3) Incomplete or inaccurate records.--
                    (A) Temporary order.--If a notice of charges served 
                under subsection (b)(1) specifies, on the basis of 
                particular facts and circumstances, that an interstate 
                insurer's books and records are so incomplete or 
                inaccurate that the Commission is unable, through the 
                normal supervisory process, to determine the financial 
                condition of that interstate insurer or the details or 
                purpose of any transaction or transactions that may 
                have a material effect on the financial condition of 
                that interstate insurer, the Commission may issue a 
                temporary order requiring--
                            (i) the cessation of any activity or 
                        practice which gave rise, whether in whole or 
                        in part, to the incomplete or inaccurate state 
                        of the books or records; or
                            (ii) affirmative action to restore such 
                        books or records to a complete and accurate 
                        state, until the completion of the proceedings 
                        under subsection (b)(1).
                    (B) Effective period.--Any temporary order issued 
                under subparagraph (A)--
                            (i) shall become effective upon service; 
                        and
                            (ii) unless set aside, limited, or 
                        suspended by a court in proceedings under 
                        paragraph (2), shall remain in effect and 
                        enforceable until the earlier of--
                                    (I) the completion of the 
                                proceeding initiated under subsection 
                                (a)(1) in connection with the notice of 
                                charges; or
                                    (II) the date the Commission 
                                determines, by examination or 
                                otherwise, that the interstate 
                                insurer's books and records are 
                                accurate and reflect the financial 
                                condition of the interstate insurer.
    (d) Removal and Prohibition Authority.--
            (1) Authority to issue order.--Whenever the Commission 
        determines that--
                    (A) any insurer-affiliated party has, directly or 
                indirectly--
                            (i) violated--
                                    (I) any law or regulation;
                                    (II) any cease-and-desist order 
                                issued under this section which has 
                                become final;
                                    (III) any condition imposed in 
                                writing by the Commission in connection 
                                with the grant of any application, 
                                filing, statement, notice or other 
                                request by such interstate insurer; or
                                    (IV) any written agreement between 
                                such interstate insurer and the 
                                Commission;
                            (ii) engaged or participated in any conduct 
                        involving undue risk of loss to such interstate 
                        insurer's policyholders as a whole; or
                            (iii) committed or engaged in any act, 
                        omission, or practice which constitutes a 
                        breach of such party's fiduciary duty;
                    (B) by reason of the violation, practice, or breach 
                described in any clause of subparagraph (A)--
                            (i) such interstate insurer has suffered or 
                        will probably suffer financial loss or other 
                        damage;
                            (ii) the interests of the interstate 
                        insurer's policyholders have been or could be 
                        prejudiced; or
                            (iii) such party has received financial 
                        gain or other benefit by reason of such 
                        violation, practice, or breach; and
                    (C) such violation, practice, or breach--
                            (i) involves personal dishonesty on the 
                        part of such party; or
                            (ii) demonstrates willful or continuing 
                        disregard by such party for the condition of 
                        such interstate insurer or the interests of the 
                        interstate insurer's policyholders, the 
                        Commission may serve upon such party a written 
notice of the Commission's intention to suspend or remove such party 
from office or to prohibit any further participation by such party, in 
any manner, in the conduct of the affairs of any interstate insurer.
            (2) Temporary suspension order.--
                    (A) Suspension or prohibition authorized.--If the 
                Commission serves written notice under paragraph (1) on 
                any insurer-affiliated party of the Commission's 
                intention to issue an order under such paragraph, the 
                Commission may issue a temporary order suspending such 
                party from office or prohibiting such party from 
                further participation in any manner in the conduct of 
                the affairs of the interstate insurer, if the 
                Commission--
                            (i) determines that such action is 
                        necessary for the protection of the interstate 
                        insurer or of the interests of the interstate 
                        insurer's policyholders; and
                            (ii) serves such party with the temporary 
                        order of suspension or prohibition.
                    (B) Effective period.--Any temporary order issued 
                under subparagraph (A)--
                            (i) shall become effective upon service; 
                        and
                            (ii) unless a court issues a stay of such 
                        order under paragraph (5), shall remain in 
                        effect and enforceable until--
                                    (I) the date the Commission 
                                dismisses the charges contained in the 
                                notice served under paragraph (1) with 
                                respect to such party; or
                                    (II) the effective date of an order 
                                issued by the Commission to such party 
                                under paragraph (1).
                    (C) Copy of order.--If the Commission issues a 
                temporary order under subparagraph (A) to any insurer-
                affiliated party, the Commission shall serve a copy of 
                such order on any interstate insurer with which such 
                party is associated at the time such order is issued.
            (3) Procedures.--A notice of intention to remove an 
        insurer-affiliated party from office or to prohibit such party 
        from participating in the conduct of the affairs of an 
        interstate insurer that is served under paragraph (1), shall 
        contain a statement of the facts constituting grounds therefor, 
        and shall fix a time and place at which a hearing will be held 
        thereon. Such hearing shall be fixed for a date not earlier 
        than 30 days nor later than 60 days after the date of service 
        of such notice, unless an earlier or a later date is set by the 
        Commission at the request of (A) such party, or (B) the 
        Attorney General of the United States. Unless such party shall 
        appear at the hearing in person or by a duly authorized 
        representative, such party shall be deemed to have consented to 
        the issuance of an order of such removal or prohibition. In the 
        event of such consent, or if upon the record made at any such 
        hearing the Commission shall find that any of the grounds 
        specified in such notice have been established, the Commission 
        may issue such orders of suspension or removal from office, or 
        prohibition from participation in the conduct of the affairs of 
        the interstate insurer, as the Commission may deem appropriate. 
        Any such order shall become effective at the expiration of 30 
        days after service upon such interstate insurer and such party 
        (except in the case of an order issued upon consent, which 
        shall become effective at the time specified therein). Such 
        order shall remain effective and enforceable as provided 
        therein, except to such extent as it is stayed, modified, 
        terminated, or set aside by action of the Commission or a 
        reviewing court.
            (4) Industrywide prohibition.--
                    (A) In general.--Except as provided in subparagraph 
                (B), any person who, pursuant to any order issued under 
                this subsection or subsection (e), has been removed or 
                suspended from office in an interstate insurer or 
                prohibited from participating in the conduct of the 
                affairs of an interstate insurer may not, while such 
                order is in effect--
                            (i) continue or commence to hold any office 
                        in, or participate in any manner in the conduct 
                        of the affairs of any interstate insurer;
                            (ii) solicit, procure, transfer, attempt to 
                        transfer, vote, or attempt to vote any proxy, 
                        consent, or authorization with respect to any 
                        voting rights in any interstate insurer; or
                            (iii) act as an insurer-affiliated party.
                    (B) Exception if commission provides written 
                consent.--If, on or after the date an order is issued 
                under this subsection which removes or suspends from 
                office any insurer-affiliated party or prohibits such 
                party from participating in the conduct of the affairs 
                of an interstate insurer, such party receives the 
                written consent of the Commission, subparagraph (A) 
                shall, to the extent of such consent, cease to apply to 
                such party with respect to the interstate insurer 
                described in each written consent.
                    (C) Violation of paragraph treated as violation of 
                order.--Any violation of subparagraph (A) by any person 
                who is subject to an order described in such 
                subparagraph shall be treated as a violation of the 
                order.
            (5) Stay of suspension or prohibition of insurer-affiliated 
        party.--Within 10 days after any insurer-affiliated party has 
        been suspended from office or prohibited from participation in 
        the conduct of the affairs of an interstate insurer by a 
        temporary order issued under subsection (d)(2), such party may 
        apply to the United States district court for the judicial 
        district in which the main office of the interstate insurer is 
        located, or the United States District Court for the District 
        of Columbia, for a stay of such suspension or prohibition 
        pending the completion of the administrative proceedings 
        pursuant to the notice served upon such party under subsection 
(d)(1), and such court shall have jurisdiction to stay such suspension 
or prohibition.
    (e) Suspension or Removal of Insurer-affiliated Party Charged With 
Felony.--
            (1) Suspension or prohibition.--
                    (A) In general.--Whenever any insurer-affiliated 
                party is charged in any information, indictment, or 
                complaint, with the commission of or participation in--
                            (i) a crime involving dishonesty or breach 
                        of trust which is punishable by imprisonment 
                        for a term exceeding 1 year under State or 
                        Federal law, or
                            (ii) a criminal violation of section 1956, 
                        1957, or 1960 of title 18, United States Code, 
                        or section 5322 or 5324 of title 31, United 
                        States Code,
                the Commission may, if continued service or 
                participation by such party may pose a threat to the 
                interstate insurer or the interests of the interstate 
                insurer's policyholders, by written notice served upon 
                such party, suspend such party from office or prohibit 
                such party from further participation in any manner in 
                the conduct of the affairs of the interstate insurer.
                    (B) Provisions applicable to notice.--
                            (i) Copy.--A copy of any notice under 
                        subparagraph (A) shall also be served upon the 
                        interstate insurer.
                            (ii) Effective period.--A suspension or 
                        prohibition under subparagraph (A) shall remain 
                        in effect until the information, indictment, or 
                        complaint referred to in such subparagraph is 
                        finally disposed of or until terminated by the 
                        Commission.
            (2) Removal or prohibition.--
                    (A) In general.--If a judgment of conviction or an 
                agreement to enter a pretrial diversion or other 
                similar program is entered against an insurer-
                affiliated party in connection with a crime described 
                in paragraph (1)(A)(i), at such time as such judgment 
                is not subject to further appellate review, the 
                Commission may, if continued service or participation 
                by such party may pose a threat to the interstate 
                insurer or the interests of the interstate insurer's 
                policyholders, issue and serve upon such party an order 
                removing such party from office or prohibiting such 
                party from further participation in any manner in the 
                conduct of the affairs of the interstate insurer 
                without the prior written consent of the Commission.
                    (B) Required for certain offenses.--In the case of 
                a judgment of conviction or agreement against an 
                insurer-affiliated party in connection with a violation 
                described in paragraph (1)(A)(ii), the Commission shall 
                issue and serve upon such party an order removing such 
                party from office or prohibiting such party from 
                further participation in any manner in the conduct of 
                the affairs of the interstate insurer without the prior 
                written consent of the Commission.
                    (C) Copy.--A copy of any order under this paragraph 
                shall also be served upon the interstate insurer, 
                whereupon the insurer-affiliated party who is subject 
                to the order (if a Commission or an officer) shall 
                cease to be a Commission or officer of such interstate 
                insurer.
                    (D) Effect of acquittal.--A finding of not guilty 
                or other disposition of the charge shall not preclude 
                the Commission from instituting proceedings after such 
                finding or disposition to remove such party from office 
                or to prohibit further participation in interstate 
                insurer affairs, pursuant to paragraphs (1) or (2) of 
                subsection (d).
                    (E) Effective period.--Any notice of suspension or 
                order of removal issued under this paragraph or 
                paragraph (1) shall remain effective and outstanding 
                until the completion of any hearing or appeal 
                authorized under paragraph (3) unless terminated by the 
                Commission.
            (3) Appeal.--Within 30 days from service of any notice of 
        suspension or order of removal issued pursuant to paragraph (1) 
        or (2) of this subsection, the insurer-affiliated party 
        concerned may request in writing an opportunity to appear 
        before the Commission to show that the continued service to or 
        participation in the conduct of the affairs of the interstate 
        insurer by such party does not, or is not likely to, pose a 
        threat either to the interstate insurer or to the interests of 
        the interstate insurer's policyholders. Upon receipt of any 
        such request, the Commission shall fix a time (not more than 30 
        days after receipt of such request, unless extended at the 
        request of such party) and place at which such party may 
        appear, personally or through counsel, before one or more 
        designated employees of the Commission to submit written 
        materials (or, at the discretion of the Commission, oral 
        testimony) and oral argument. Within 60 days of such hearing, 
        the Commission shall notify such party whether the notice of 
        suspension or prohibition from participation in any manner in 
        the conduct of the affairs of the interstate insurer will be 
        continued, terminated, or otherwise modified, or whether the 
        order removing such party from office or prohibiting such party 
        from further participation in any manner in the conduct of the 
        affairs of the interstate insurer will be rescinded or 
        otherwise modified. Such notification shall contain a statement 
        of the basis for the Commission's decision, if adverse to such 
        party.
    (f) Effect on Board of Directors.--If at any time, because of the 
suspension of one or more directors pursuant to this section, there 
shall be on the board of directors of an interstate insurer less than a 
quorum of directors not so suspended, all powers and functions vested 
in or exercisable by such board shall vest in and be exercisable by the 
director or directors on the board not so suspended, until such time as 
there shall be a quorum of the board of directors. In the event all of 
the directors of an interstate insurer are suspended pursuant to this 
section, the Commission shall appoint persons to serve temporarily as 
directors in their place and stead pending the termination of such 
suspensions, or until such time as those who have been suspended cease 
to be directors of the interstate insurer and their respective 
successors take office.
    (g) Hearings and Judicial Review.--
            (1) Any hearing provided for in this section (other than 
        the hearing provided for in subsection (e)(3) of this section) 
        shall be held in the Federal judicial district in which the 
        main office of the interstate insurer is located or the 
        insurer-affiliated party is located, as the case may be, unless 
        the party afforded the hearing consents to another place, and 
        shall be conducted in accordance with the provisions of chapter 
        5 of title 5, United States Code. After such hearing, and 
        within 90 days after the Commission has notified the parties 
        that the case has been submitted to the Commission for final 
        decision, the Commission shall render a decision (which shall 
        include findings of fact upon which the Commission's decision 
        is predicated) and shall issue and serve upon each party to the 
        proceeding an order or orders consistent with the provisions of 
        this section. Judicial review of any such order shall be 
        exclusively as provided in this subsection. Unless a petition 
        for review is timely filed in a court of appeals of the United 
        States, as hereinafter provided in paragraph (2), and 
        thereafter until the record in the proceeding has been filed as 
        so provided, the Commission may at any time, upon such notice 
        and in such manner as it shall deem proper, modify, terminate, 
        or set aside any such order. Upon such filing of the record, 
        the Commission may modify, terminate, or set aside any such 
        order with permission of the court.
            (2) Any party to any proceeding under paragraph (1) may 
        obtain a review of any order served pursuant to paragraph (1) 
        of this subsection (other than an order issued with the consent 
        of the interstate insurer or the insurer-affiliated party 
        concerned, or an order issued under paragraph (e)(1) or (e)(2)) 
        by the filing in the court of appeals of the United States for 
        the circuit in which the main office of the interstate insurer 
        is located or the insurer-affiliated party is located, as the 
        case may be, or in the United States Court of Appeals for the 
        District of Columbia Circuit, within 30 days after the date of 
        service of such order, a written petition praying that the 
        order of the Office be modified, terminated, or set aside. A 
        copy of such petition shall be forthwith transmitted by the 
        clerk of the court to the Commission, and thereupon the 
        Commission shall file in the court the record in the 
        proceeding, as provided in section 2112 of title 28, United 
        States Code. Upon the filing of such petition, such court shall 
        have jurisdiction, which upon the filing of the record shall 
        except as provided in the last sentence of said paragraph (1) 
        be exclusive, to affirm, modify, terminate, or set aside, in 
        whole or in part, the order of the Office. Review of such 
        proceedings shall be had as provided in chapter 7 of title 5, 
        United States Code. The judgment and decree of the court shall 
        be final, except that the same shall be subject to review by 
        the Supreme Court upon certiorari, as provided in section 1254 
        of title 28, United States Code.
            (3) The commencement of proceedings for judicial review 
        under paragraph (2) of this subsection shall not, unless 
        specifically ordered by the court, operate as a stay of any 
        order issued by the Commission.
    (h) Jurisdiction and Enforcement.--The Commission may in its 
discretion apply to the United States district court for the judicial 
district in which the main office of the interstate insurer is located 
or the insurer-affiliated party is located, as the case may be, for the 
enforcement of any effective and outstanding notice or order issued 
under this section, and such court shall have jurisdiction and power to 
order and require compliance therewith; but except as otherwise 
provided in this section no court shall have jurisdiction to affect by 
injunction or otherwise the issuance or enforcement of any notice or 
order under any such section, or to review, modify, suspend, terminate, 
or set aside any such notice or order.
    (i) Penalties.--
            (1) Civil money penalty.--
                    (A) First tier.--Any interstate insurer or insurer-
                affiliated party that--
                            (i) violates any law or regulation;
                            (ii) violates any final order or temporary 
                        order issued pursuant to subsection (b), (c), 
                        (d) or (e) of this section or subsection (e) of 
                        section 201;
                            (iii) violates any written agreement 
                        between such interstate insurer, producer or 
                        party and the Office,
                shall pay a civil penalty of not more than $5,000 for 
                each day during which such violation continues.
                    (B) Second tier.--Notwithstanding subparagraph (A), 
                any interstate insurer or any insurer-affiliated party 
                that--
                            (i)(I) commits any violation described in 
                        any clause of subparagraph (A);
                            (II) recklessly engages in any conduct 
                        involving an undue risk of loss to such 
                        interstate insurer's policyholders as a whole; 
                        or
                            (III) breaches any fiduciary duty; and
                            (ii) which violation, practice, or breach--
                                    (I) is part of a pattern of 
                                misconduct;
                                    (II) causes or is likely to cause 
                                more than a minimal loss to such 
                                interstate insurer; or
                                    (III) results in pecuniary gain or 
                                other benefit to such party,
                shall pay a civil penalty of not more than $25,000 for 
                each day during which such violation, practice, or 
                breach continues.
                    (C) Third tier.--Notwithstanding subparagraphs (A) 
                and (B), any interstate insurer or any insurer-
                affiliated party that--
                            (i) knowingly--
                                    (I) commits any violation described 
                                in any clause of subparagraph (A);
                                    (II) engages in any conduct 
                                involving an undue risk of loss to such 
                                interstate insurer's policyholders as a 
                                whole; or
                                    (III) breaches any fiduciary duty; 
                                and
                            (ii) knowingly or recklessly causes a 
                        substantial loss to such interstate insurer or 
                        a substantial pecuniary gain or other benefit 
                        to such party by reason of such violation, 
                        practice, or breach,
                shall pay a civil penalty in an amount not to exceed 
                the applicable maximum amount determined under 
                subparagraph (D) for each day during which such 
                violation, practice, or breach continues.
                    (D) Maximum amounts of penalties for any violation 
                described in subparagraph (C).--The maximum daily 
                amount of any civil penalty which may be assessed 
                pursuant to subparagraph (C) for any violation, 
                practice, or breach described in such subparagraph is 
                an amount to not exceed $1,000,000.
                    (E) Assessment.--
                            (i) Written notice.--Any penalty imposed 
                        under subparagraph (A), (B), or (C) may be 
                        assessed and collected by the Commission by 
                        written notice. Such notice shall contain a 
                        statement of the facts constituting the basis 
                        for assessment of any penalty imposed under 
                        subparagraph (A), (B), or (C).
                            (ii) Finality of assessment.--If, with 
                        respect to any assessment under clause (i), a 
                        hearing is not requested pursuant to 
                        subparagraph (H) within the period of time 
                        allowed under such subparagraph, the assessment 
                        shall constitute a final and unappealable 
                        order.
                    (F) Authority to modify or remit penalty.--The 
                Commission may compromise, modify, or remit any penalty 
                which the Commission may assess or had already assessed 
                under subparagraph (A), (B), or (C).
                    (G) Hearing.--The interstate insurer or other 
                person against whom any penalty is assessed under this 
                paragraph shall be afforded a hearing by the Commission 
                if such interstate insurer or person submits a request 
                for such hearing within 20 days after the issuance of 
                the notice of assessment.
                    (H) Collection.--
                            (i) Referral.--If any interstate insurer or 
                        other person fails to pay an assessment after 
                        any penalty assessed under this paragraph has 
                        become final, the Commission shall recover the 
                        amount assessed by action in the appropriate 
                        United States district court.
                            (ii) Appropriateness of penalty not 
                        reviewable.--In any civil action under clause 
                        (i), the validity and appropriateness of the 
                        penalty shall not be subject to review.
            (2) Notice under this section after separation from 
        service.--The resignation, termination of employment or 
        participation, or separation of an insurer-affiliated party 
        (including a separation caused by the closing of an interstate 
        insurer) shall not affect the jurisdiction and authority of the 
        Commission to issue any notice and proceed under this section 
        against any such party, if such notice is served before the end 
        of the 6-year period beginning on the date such party ceased to 
        be an insurer-affiliated party with respect to such interstate 
        insurer.
            (3) Prejudgment attachment.--
                    (A) In general.--In any action brought by the 
                Commission pursuant to this section, or in actions 
                brought in aid of, or to enforce an order in, any 
                administrative or other civil action for money damages, 
                restitution, or civil money penalties brought by the 
                Commission, the court may, upon application of the 
                Commission, issue a restraining order that--
                            (i) prohibits any person subject to the 
                        proceeding from withdrawing, transferring, 
                        removing, dissipating, or disposing of any 
                        funds, assets or other property; and
                            (ii) appoints a temporary receiver to 
                        administer the restraining order.
                    (B) Standard.--
                            (i) Showing.--Rule 65 of the Federal Rules 
                        of Civil Procedure shall apply with respect to 
                        any proceeding under subparagraph (A), without 
                        regard to the requirement of such rule that the 
                        applicant show that the injury, loss, or damage 
                        is irreparable and immediate.
                            (ii) State proceeding.--If, in the case of 
                        any proceeding in a State court, the court 
                        determines that rules of civil procedure 
                        available under the laws of such State provide 
                        substantially similar protections to a party's 
                        right to due process as Rule 65 (as modified 
                        with respect to such proceeding by clause (i)), 
                        the relief sought under subparagraph (A) may be 
                        requested under the laws of such State.
    (j) Criminal Penalty.--Whoever, being subject to an order in effect 
under subsection (d) or (e), without the prior written approval of the 
Commission, knowingly participates, directly or indirectly, in any 
manner (including by engaging in an activity specifically prohibited in 
such an order) in the conduct of the affairs of any interstate insurer 
shall be fined not more than $1,000,000, imprisoned for not more than 5 
years, or both.
    (k) Notice of Service.--Any service required or authorized to be 
made by the Commission under this section may be made by registered 
mail, or in such other manner reasonably calculated to give actual 
notice as the Commission may by regulation or otherwise provide.
    (l) Ancillary Provisions; Subpoena Power, Etc.--In the course of or 
in connection with any proceeding or other action under this section, 
the Commission, or any employee or designated representative thereof, 
including any person designated to conduct any hearing under this 
section, shall have the power to administer oaths and affirmations, to 
take or cause to be taken depositions, and to issue, revoke, quash, or 
modify subpoenas and subpoenas duces tecum; and the Commission is 
empowered to make rules and regulations with respect to any such 
proceedings, claims, examinations, investigations, or other actions. 
The attendance of witnesses and the production of documents provided 
for in this subsection may be required from any place in any State or 
other place subject to the jurisdiction of the United States at any 
designated place where such proceeding or other action is being 
conducted. The Commission or any party to proceedings under this 
section may apply to the United States District Court for the District 
of Columbia, or the United States district court for the judicial 
district in which such proceeding or other action is being conducted, 
or where the witness resides or carries on business, for enforcement of 
any subpoena or subpoena duces tecum issued pursuant to this 
subsection, and such courts shall have jurisdiction and power to order 
and require compliance therewith. Witnesses subpoenaed under this 
subsection shall be paid the same fees and mileage that are paid 
witnesses in the district courts of the United States. Any court having 
jurisdiction of any proceeding or other action instituted under this 
section by an interstate insurer or an insurer-affiliated party 
thereof, may allow to any such party such reasonable expenses and 
attorneys' fees as it deems just and proper; and such expenses and fees 
shall be paid by the interstate insurer or from its assets. Any person 
who willfully shall fail or refuse to attend and testify or to answer 
any lawful inquiry or to produce books, papers, correspondence, 
memoranda, contracts, agreements, or other records, if in such person's 
power so to do, in obedience to the subpoena of the Commission, shall 
be guilty of a misdemeanor and, upon conviction, shall be subject to a 
fine of not more than $1,000 or to imprisonment for a term of not more 
than 1 year or both.
    (m) Non-United States Insurer.--
            (1) Applicability.--Except as otherwise specifically 
        provided in this section, the provisions of this section shall 
        be applied to non-U.S. insurers in accordance with this 
        subsection.
            (2) Actions.--Any conduct or practice outside the United 
        States on the part of a non-United States insurer or any 
        officer, director, employee, or agent thereof may not 
        constitute the basis for any action by the Commission under 
        this section, unless the Commission alleges a belief that such 
        conduct or practice has been, is, or is likely to be a cause of 
        or carried on in connection with or in furtherance of an act or 
        practice within any one or more States which, in and of itself, 
        would constitute an appropriate basis for action by the 
        Commission under this section.
            (3) Termination of business.--In any case in which any 
        action or proceeding is brought pursuant to an allegation under 
        paragraph (2) for the suspension or removal of any officer, 
        director, or other person associated with a non-United States 
        insurer, and such person fails to appear promptly as a party to 
        such action or proceeding and to comply with any effective 
        order or judgment therein, any failure by the non-United States 
        insurer to secure its removal from any office he holds in such 
        insurer and from any further participation in its affairs 
        shall, in and of itself, constitute grounds for ordering the 
        non-United States insurer to terminate all underwriting and 
        sale of insurance in the United States and all other insurance 
        operations in the United States.
            (4) Venue.--Where the venue of any judicial or 
        administrative proceeding under this section is to be 
        determined by reference to the location of the main office of 
        an interstate insurer, the venue of such a proceeding with 
        respect to a non-United States insurer having one or more 
        offices in not more than one judicial district or other 
        relevant jurisdiction shall be within such jurisdiction. Where 
        such an interstate insurer has offices in more than one such 
        jurisdiction, the venue shall be in the jurisdiction within 
        which the office or offices involved in the proceeding are 
        located, and if there is more than one such jurisdiction, the 
        venue shall be proper in any such jurisdiction in which the 
        proceeding is brought or to which it may appropriately be 
        transferred.
            (5) Service.--Any service required or authorized to be made 
        on a non-United States insurer may be made on any office 
        located within any State, but if such service is in connection 
        with an action or proceeding involving one or more offices 
        located in any State, service shall be made on at least one 
        office so involved.
    (n) Public Disclosures of Final Orders and Agreements.--
            (1) In general.--The Commission shall publish and make 
        available to the public on a monthly basis--
                    (A) any written agreement or other written 
                statement for which a violation may be enforced by the 
                Commission;
                    (B) any final order issued with respect to any 
                administrative enforcement proceeding initiated by the 
                Commission under this section or any other law; and
                    (C) any modification to or termination of any order 
                or agreement made public pursuant to this paragraph, 
                unless the Commission, in the Commission's discretion, 
                determines that publication of any such agreement, 
                statement, order, modification or termination would be 
                contrary to the public interest.
            (2) Hearings.--All hearings on the record with respect to 
        any notice of charges issued by the Commission shall be open to 
        the public, unless the Commission, in the Commission's 
discretion, determines that holding an open hearing would be contrary 
to the public interest.
            (3) Transcript of hearing.--A transcript that includes all 
        testimony and other documentary evidence shall be prepared for 
        all hearings commenced pursuant to subsection (g) of this 
        section. A transcript of public hearings shall be made 
        available to the public pursuant to section 552 of title 5, 
        United States Code.
            (4) Documents filed under seal in public enforcement 
        hearings.--The Commission may file any document or part of a 
        document under seal in any administrative hearing commenced by 
        the Commission if the Commission, in the Commission's 
        discretion, determines that disclosure of the document, in 
        whole or in part, would be contrary to the public interest. A 
        written report shall be made part of any determination to 
        withhold any part of a document from the transcript of the 
        hearing required by paragraph (2).
            (5) Retention of documents.--The Commission shall keep and 
        maintain a record, for a period of at least 6 years, of all 
        documents described in paragraph (1) and all informal 
        enforcement agreements and other supervisory actions and 
        supporting documents issued with respect to or in connection 
        with any administrative enforcement proceeding initiated by the 
        Commission under this section or any other laws.
            (6) Disclosures to congress.--No provision of this 
        subsection may be construed to authorize the withholding, or to 
        prohibit the disclosure, of any information to the Congress or 
        any committee or subcommittee of the Congress.
    (o) Foreign Investigations.--
            (1) Requesting assistance from foreign governmental 
        authorities.--In conducting any investigation, examination, or 
        enforcement action under this Act, the Commission may--
                    (A) request the assistance of any foreign 
                governmental authority; and
                    (B) maintain an office outside the United States.
            (2) Providing assistance to foreign governmental 
        authorities.--
                    (A) In general.--The Commission may, at the request 
                of any foreign governmental authority, assist such 
                authority if such authority states that the requesting 
                authority is conducting an investigation to determine 
                whether any person has violated, is violating, or is 
                about to violate any law or regulation relating to 
                insurance matters or currency transactions administered 
                or enforced by the requesting authority.
                    (B) Investigation by the commission.--The 
                Commission may, in its discretion, investigate and 
                collect information and evidence pertinent to a request 
                for assistance under subparagraph (A). Any such 
                investigation shall comply with the laws of the United 
                States and the policies and procedures of the 
                Commission.
                    (C) Factors to consider.--In deciding whether to 
                provide assistance under this paragraph, the Commission 
                shall consider--
                            (i) whether the requesting authority has 
                        agreed to provide reciprocal assistance with 
                        respect to insurance matters within the 
                        jurisdiction of the Commission; and
                            (ii) whether compliance with the request 
                        would prejudice the public interest of the 
                        United States.
            (3) Rule of construction.--Paragraphs (1) and (2) shall not 
        be construed to limit the authority of the Commission or any 
        other Federal agency to provide or receive assistance or 
        information to or from any foreign governmental authority with 
        respect to any matter.
    (p) Referral of Matters to Enforcement Authorities.--The Commission 
shall refer to the Department of Justice or to the appropriate State 
enforcement authorities any information or matters which it deems 
warrant investigation for possible civil or criminal enforcement 
action.

                  Subtitle D--Accounting and Auditing

SEC. 251. ACCOUNTING PRINCIPLES AND AUDITING STANDARDS.

    (a) Regulations.--
            (1) In general.--The Commission shall, by regulation, 
        specify the accounting principles and auditing standards to be 
        followed by an interstate insurer in preparing financial 
        statements to be filed with the Commission under section 
        108(a).
            (2) Initial regulations.--The initial regulations under 
        paragraph (1) shall be promulgated on or before the transition 
        commencement date and shall require that--
                    (A) interstate insurers shall follow statutory 
                accounting practices as promulgated by the NAIC in its 
                Accounting Practices and Procedures Manual; and
                    (B) audited financial statements shall be in 
                accordance with guidance prescribed by the  NAIC in its 
Model Regulation Requiring Annual Audited Financial Reports;
        each as in effect as of January 1, 2001, and as amended by the 
        NAIC and in effect thereafter from time to time prior to the 
        transition termination date, except that the Commission may by 
        regulation specify that any such amendment by the NAIC shall, 
        in whole or in part, be inapplicable to interstate insurers.
            (3) Amendment of naic standards.--The accounting principles 
        and auditing standards for interstate insurers in effect on the 
        transition termination date pursuant to paragraph (2) may 
        thereafter be amended by regulations promulgated pursuant to 
        paragraph (1).
    (b) Study and Hearings.--The Commission shall conduct a study and 
hold hearings prior to the transition termination date and shall 
determine whether modification of the accounting principles and 
auditing standards for interstate insurers established pursuant to 
subsection (a) would be consistent with the public interest and the 
protection of policyholders.

SEC. 252. INVESTMENTS.

    (a) In General.--
            (1) Investments.--An interstate insurer may loan or invest 
        its funds, and may buy, sell, hold title to, possess, occupy, 
        pledge, convey, manage, protect, insure and deal with its 
        investments, property and other assets. Such investments shall 
        be of sufficient value, liquidity, and diversity to ensure the 
        interstate insurer's ability to meet its outstanding 
        obligations based on reasonable assumptions as to its business.
            (2) Subsidiaries.--An interstate insurer may invest in, or 
        otherwise acquire, subsidiaries engaged or organized to engage 
        in any business lawful under the laws of the jurisdictions in 
        which such subsidiaries are organized.
    (b) Investment Policy.--In acquiring, investing, exchanging, 
holding, selling, and managing investments, an interstate insurer shall 
establish and follow a written investment policy that shall be reviewed 
and approved by the interstate insurer's board of directors at least 
annually. The content and format of an interstate insurer's investment 
policy shall be at the interstate insurer's discretion, but shall 
include written guidelines appropriate to the interstate insurer's 
business as to the following issues:
            (1) The general investment policy of the interstate 
        insurer, with guidelines and specifications intended to assure 
        that its investments are appropriate for the business conducted 
        by the interstate insurer, its liquidity needs and its capital 
        and surplus.
            (2) Goals and objectives regarding the composition of 
        classes of investments, including maximum internal limits.
            (3) Requirements for periodic evaluation of the investment 
        portfolio as to its risk and reward characteristics, and for 
        adoption and oversight of implementation of procedures and 
        controls covering all aspects of the investment function.
    (c) Standard of Care.--In reviewing and approving the investment 
policy established pursuant to subsection (b), the directors of an 
interstate insurer shall perform their duties in good faith and with 
that degree of care that an ordinarily prudent individual in a like 
position would use under similar circumstances. Among the factors that 
the board of directors may consider are the following:
            (1) The interstate insurer's business.
            (2) General economic conditions.
            (3) The possible effect of inflation or deflation.
            (4) The expected tax consequences of investment decisions 
        or strategies.
            (5) The fairness and reasonableness of the terms of an 
        investment considering its probable risk and reward 
        characteristics and relationship to the investment portfolio as 
        a whole.
            (6) The extent of the diversification of the interstate 
        insurer's investments among--
                    (A) individual investments;
                    (B) classes of investments;
                    (C) industry concentrations; and
                    (D) geographic areas.
            (7) The quality and liquidity of investments in affiliates.
            (8) The investment exposure to--
                    (A) liquidity risk;
                    (B) credit and default risk;
                    (C) systemic (market) risk;
                    (D) interest rate risk;
                    (E) call, prepayment, and extension risk;
                    (F) currency risk; and
                    (G) foreign sovereign risk.
            (9) The amount of the interstate insurer's assets, capital 
        and surplus, premium writings, and insurance in force.
            (10) The amount and adequacy of the interstate insurer's 
        reported and unreported liabilities.
            (11) The relationship of the expected cash flows of the 
        interstate insurer's assets and liabilities, and the risk of 
        adverse changes in the interstate insurer's assets and 
        liabilities.
            (12) The adequacy of the interstate insurer's capital and 
        surplus to support the risks and liabilities of the interstate 
        insurer.
            (13) The amount of investments made in the communities 
        where the interstate life insurer sells insurance policies or 
        has offices.
    (d) Internal Controls.--An interstate insurer shall establish and 
implement internal controls and procedures to ensure compliance with 
its investment policy. In this respect, an evaluation and monitoring 
process shall occur periodically for assessing the effectiveness of 
such controls and procedures. Additionally, the interstate insurer 
shall assess management's success in meeting the stated objectives 
within the investment policy.
    (e) Minimum Financial Security Benchmark.--
            (1) Establishment.--The Commission shall by regulation or 
        order establish what portion of the surplus of an individual 
        interstate insurer or any category of interstate insurers shall 
        constitute a minimum financial security benchmark that will 
        provide reasonable security against contingencies affecting an 
        interstate insurer's financial position that are not fully 
        covered by reserves or by reinsurance.
            (2) Minimum.--Any such minimum financial security benchmark 
        shall be not less than the authorized control level risk-based 
        capital (or, absent an authorized control level risk-based 
        capital, another comparable risk-based capital level 
        established by the Commission) applicable to the interstate 
        insurer as established under section 256, less any asset 
        valuation reserve and voluntary investment reserves that may be 
        required.
            (3) Failure to comply.--Notwithstanding the provisions of 
        subsection (c), if an interstate insurer fails to meet the 
        minimum financial security benchmark applicable to it, the 
        interstate insurer shall be subject to such investment 
        standards as the Commission shall establish by regulation or 
        order.

SEC. 253. ASSET VALUATION AND RATING.

    The Commission shall establish such standards and means to 
recognize risk factors appropriate to the valuation and rating of 
assets held by an interstate insurer for purposes pertinent to the 
supervision of interstate insurers other than risk-based capital. The 
initial standards and means shall be promulgated on or before the 
transition commencement date.

SEC. 254. VALUATION OF LIABILITIES.

    (a) Regulations.--The Commission shall, by regulation, establish 
standards for the valuation of insurer obligations and liabilities for 
interstate insurers. The regulations may prescribe valuation 
requirements for particular types of insurance policies and, for other 
types of insurance policies, shall require that reserves be established 
based on a valuation performed by a qualified actuary in accordance 
with generally accepted actuarial principles.
    (b) Regulations During Transition Period.--The initial regulations 
under subsection (a) shall be promulgated on or before the transition 
commencement date and shall provide that the standards be based on 
relevant NAIC model laws, regulations, and guidelines in the form 
adopted by the NAIC, including the Standard Valuation Law, Valuation of 
Life Insurance Policies Model Regulation, Universal Life Insurance 
Model Regulation, Variable Life Insurance Model Regulation, Health 
Insurance Reserves Model Regulation, and NAIC actuarial guidelines 
applicable to insurance policies that may be underwritten and sold by 
interstate insurers, each as in effect as of January 1, 2001, and as 
amended by the NAIC and in effect thereafter from time to time prior to 
the transition termination date, except that the Commission may by 
regulation specify that any such amendment by the NAIC shall, in whole 
or in part, be inapplicable to interstate insurers.
    (c) Regulations After Transition Period.--The standards for the 
valuation of insurer obligations and liabilities for interstate 
insurers in effect on the transition termination date pursuant to 
subsection (b) may thereafter be amended by regulations promulgated 
pursuant to subsection (a).

SEC. 255. CONTINUING AND ALTERNATE BENEFITS.

    (a) Regulations.--The Commission shall, by regulation, establish 
standards applicable to interstate life insurers for the determination 
of continuing and alternate benefits available at the election of the 
policyholder or upon insurance policy termination that are reflective 
of the accumulated remaining value in the insurance policy.
    (b) Regulations During Transition Period.--The initial regulations 
under subsection (a) shall be promulgated on or before the transition 
commencement date and shall provide that the standards be based on 
relevant NAIC model laws, regulations, and guidelines in the form 
adopted by the NAIC, including the Standard Nonforfeiture Law for Life 
Insurance, Variable Life Insurance Model Regulation, Standard 
Nonforfeiture Law for Individual Deferred Annuities, Long-Term Care 
Insurance Model Act, Long-Term Care Insurance Model Regulation, and 
NAIC actuarial guidelines applicable to insurance policies that may be 
underwritten and sold by interstate insurers, each as in effect as of 
January 1, 2001, and as amended by the NAIC and in effect thereafter 
from time to time prior to the transition termination date, except that 
the Commission may by regulation specify that any such amendment by the 
NAIC shall, in whole or in part, be inapplicable to interstate 
insurers.
    (c) Regulations After Transition Period.--The standards applicable 
to interstate life insurers for the determination of continuing and 
alternate benefits in effect on the transition termination date 
pursuant to subsection (b) may thereafter be amended by regulations 
promulgated pursuant to subsection (a).

SEC. 256. RISK-BASED CAPITAL STANDARDS.

    (a) Regulations.--
            (1) Establishment.--The Commissioner shall, by regulation, 
        establish risk-based capital standards for interstate insurers 
        that recognize risk factors appropriate to the business of 
interstate insurers and remedies for failure to meet such standards.
            (2) Regulations during transition period.--The initial 
        regulations under paragraph (1) shall be promulgated on or 
        before the transition commencement date and shall provide that 
        the standards be based on NAIC risk-based capital calculations 
        and remedies in the form adopted by the NAIC, each as in effect 
        as of January 1, 2001, and as amended by the NAIC and in effect 
        thereafter from time to time prior to the transition 
        termination date, except that the Commissioner may by 
        regulation specify that any such amendment by the NAIC shall, 
        in whole or in part, be inapplicable to interstate insurers.
            (3) Regulations after transition period.--The risk-based 
        capital standards for interstate insurers and the remedies for 
        failure to meet such standards in effect on the transition 
        termination date pursuant to paragraph (2) may thereafter be 
        amended by regulations promulgated pursuant to paragraph (1).
    (b) Disclosure.--Except as may be required or permitted under the 
regulations promulgated pursuant to subsection (a), an interstate 
insurer shall not disclose its risk-based capital ratio to the general 
public for any purpose.

SEC. 257. DIVIDENDS TO SHAREHOLDERS.

    (a) Shareholder Dividends Permitted.--An interstate insurer may 
declare and pay dividends or make other distributions in cash or its 
bonds or its property on its outstanding shares, except when the 
interstate insurer is insolvent or would thereby be made insolvent, or 
when the declaration, payment or distribution would be contrary to any 
restrictions contained in its license or any order issued by the 
Commission.
    (b) Source of Shareholder Dividends.--Dividends may be declared or 
paid and other distributions may be made out of surplus only, so that 
the assets of the interstate insurer remaining after such declaration, 
payment, or distribution shall at least equal the amount of its 
capital.

SEC. 258. INSURANCE HOLDING COMPANY SYSTEMS.

    (a) Definitions.--For purposes of this section:
            (1) The term ``affiliate'' means a person that directly, or 
        indirectly through one or more intermediaries, controls, or is 
        controlled by, or is under common control with, the person 
        specified.
            (2) The term ``insurance holding company system'' means two 
        or more affiliated persons, one or more of which is an insurer.
    (b) Financial Condition.--The Commission shall establish such 
requirements as necessary to ensure effective and comprehensive 
regulation of the financial condition of an insurer in a holding 
company system. These requirements shall address but are not limited to 
intrasystem transactions involving the insurer, mergers and 
acquisitions of insurers, investments in subsidiaries, registration of 
members of the system and disclosure and verification by examination of 
matters which may affect the financial status of an insurer in the 
system.

SEC. 259. RISK LIMITATIONS.

    The Commission shall prescribe the amount of risk which may be 
retained by a property and liability company for an individual risk 
based upon the insurer's capital and surplus.

SEC. 260. INVESTMENT REGULATIONS.

    (a) Diversification.--The Commission shall require a diversified 
investment portfolio for all insurers.
    (b) Requirements.--Such requirement shall include limitations as to 
type and issue of investment, percentage limitations for certain 
investments such as non-investment grade bonds and investments 
involving real estate and real estate mortgages, and minimum levels of 
liquidity.

SEC. 261. ADMISSIBLE ASSETS.

    (a) Assets.--The Commission shall prescribe assets which may be 
admitted, authorized or allowed as assets in the financial statement of 
insurers.
    (b) Value of Assets.--The Commission shall prescribe methods for 
establishing the value of such assets which will enable the most 
accurate estimates to be made.

SEC. 262. LIABILITIES AND RESERVES.

    (a) Liabilities and Reserves.--The Commission shall prescribe 
requirements for the establishment of liabilities and reserves 
resulting from insurance contracts issued by an insurer.
    (b) Life Reserves.--The requirements established pursuant to 
subsection (a) shall include, but should not be limited to, 
requirements for life reserves; active life reserves and unearned 
premium reserves; liabilities for claims and losses unpaid; and for 
claims incurred but not reported.

SEC. 263. INDEPENDENT CPA AUDITS.

    (a) Annual Audits.--The Commission shall require annual audits by 
qualified independent certified public accountants of the financial 
statements reporting the financial condition and the results of 
operations of all insurers.
    (b) Notifications.--The requirements in subsection (a) shall 
require the insurer furnishing the annual audited financial reports to 
require the independent certified public accountant to immediately 
notify in writing an executive officer and all directors of the insurer 
of the final determination by that independent certified public 
accountant that the insurer has materially misstated its financial 
condition as reported to the Commission as of the balance sheet date 
currently under examination or that the insurer does not meet the 
minimum capital and surplus required by law as of that date. The 
insurer shall furnish such notification to the Commission within 5 days 
of receipt thereof.

SEC. 264. QUALIFIED ACTUARIAL ANALYSIS.

    The Commission shall require an opinion on life and health policy 
and claim reserves and loss and loss adjustment expense reserves by a 
qualified actuary or specialist on an annual basis for all insurers.

SEC. 265. TRANSFER OF POLICIES.

    (a) Approval of the Commission.--Prior approval of the Commission 
is required for any transaction where an insurer assumes or transfers 
obligations or risks on contracts of insurance under an assumption 
reinsurance agreement. The Commission shall have not more than 30 days 
in which to approve or reject such application. If the Commission 
approves such request, the Commission shall issue to the insurer an 
``Approval of Assumption Reinsurance'' certificate.
    (b) Factors To Be Considered.--In reviewing an application to 
assume or transfer obligations or risks on contracts of insurance under 
an assumption reinsurance agreement, the Commission shall consider the 
following factors:
            (1) the financial condition of the transferring insurer and 
        assuming insurer and the effect the transaction will have on 
        the financial condition of the assuming insurer and the 
        transferring insurer;
            (2) the managerial expertise and experience of those 
        persons who will control the operations of the assuming 
        insurer;
            (3) the plans or proposals the assuming insurer has with 
        respect to the administration of the policies subject to the 
        proposed transfer;
            (4) whether the transfer is fair and reasonable to the 
        policyholders of both companies;
            (5) whether an administrative or judicial proceeding has 
        been instituted against the transferring or assuming insurer 
        for purposes of liquidating, reorganizing or conserving such 
        insurer and whether the transfer of the contracts of insurance 
        is in the best interest of the policyholders;
            (6) whether the contracts of insurance that are the subject 
        of the transfer provide that notice shall be given to 
        policyholders of a potential transfer of policy; and
            (7) whether the disclosure required by subsection (c) to 
        the policyholders to be transferred is fair, adequate and not 
        misleading to the policyholders.
    (c) Requirements for a Transfer.--No transfer of obligations or 
risks on contracts of insurance under an assumption reinsurance 
agreement shall take place until--
            (1) the transferring insurer gives advance written notice 
        of the potential transfer to each policyholder and provides 
        each policyholder and the Commission with information on the 
        financial stability and managerial capability of the assuming 
        insurer including but not limited to--
                    (i) all ratings issued within the previous 3 years 
                by a nationally recognized rating agency, the 
                transferring insurer and the assuming insurer;
                    (ii) the financial statements of the transferring 
                insurer and the assuming insurer for the 3 previous 
                years;
                    (iii) where the policies being transferred involve 
                at least 5 percent of the reserve liability of either 
                the transferring insurer and the assuming insurer, pro 
                forma financial statements forecasting the effect of 
                the transfer on the transferring insurer and on the 
                assuming insurer; and
                    (iv) an option by a disinterested third party 
                expert that such transfer is fair and in the best 
                interests of the policyholders being transferred, the 
                policyholders who remain with the transferring company, 
                and the policyholders of the assuming company; and
            (2) each policyholder has affirmatively consented in 
        writing to the policy transfer.
    (d) Prohibited Transfers; Servicing Contracts; Liability.--No 
assumption reinsurance agreement shall be effective unless a 
policyholder has specifically consented to the transfer under 
subsection (c) of this section. Each policyholder who has consented to 
the assumption reinsurance agreement, may have their contract of 
insurance assumed by another insurer. If a policy holder has not 
consented to the assumption reinsurance agreement, such contracts of 
insurance shall not be transferred. The transferring insurer may enter 
into a contract with the assuming insurer wherein the assuming insurer 
agrees to provide the administrative servicing of those contracts of 
insurance not transferred. The transferring insurer shall remain 
directly liable to the policyholders for those contracts of insurance 
that are not transferred.
    (e) Exceptions.--The Commission may establish exceptions to the 
requirements of subsections (b) and (c) where the transfer is part of a 
conservatorship, receivership, or liquidation process approved by 
judicial order.

SEC. 266. RESTRICTIONS ON OWNERSHIP AND TRANSFER OF OWNERSHIP.

    The Commission shall restrict ownership and control of an insurer 
to persons with appropriate qualifications and good character. These 
requirements shall require that any transfer of ownership be subject to 
a review of the qualifications and character of persons who will own or 
control the insurer.

SEC. 267. REAL ESTATE VALUATION.

    (a) Market Value.--The Commission shall require that real estate 
holdings held as assets by insurers be valued at market value on a 
regular basis.
    (b) Materiality.--Such requirements shall provide for the weighing 
of the materiality of the asset against the costs of determining the 
market value of the asset. In promulgating a standard for materiality 
the Commission shall consider the real estate holding as a percentage 
of an insurer's net worth and as a percentage of the insurer's other 
real estate holdings.

SEC. 268. REINSURANCE.

    (a) Credits.--The Commission shall prescribe requirements under 
which a ceding insurer may be allowed credit for reinsurance either as 
an asset or as a deduction from liability.
    (b) Valid Licenses.--Such requirements shall require that no credit 
be allowed except where the reinsurer has a valid license issued 
pursuant to the provisions of this Act.
    (c) Legitimacy.--Such requirements shall establish standards with 
regard to whether the reinsurance is legitimate. In promulgating 
standards as to the legitimacy of a reinsurance agreement the 
Commission shall consider a variety of factors including, but not 
limited to, whether--
            (1) the primary effect of the reinsurance agreement is to 
        transfer deficiency reserves or excess interest reserves to the 
        books of the reinsurer for a ``risk charge'' and the agreement 
        does not provide for significant participation by the reinsurer 
        in one or more of the following risks: mortality, morbidity, 
        investment or surrender benefit;
            (2) the reserve credit taken by the ceding insurer is not 
        in compliance with the insurance laws, rules or regulations, 
        including actuarial interpretations or standards, adopted by 
        the Federal or State authorities;
            (3) the reserve credit taken by the ceding insurer is 
        greater than the underlying reserve of the ceding company 
        supporting the policy obligations transferred under the 
        reinsurance agreement;
            (4) the ceding insurer is required to reimburse the 
        reinsurer for negative experience under the reinsurance 
        agreement, except that neither offsetting experience refunds 
        against prior years losses nor payment by the ceding insurer of 
        an amount equal to prior years losses upon voluntary 
        termination of in-force reinsurance by that ceding insurer 
        shall be considered such reimbursement to the reinsurer for 
        negative experience;
            (5) the ceding insurer can be deprived of surplus at the 
        reinsurer's option or automatically upon the occurrence of some 
        event, such as the insolvency of the ceding insurer, except 
        that termination of the reinsurance agreement by the reinsurer 
        for non-payment of reinsurance premiums shall not be considered 
        to be such a deprivation of surplus;
            (6) the ceding insurer must, at specific points in time 
        scheduled in the agreement, terminate or automatically 
        recapture all or part of the reinsurance ceded;
            (7) no cash payment is due from the reinsurer, throughout 
        the lifetime of the reinsurance agreement, with all settlements 
        prior to the termination date of the agreement made only in a 
        ``reinsurance account'', and no funds in such account are 
        available for the payment of benefits;
            (8) the reinsurance agreement involves the possible payment 
        by the ceding insurer to the reinsurer of amounts other than 
        from income reasonably expected from the reinsured policies; 
        and
            (9) the reinsurance would allow an insurer otherwise in 
        hazardous financial condition to continue to transact business 
        to the detriment of consumers.

SEC. 269. SURPLUS NOTES.

    The Commission shall restrict the use of surplus notes and other 
financial devices where the Commission determines such devices would 
allow an insurer otherwise in hazardous financial condition to continue 
to transact business to the detriment of consumers.

                    Subtitle E--Consumer Protection

SEC. 281. OFFICE OF CONSUMER PROTECTION.

    The Commission shall establish an Office of Consumer Protection. 
The Office shall represent the interests of consumers in proceedings 
before the Commission. Before engaging in any such representational 
activities, the Office shall--
            (1) attempt to determine who is the consumer by 
        establishing appropriate parameters for application of the term 
        ``consumer'' in the context of insurance, taking into account 
        the interests of purchasers and beneficiaries of insurance 
        policies, including commercial and professional organizations 
        who may require their officers and employees to purchase 
        insurance policies, third party beneficiaries, employer-
        provided insurance policies, and mortgage lenders and other 
        commercial interests who may require or recommend the purchase 
        of insurance policies, including credit life insurance; and
            (2) establish a process for reconciling or prioritizing 
        conflicting or competing interests of any such consumers with 
        respect to any particular issue or policy the Office may 
        purport to represent.

SEC. 282. CONSUMER DISCLOSURE.

    (a) Information Required.--The Commission shall prescribe the 
information which must be provided by representatives of the insurer to 
a consumer prior to the purchase of any insurance policy or 
certificate. Such information shall--
            (1) inform the consumer of the rights and obligations of 
        the parties to the agreement;
            (2) convey information, understandable to the consumer, 
        that will enable the consumer to make meaningful cost and 
        coverage comparisons of similar policies offered by other 
        insurers and of different policies of the same insurer;
            (3) with regard to life insurance policies, convey to the 
        consumer information regarding the relationship of premiums to 
        the accumulation of interest;
            (4) disclosure of rate-of-return values for non-term life 
        insurance policies that include a cash value component;
            (5) disclosure, for the same or a similar type of 
        insurance, of comparative data on--
                    (A) insurers' complaint records; and
                    (B) the length of time to settle claims, by size of 
                claim, solvency information, and coverage ratings on a 
                company-by-company basis;
            (6) convey to the consumer existing public information 
        concerning the financial solidity of the insurer; and
            (7) include any other information which the Commission 
        deems necessary to fully inform the consumer.
    (b) Revocations.--The Commission shall establish requirements which 
allow a consumer to revoke the agreement within a reasonable amount of 
time following acceptance.
    (c) Clarity of Contracts.--The Commission shall establish 
requirements for the simplification and, where appropriate, the 
standardization of insurers' contracts for the benefit of consumers.
    (d) Good Faith.--The Commission shall require that each individual 
who sells or offers to sell an insurance policy has a duty of good 
faith and fair dealing to the purchaser or potential purchaser of such 
policy. Such requirements shall require that such an individual not 
knowingly make any misleading representation or fraudulent comparison 
of any policy or insurer for the purpose of inducing any person to 
purchase a policy or use undue pressure to induce the purchase of a 
policy.
    (e) Consumer Feedback.--
            (1) In general.--An interstate insurer shall provide a 
        means for consumers to provide feedback to the Commission 
        following--
                    (A) the purchase of an insurance policy;
                    (B) the denial, cancellation, or modification of an 
                insurance policy; and
                    (C) a claim made under an insurance policy sold or 
                serviced by that insurer.
            (2) Availability to public.--An interstate insurer shall 
        provide access to consumer feedback harvested under paragraph 
        (1) to prospective purchasers of any insurance policy sold by 
        that insurer before purchase for the same or a similar type of 
        insurance.

SEC. 283. REPEAL OF ANTITRUST EXEMPTION FOR BUSINESS OF INSURANCE.

    (a) In General.--The antitrust laws of the United States shall 
apply to interstate insurers, State insurers, and all reinsurers doing 
business in the United States (regardless of the domicile of such 
reinsurers), to the same extent as other business are subject to such 
laws.
    (b) Exceptions.--The antitrust laws shall not apply to--
            (1) the sharing of historical loss data among insurers, but 
        this paragraph shall not be construed to permit the sharing of 
        trending data; and
            (2) the activities of insurers required to participate in 
        State mandatory residual market mechanisms designed to make 
        insurance available to those unable to obtain insurance in the 
        voluntary market and to the activities of insurers required to 
        participate in a worker's compensation administration 
        mechanism.

                         TITLE III--REINSURANCE

SEC. 301. AUTHORITY OF THE COMMISSION.

    (a) In General.--The Commission shall have the authority to 
establish, by regulation, the standards and procedures for granting a 
license to professional reinsurers under section 305 and other 
reinsurers and insurers in the business of providing reinsurance under 
section 306 (collectively may be referred to as ``reinsurers'').
    (b) Rules and Regulations.--The Commission shall promulgate such 
rules and regulations as it deems warranted.
    (c) Annual Reports.--The Commission through regulations shall 
require each holder of a license to conduct the business of reinsurance 
to submit an annual report of its financial condition and an annual 
report on the condition of any trust fund regulated under this Act.
    (d) Qualified Financial Institution.--The Commission shall 
establish, by regulation, appropriate criteria for becoming a qualified 
financial institution for purposes of the establishment of a trust fund 
under section 306(c). Foreign banks with a United States presence may 
apply for acceptance.
    (e) National Solvency Standards.--The Commission shall establish 
national standards for the financial soundness and solvency of all 
insurers or reinsurers that seek a reinsurance license under this 
title.
    (f) Certificate of Solvency.--The Commission is authorized to issue 
a Federal certificate of solvency to an insurer or reinsurer pursuant 
to the financial standards and procedures adopted by the Commission if 
the Commission determines that the insurer or reinsurer meets such 
standards.
    (g) Licenses.--The Commission shall issue licenses to transact 
reinsurance business. The Commission may refuse to issue or may revoke 
such licenses pursuant to the requirements of this Act. Such licenses 
shall bear a seal of the Commission.
    (h) Investigations.--The Commission shall conduct such examinations 
and investigations on reinsurance matters, as are required to determine 
whether a person has violated any provision of this title or for the 
purpose of securing information useful in the lawful administration of 
any such provision.
    (i) Records.--The Commission shall maintain records of official 
transactions, examinations, investigations and proceedings. Such 
records and reinsurance filings shall be open to public inspections, 
except as deemed necessary by the Commission.
    (j) Reports.--The Commission shall annually prepare a report for 
delivery to the Congress with respect to reinsurance, recommendations 
for legislative or administrative action, proposals for rules and 
regulations affecting reinsurance and matters affecting reinsurance, 
and such other pertinent information and matters as the Commission 
deems proper.
    (k) Revocation of Licenses.--The Commission may suspend or revoke 
the license of any reinsurer which violates the provisions of this Act. 
In addition to, or in lieu of suspension or revocation, the Commission 
may fine any reinsurer which violates the provisions of this Act in an 
amount not to exceed $100,000 per violation.
    (l) Research.--The Commission shall conduct research and financial 
analysis of the reinsurance industry and any other research and 
analysis deemed appropriate.
    (m) Hearings.--The Commission shall hold hearings consistent with 
the requirements of subchapter II of chapter 5 and chapter 7 of title 
5, United States Code, for any purpose deemed necessary and within the 
scope of this Act.
    (n) Assessments.--The Commission shall levy and collect assessments 
and other fees imposed pursuant to this Act.

SEC. 302. RULES AND REGULATIONS.

    In addition to any other rules and regulations the Commission deems 
necessary for the effective regulation of reinsurance, the Commission 
shall promulgate rules and regulations--
            (1) requiring a license to conduct the business of 
        reinsurance in the United States;
            (2) establishing minimum levels of capital and surplus 
        necessary for reinsurers to transact business;
            (3) requiring, where appropriate, the establishment of 
        irrevocable trust accounts in qualified United States financial 
        institutions adequate for the payment of the claims of their 
        United States policy holders and ceding insurers, their assigns 
        and successors in interest;
            (4) requiring that all reinsurers agree to submit to the 
        jurisdiction and be bound by the final order or judgment of any 
        court of competent jurisdiction in the United States;
            (5) reviewing the business plan of all reinsurers seeking a 
        license to see that the reinsurer's methods of operation are 
        reasonable, prudent and do not present a threat to the public;
            (6)(i) defining standards for identifying reinsurers found 
        to be in such condition as to render the continuance of their 
        business hazardous to the public, and
            (ii) defining the authority of the Commission to order a 
        company to take necessary corrective action or cease and desist 
        certain practices which, if not corrected, could place the 
        company in a hazardous financial condition;
            (7) requiring compliance with regulations adopted pursuant 
        to section 201 of this Act;
            (8) requiring that all directors and senior officers of a 
        reinsurer possess appropriate qualifications and good 
        character;
            (9) requiring a diversified investment portfolio;
            (10) prescribing assets which may be admitted, authorized 
        or allowed as assets in the statutory financial statement; and
            (11) restricting the credit that may be allowed to licensed 
        reinsurers, either as asset or as a reduction of liabilities 
        for retrocessions reinsurers not licensed to do business in the 
        United States.

SEC. 303. INFORMATION, RECORDS, AND MEETINGS.

    For purposes of subchapter II of chapter 5 of title 5, United 
States Code, the Commission shall, with respect to activities under 
this Act, be considered agencies responsible for the regulation or 
supervision of financial institutions.

SEC. 304. LICENSE OF PROFESSIONAL REINSURERS.

    (a) In General.--The Commission is authorized to license and 
otherwise regulate professional reinsurers. A professional reinsurer 
shall be subject to regulation solely by the Commission as to the 
business of reinsurance in the United States.
    (b) Establishment of Standards.--The Commission shall, by 
regulation, establish standards and procedures for the licensing and 
regulation of professional reinsurers. Such standards shall give due 
consideration to the public interest in providing secure reinsurance 
capacity in the United States and to the need for promptly collectible 
reinsurance recoverables.
    (c) Standards.--Licensing standards for professional reinsurers 
promulgated by the Commission under subsection (b) shall include the 
following:
            (1) Minimum net worth requirements, risk-based or 
        otherwise, appropriate to the nature of the reinsurance written 
        by the different types and sizes of reinsurers, except that the 
        Commission shall set the minimum at an amount not less than 
        $50,000,000 and shall establish additional net worth 
        requirements for appropriate categories of professional 
        reinsurers based upon their operations, including such factors 
        as premium volume, volatility, and loss development 
        characteristics of the types of reinsurance provided by such 
        reinsurers. The Commission shall adjust such minimum for 
        inflation every fifth year unless for good cause the Commission 
        determines that it should be adjusted more frequently.
            (2) Appropriate standards for investments, reserves, and 
        asset valuations relating to minimum net worth, including 
        percentage limitations for various categories of investments; 
        except that investments in excess of minimum net worth and 
        reserves shall be subject to the prudent person standard.
            (3) Limitations on the net amount of exposure that may be 
        retained on a single risk, based on the amount of net worth.
            (4) Accounting standards and standards for reserve 
        valuation that will promote strong and appropriate financial 
        monitoring.
            (5) Liquidity requirements appropriate to the nature of the 
        reinsurance written.
            (6) Requirements for annual reports by independent 
        accountants of financial statements reporting financial 
        condition and financial activities.
            (7) Limitations and controls on the use of reinsurance, and 
        standards for ceding, reporting on, and credit for such 
        reinsurance.
            (8) Requirements for certification of loss reserves by 
        actuaries and reports of such certification.
            (9) Disclosure of all subsidiary and affiliate 
        relationships and the identity of all persons which control the 
        professional reinsurer.
            (10) Regulation of financial transactions within holding 
        company systems.
            (11) Procedures for initial and special examinations and 
        for the annual financial review of financial statements.
            (12) Regulations under which a foreign insurer or reinsurer 
        may establish a United States branch which may become a 
        certified professional reinsurer.
            (13) Minimum security deposit requirements for United 
        States branches of foreign insurers or reinsurers that apply to 
        become professional reinsurers.
            (14) Appointment of an agent in the United States upon whom 
        may be served any lawful process in any action, suit, or 
        proceeding instituted by or on behalf of any person in the 
        United States, and an agreement that, in the event such process 
        may not be served upon the appointed agent, process may be 
        served upon the Commission.
            (15) Agreement, by a foreign professional reinsurer, to 
        submit to the jurisdiction and be bound by the final order or 
        judgment of any court of competent jurisdiction in the United 
        States.
            (16) Procedures for ongoing monitoring and enforcement of 
        compliance with the Commission's standards.
            (17) Minimum standards as to the qualifications of the 
        management of professional reinsurers.
            (18) Minimum standards governing the fiduciary duties of 
        officers and directors of professional reinsurers.
            (19) Submission of an outline of current and projected 
        operations in the United States demonstrating that the methods 
        of operation are reasonable, prudent, and do not present an 
        undue risk to the public.
            (20) Demonstration of sufficient data processing capability 
        and capacity to meet all data collection and reporting 
        requirements of the Commission.
            (21) Submission of biographical information, which shall be 
        updated annually, demonstrating that all directors and senior 
        officers possess sufficient experience and good character to 
        manage business affairs in a competent and trustworthy manner.
            (22) Disclosure requirements, in addition to those 
        enumerated above, for information to be provided to the 
        Commission and the public.
            (23) Such other standards as the Commission determines to 
        be necessary to evaluate and maintain the sound financial 
        condition of federally certified professional reinsurers.

SEC. 305. LICENSE FOR OTHER PROVIDERS OF REINSURANCE.

    (a) In General.--The Commission is authorized to issue a 
reinsurance license to insurers and to any reinsurer that does not seek 
certification as a professional reinsurer under section 305.
    (b) Establishment of Qualifications.--The Commission shall 
establish, by regulation, standards and procedures for licensing under 
this section.
    (c) Qualifications for Certificate.--To qualify for a reinsurance 
license, an insurer or reinsurer must meet one of the following 3 
standards:
            (1) The insurer or reinsurer shall have met the national 
        standards established under this Act and have a certificate of 
        solvency issued by the Commission under and either--
                    (A) maintain a net worth which is not less than a 
                minimum set by the Commission which--
                            (i) shall be no less than $5,000,000;
                            (ii) shall establish additional net worth 
                        requirements for appropriate categories of 
                        reinsurers based upon their operations, 
                        including such factors as premium volume, 
                        volatility, and loss development 
                        characteristics of the types of reinsurance 
                        provided by such reinsurers; and
                            (iii) shall ensure that reinsurance 
                        obligations will be met; or
                    (B) in the case of a financially sound applicant 
                that does not meet the net worth dollar standard of 
                subparagraph (A), obtain a waiver of this minimum 
                dollar standard if the Commission concludes that the 
                applicant is sufficiently financially sound, is able to 
                pay its reinsurance obligations, and has sufficient 
                expertise to provide the type of reinsurance that it 
                intends to offer.
            (2) The insurer or reinsurer shall be authorized by the law 
        of its domiciliary jurisdiction to assume reinsurance; 
        demonstrate to the Commission that it has sufficient assets and 
        management experience so that it can operate safely in the 
        United States reinsurance market in a way that will protect the 
        public interest; and maintain a trust fund in a qualified 
        financial institution which includes a trusteed surplus for the 
        protection of United States ceding insurers and which is--
                    (A) for a single company, an amount not less than 
                its United States reinsurance liabilities arising from 
                reinsurance contracts entered into after the date of 
                enactment of this Act plus $20,000,000;
                    (B) for an established group of individual 
                unincorporated underwriters regulated as a group by its 
                State or country of domicile, an amount not less than 
                the group's United States reinsurance liabilities 
                arising from reinsurance contracts entered into after 
                the date of enactment of this Act plus $100,000,000; or
                    (C) for a group of incorporated insurers under 
                common administration, and which has continuously 
                transacted an insurance or reinsurance business outside 
                the United States for at least 10 years, in an amount 
                not less than the group's United States reinsurance 
                liabilities arising from reinsurance contracts entered 
                into after the date of enactment of this Act plus 
                $100,000,000.
        The Commission shall require additional amounts to be held in a 
        trust established under this paragraph as a condition for 
        initial or continued license if the Commission determines that 
        such additional amounts are required for the protection of 
        United States ceding insurers.
            (3) The insurer or reinsurer shall be authorized by the 
        laws of its domiciliary jurisdiction to assume reinsurance and 
        demonstrate to the Commission that it has sufficient assets and 
        management experience so that it will operate safely in the 
        United States reinsurance market in a way that will protect the 
        public interest and in addition complies with the following:
                    (A) Holders of licenses will be required to fund 
                their obligations to United States ceding insurers 
                pursuant to subsection (e) for such ceding insurers to 
                be able to count such reinsurance as an asset or 
                deduction from liabilities on the ceding insurer's 
                financial statements.
                    (B) In the event the Commission determines that the 
                funding required by subsection (e) is inadequate to 
                protect United States ceding insurers, the Commission 
                may require, as a condition for initial or continued 
                license, additional security requirements, including 
                the establishment of a United States trust fund for the 
                exclusive protection of United States ceding insurers. 
                The Commission may require such trust fund to be in any 
                amount that the Commission determines to be appropriate 
                to protect United States ceding insurers.
    (d) Requirements for a Trust Fund Under Subsection (c).--A trust 
fund required by paragraphs (2) and (3) of subsection (c) shall be in a 
form approved by the Commission and shall meet the following 
requirements for all new reinsurance provided after the date the 
license to provide reinsurance was granted:
            (1) The trust fund shall be exclusively for the purpose of 
        securing the payment of valid claims of United States ceding 
        insurers and their assigns and successors in interest.
            (2) The trust fund shall be established in a qualified 
        financial institution in a form approved by the Commission. The 
        Commission shall establish acceptable criteria for assets held 
        in trust, which shall include cash, securities, bonds, 
        commercial paper, clean, irrevocable, unconditional, and 
        automatically renewable letters of credit issued by a qualified 
        financial institution, or any other appropriate assets, whether 
        United States or non-United States, the fair market value of 
        which can be readily ascertained and which provide the 
        stability necessary for adequate protection of the trust 
        beneficiaries.
            (3) Assets may be held in trust by a qualified financial 
        institution the principal place of business of which is outside 
        the United States if the holder of the license demonstrates 
        that a beneficiary of the trust can obtain immediate payment 
        from a United States branch, subsidiary, or representative 
office of the institution.
            (4) The trust instrument shall provide that claims shall be 
        paid with the concurrence of the holder of the license or upon 
        final order of any court of competent jurisdiction in the 
        United States. The holder of the license may freely substitute 
        and withdraw assets in the trust so long as the value of the 
        assets maintained in the trust equals or exceeds the amount set 
        forth in paragraph (2) or (3) of subsection (c).
            (5) The trustees of the trust shall report annually to the 
        Commission in writing, setting forth the balance of the trust, 
        providing an actuary's opinion as to the reasonableness of the 
        trust reserves, listing the trust's investments at the 
        preceding year end, and certifying the date of termination of 
        the trust if so planned, or certifying that the trust shall not 
        expire as to new business prior to the next following December 
        31. The trust shall remain in effect as long as there are 
        outstanding obligations under the reinsurance agreements to 
        which the trust pertains.
            (6) The trust instrument shall provide that, in the event 
        the holder of the license is placed in supervision, 
        rehabilitation, or liquidation, or its equivalent by its State 
        or country of domicile, or if the Commission determines, 
        pursuant to regulations adopted by the Commission, that the 
        condition of the holder is such that further transaction of 
        business will be hazardous to United States creditors or to the 
        public, the Commission may take control of the trust.
            (7) The trust shall be subject to annual review and initial 
        and special examination by the Commission in the same manner as 
        the Commission may examine certified reinsurers.
    (e) Requirements for the Form of Funding Under Subsection (c).--The 
funds required by subsection (c)(3) may be in the form of--
            (1) cash under the control of the ceding insurer;
            (2) a clean, irrevocable, unconditional, and automatically 
        renewable letter of credit issued by a qualified financial 
        institution and held by the ceding insurer; or
            (3) other funding acceptable to the Commission.
    (f) Previous Reinsurance Obligations.--As a pre-condition for 
obtaining a license to provide reinsurance on the basis of meeting the 
requirements of paragraph (2) or (3) of subsection (c), the applicant 
shall be required to demonstrate to the Commission that it has 
adequately secured its reinsurance liabilities in existence at the time 
of licensing. The adequacy of the funding of such previous reinsurance 
liabilities shall be subject to the requirements of this Act and shall 
be reviewed by the Commission in determining the financial condition of 
the reinsurer in each annual review.
    (g) Additional Requirements for a Foreign Applicant.--Any foreign 
insurer or reinsurer applying under this section for a reinsurance 
license shall meet the following additional requirements:
            (1) Have been doing business in its country of domicile for 
        at least 3 years, or be an affiliate of an insurer or reinsurer 
        which has been doing business in its country of domicile for at 
        least 3 years, unless the Commission, for good cause shown, 
        pursuant to regulations, waives this 3-year operating 
        requirement.
            (2) File an annual financial statement with its domiciliary 
        regulator and have established satisfactory evidence of good 
        repute and financial integrity.
            (3) File annually with the Commission a copy of the 
        financial statement provided to its domiciliary regulator (if 
        appropriate, translated from its original language) and a 
        report showing the volume of written premiums assumed from 
        United States insurers in the past year and such other 
        information as the Commission, in its sole discretion, 
        requires.
            (4) File with the Commission a list identifying its 
        officers and directors (or similar principals) along with 
        biographical information for each, and provide an annual update 
        of this information.
            (5) Agree to allow the Commission to examine its books and 
        records and to waive any protection it has under any secrecy 
        laws of its domiciliary jurisdiction, except that such 
        examinations will only take place upon the Commission's showing 
        of good cause for concern about the financial soundness or 
        solvency of the subject entity.
            (6) Appoint an agent in the United States upon whom may be 
        served any lawful process in any action, suit, or proceeding 
        instituted by or on behalf of a domestic ceding insurer, and 
        agree that, in the event such process may not be served upon 
        the appointed agent, process may be served upon the Commission.
            (7) Submit to the jurisdiction of any United States court 
        of competent jurisdiction for the resolution of any dispute 
        arising out of a reinsurance agreement with a domestic ceding 
        insurer or to respond to any allegations or charges made 
        against it by any United States Government official or agency 
        except that this paragraph does not override any contractual 
        agreement of the parties to resolve disputes between them 
        pursuant to other procedures.

SEC. 306. SUSPENSION AND REVOCATION OF FEDERAL LICENSE TO PROVIDE 
              REINSURANCE.

    (a) In General.--The Commission shall suspend or revoke the 
certificate of a professional reinsurer issued under section 305 or a 
reinsurance certificate issued under section 306 at any time the 
Commission determines the standards for holding such license are no 
longer satisfied. The Commission shall provide the opportunity for a 
hearing on the record before making a determination to suspend or 
revoke such certificate.
    (b) Notice of Suspension or Revocation.--
            (1) The Commission shall notify the State or country of 
        domicile of a licensed professional reinsurer or holder of a 
        reinsurance license that the license has been suspended or 
        revoked. Such notification shall be made at the earliest 
        possible date.
            (2) The holder of a license that is suspended or revoked 
        under subsection (a) shall immediately notify all insurers and 
        reinsurers from which it has accepted cessions of such 
        suspension or revocation.

SEC. 307. CREDIT FOR REINSURANCE.

    (a) In General.--Notwithstanding any provision of State law to the 
contrary, any insurer certified by the Commission may count reinsurance 
as an asset or a deduction from its liabilities on its annual financial 
statement only if the provider of reinsurance, at the time such 
statement is filed--
            (1) holds a Federal license as a professional reinsurer 
        under section 305;
            (2) holds a Federal certificate of solvency and is licensed 
        pursuant to section 306(c)(1);
            (3) maintains a United States trust fund and is licensed 
        pursuant to section 306(c)(2); or
            (4) is licensed pursuant to section 306(c)(3) and funds its 
        obligations to ceding insurers and reinsurers as required in 
        section 306(e).
    (b) Limitation on Credit.--With regard to a reinsurer licensed 
pursuant to section 306(c)(3), a ceding insurer may count as an asset 
or deduction from liabilities only that portion of the reinsurance 
which meets the standards for funding under section 306(e). Such ceding 
insurer may also not count as such an asset or deduction any 
reinsurance secured by letters of credit, trust funds, or other 
collateral if such sources of security are not transferable to it when 
due.
    (c) Credit Pending Certification.--A United States insurer may take 
credit for reinsurance from a reinsurer that does not hold a 
professional reinsurer license issued pursuant to section 305 or a 
reinsurance license issued pursuant to section 306 only if--
            (1) the reinsurer submits to the Commission a complete 
        application for a license within 30 days of the coverage being 
        placed;
            (2) the reinsurer places all premiums in trust in a 
        qualified financial institution pending consideration of its 
        application, and provides evidence to the Commission that all 
        premiums from United States ceding insurers have been placed in 
        such trust;
            (3) the reinsurer funds any liabilities pursuant to 
        reinsurance assumed in a manner consistent with the 
        requirements of section 306(e) and submits to the Commission 
        proof of such funding;
            (4) the reinsurance agreement expressly provides that it 
        may be canceled from inception or at any subsequent time at the 
        request of the Commission if the provider's application for a 
        license is denied;
            (5) the reinsurer is authorized in its State or country of 
        domicile to do an insurance business and either has been doing 
        business in its State or country of domicile for at least 3 
        years or is an affiliate of an insurer which has been doing 
        business in its State or country of domicile for at least 3 
        years, except that this 3-year operating requirement may be 
        waived by the Commission for good cause pursuant to 
        regulations; and
            (6) the ceding insurer has not, within the previous 3 
        years, taken a credit for reinsurance ceded to the reinsurer 
        pursuant to this subsection.
    (d) Preemption.--No State shall regulate credit for reinsurance 
when purchased by federally licensed insurers. The Commission through 
the Commission shall have exclusive jurisdiction to regulate such 
credit.
    (e) Exceptions.--Notwithstanding any other provision of this 
section, a ceding insurer may count as an asset or deduction from 
liabilities--
            (1) reinsurance of risks located in jurisdictions within or 
        without the United States where such reinsurance is required by 
        applicable law of that jurisdiction;
            (2) reinsurance ceded to a reinsurer which is licensed by 
        one or more States and which is ceded to--
                    (A) a member of the same holding company system as 
                the ceding insurer; or
                    (B) an underwriting pool of which the ceding 
                insurer is a member;
            (3) risks ceded to a pool authorized or permitted by a 
        statute, regulation, or policy of the United States or under an 
        arrangement approved by the Federal or a State government;
            (4) risks of a parent or affiliate ceded to a pool or group 
        captive insurer or reinsurer where the captive's obligations 
        are funded or collateralized as provided in subsection (d) or 
        (e) of section 306; or
            (5) risks ceded to a risk retention group authorized by and 
        operating pursuant to the Liability Risk Retention Act of 1986 
        (15 U.S.C. 3901 et seq.) if the risk retention group's 
        obligations are funded or collateralized as provided in 
        subsection (d) or (e) of section 306.
    (f) Effect of Loss of License.--In the event that the Commission 
suspends or revokes a license issued pursuant to this title or such 
license is lost for any other reason, a ceding insurer may not count 
reinsurance as an asset or a deduction from its liabilities on its 
annual financial statement for any cessions made after the date the 
certification ceases. For those cessions before the loss of license 
under this Act--
            (1) a ceding insurer may continue to count as an asset or 
        deduction any funds withheld from such reinsurer; and
            (2) a ceding insurer may also continue to count as an asset 
        or deduction any unfunded reinsurance for 90 days or such 
        longer period as approved by the Commission.
A ceding insurer affected by the suspension or revocation of a license 
issued pursuant to this title shall immediately notify the Commission 
of this fact.
    (g) Effective Date of This Section.--This section shall apply to 
cessions which take place 2 years after the date of enactment of this 
Act.

SEC. 308. RELATIONSHIP TO STATE LAW.

    (a) Preemption.--A professional reinsurer certified pursuant to 
section 305 or licensed under section 306 shall be exempt from the 
application of any State law or regulation pertaining to the licensing 
or regulation of reinsurers or reinsurance transactions.
    (b) Nondiscrimination.--
            (1) With respect to any State law requiring evidence of 
        insurance or of financial responsibility, reinsurance contracts 
        made by a professional reinsurer licensed pursuant to section 
        305 or by the holder of a reinsurance license issued pursuant 
        to section 306 shall be accorded the same treatment as is 
        accorded to such contracts issued by insurers subject to 
        regulation for financial condition by that State.
            (2) No State shall revoke, suspend, refuse to issue, or 
        refuse to renew any license, privilege, charter, certificate, 
        franchise, or any other right conferred, guaranteed, or 
        protected by law because an insurer or reinsurer obtains or 
        maintains a certificate to provide reinsurance from the 
        Commission. No tax, fee, or assessment of any kind may be 
        imposed on an insurer or reinsurer certified by the Commission 
        in any manner or on any basis different from that applied to 
        other insurers by that State. No corporate charter or franchise 
        issued to an insurer or reinsurer licensed by the Commission 
        shall be rendered invalid or subject to revocation, lapse, or 
        forfeiture merely by reason of the failure of an insurer or 
        reinsurer licensed by the Commission to obtain a license or 
        certificate of authority issued by a State in addition to the 
        license issued by the Commission.

SEC. 309. FINANCIAL REPORTS BY REINSURERS.

    (a) In General.--The Commission shall conduct examinations of 
reinsurers licensed under section 305 and insurers and reinsurers 
licensed under section 306 that have a Federal solvency certificate. 
Each reinsurer shall provide to the Commission annual and, as deemed 
appropriate by the Commission, quarterly reports of its financial 
condition and operations which shall be in such form, contain such 
information, and be made on such dates, as the Commission may require.
    (b) Insurers or Reinsurers Regulated for Financial Condition by a 
State.--The State insurance regulator shall conduct the examination of 
insurers or reinsurers subject to State regulation for financial 
condition.
    (c) Contents of Annual Report.--Each annual report shall include--
            (1) financial statements;
            (2) any supplemental information or alternative 
        presentation that the Commission may require; and
            (3) a report signed by the reinsurer's chief executive 
        officer and chief accounting or financial officer, that 
        assesses, as of the reinsurer's most recent fiscal year--
                    (A) the effectiveness of the reinsurer's internal 
                audit control structure and procedures;
                    (B) the reinsurer's compliance with designated 
                safety and soundness laws and requirements; and
                    (C) any other information required by the 
                Commission.
    (d) Financial Examinations.--The Commission shall establish, by 
regulation, procedures for an effective system of examining the 
activities, operations, financial condition and affairs of insurers and 
reinsurers.
    (e) Annual Independent Audits of Financial Statements.--
            (1) Audits required.--Each reinsurer shall have an annual 
        independent audit made of its financial statements by an 
        independent certified public accountant in accordance with 
        accounting standards determined by the Commission.
            (2) Scope of audit.--In conducting an audit under this 
        subsection, an independent certified public accountant shall 
        determine and report on whether the financial statements--
                    (A) are presented fairly in accordance with 
                accounting principles determined by the Commission; and
                    (B) to the extent determined necessary by the 
                Commission, comply with such other disclosure 
                requirements as may be imposed under subsection (b).
    (f) Certification of Annual and Quarterly Reports.--
            (1) Declaration.--Annual and quarterly reports shall 
        contain a declaration by the chief executive officer of the 
        reinsurer that the report is true and correct to the best of 
        his or her knowledge and belief.
            (2) Attestation.--The correctness of the annual and 
        quarterly report shall be attested by the signature of at least 
        3 of the directors or executive officers of the reinsurer other 
        than the officer making the declaration required above. Such 
        attestation shall include a declaration that the report has 
        been examined by them and to the best of their knowledge and 
        belief is true and correct.
    (g) Special Reports.--The Commission may require special reports 
from a reinsurer, in such form and containing such information as the 
Commission may prescribe, on dates fixed by the Commission, whenever in 
the Commission's judgment, such reports are necessary for the 
Commission to carry out the purposes of this Act.

SEC. 310. ACCOUNTING STANDARDS.

    The financial statements of insurers and reinsurers shall be 
prepared in conformity with accounting principles determined by the 
Commission. Insurers and reinsurers that obtain and maintain Federal 
certificates of solvency or State insurance license on the basis of 
trust fund or funding mechanisms shall prepare the financial statements 
as to such trust funds or mechanisms in conformity with these 
principles. The Commission may establish, by regulation, additional 
disclosure requirements applicable to reports required to be filed with 
it.

SEC. 311. EXAMINATIONS.

    (a) In General.--The Commission shall conduct a full scope 
examination of the affairs, transactions, accounts, records and assets 
of each licensed reinsurer to assure the solidity and proper 
functioning of the reinsurer. In addition, the Commission may conduct 
an examination under this section whenever the Commission determines 
that an examination is necessary to determine the condition of the 
reinsurer for the purpose of ensuring its financial safety and 
soundness.
    (b) Initial Application and Examination.--The Commission shall 
conduct an initial examination of every insurer or reinsurer that 
applies for a Federal certificate of solvency to determine if the 
applicant satisfies the national standards established under this Act.
    (c) Examination of Holding Company, Affiliates, and Subsidiaries.--
In connection with examinations of a reinsurer, examiners selected or 
approved by the Commission shall make such examinations of the affairs 
of holding companies, and all affiliates and subsidiaries of such 
reinsurer as shall be necessary to disclose fully the relations between 
the reinsurer and its holding company, affiliates or subsidiaries and 
the effect of such relations upon the affairs of the reinsurer. The 
expense of examination of such holding company, affiliates, and 
subsidiaries of any reinsurer shall be assessed against the reinsurer 
and, when so assessed, shall be paid by the reinsurer. The refusal to 
give any information requested in the course of the examination, or to 
permit such examination, or to pay any expense so assessed, is grounds 
for suspension or refusal of, or nonrenewal of any license or authority 
held by the reinsurer to engage in any business subject to the 
Commission's authority. Any such proceeding for suspension, revocation 
or refusal of any license or authority shall be conducted pursuant to a 
hearing.
    (d) Information Provided to Examiner.--Each reinsurer, its 
officers, directors, agents or other persons from whom information is 
sought must provide to the examiners appointed under subsection (b) 
timely, convenient and free access at all reasonable hours at its 
office to all books, records, accounts, papers, documents and any or 
all computer or other recordings relating to the property, assets, 
business and affairs of the reinsurer being examined. The officers, 
directors, employees, agents of the reinsurer and other persons from 
whom information is sought, must facilitate the examination and aid in 
the examination so far as it is in their power to do so. The refusal of 
any reinsurer, by its officers, directors, employees, agent or other 
persons, to submit to examination or to comply with any reasonable 
written request of the examiners shall be grounds for suspension or 
refusal of, or nonrenewal of any license or authority held by the 
reinsurer to engage in any business subject to the Commission's 
approval. Any such proceeding for suspension, revocation or refusal of 
any license or authority shall be conducted pursuant to a hearing.
    (e) Examination Report.--
            (1) Filing of examination report.--No later than 60 days 
        following completion of an examination, the examiner in charge 
        shall file with the Commission a verified written report of 
        examination under oath. Upon receipt of the verified report, 
        the Commission shall transmit the report to the reinsurer 
        examined, together with notice which shall afford the reinsurer 
        examined, a reasonable opportunity of not more than 30 days to 
        make a written submission or rebuttal with respect to any 
        matters contained in the examination report.
            (2) Adoption of report on examination.--Within 30 days of 
        the end of the period allowed for the receipt of written 
        submissions or rebuttals, the Commission shall fully consider 
        and review the report, together with any written submissions or 
        rebuttals and any relevant portions of the examiner's 
        workpapers and enter an order--
                    (A) adopting the examination report as filed or 
                with modification or corrections. If the examination 
                report reveals that the reinsurer is operating in 
                violation of any law, regulation, or prior order of the 
                Commission, the Commission may order the reinsurer to 
                take any action the Commission considers necessary and 
                appropriate to cure such violation; or
                    (B) rejecting the examination report with 
                directions to the examiners to reopen the examination 
                for purposes of obtaining additional data, 
                documentation or information, and refiling the report 
                pursuant to paragraph (1) of this subsection.
    (f) Law Applicable to Examiners.--The Commission and each examiner 
shall have the same authority and each examiner shall be subject to the 
same disclosures, prohibitions, obligations, and penalties as are 
applicable to examiners employed by the Federal Reserve banks.
    (g) Expenses.--Each reinsurer shall pay to the Commission the 
expense attendant to conducting the examination.
    (h) Technical Experts.--The Commission may obtain the services of 
any technical experts the Commission considers appropriate to provide 
temporary technical assistance relating to an examination under this 
Act. The Commission shall describe, in the record of each examination, 
the nature and extent of any such temporary technical assistance.
    (i) Preservation of Records by Photography.--
            (1) In general.--The Commission may cause any record, 
        paper, or document to be copied or photographed, in a manner 
        that complies with the minimum standards of quality approved 
        for permanent photographic records by the National Institute of 
        Standards and Technology.
            (2) Deemed as originals.--Such copies or photographs shall 
        be deemed to be an original record for all purposes, including 
        introduction in evidence in all State and Federal courts or 
        administrative agencies.
            (3) Preservation.--Any such photograph or copy shall be 
        preserved as the Commission shall prescribe, and the original 
        may be destroyed.
    (j) Publication and Use.--
            (1) Public disclosure.--Upon the adoption of the 
        examination report under subsection (f), the Commission shall 
        continue to hold the content of the examination report as 
        private and confidential information for a period of 60 days 
        except to the extent provided in paragraph (2) below. 
        Thereafter, the Commission may open the report for public 
        inspection so long as no court of competent jurisdiction has 
        stayed its publication.
            (2) Disclosure for enforcement purposes.--Nothing in this 
        Act shall prevent or be construed as prohibiting the Commission 
        from disclosing the content of an examination report, 
        preliminary examination report or results, of any matter 
        relating thereto, to a State insurance department, to the 
        insurance department of another country, or to Federal or State 
        law enforcement officials at any time, as long as such agency 
        or office receiving the report or matters relating thereto 
        agrees in writing to hold it confidential and in a manner 
        consistent with this Act.
            (3) Disclosure to congress.--This section may not be 
        construed to authorize the withholding of any information from, 
        or to prohibit the disclosure of any information to, the 
        Congress or any committee or subcommittee thereof.
    (k) Immunity From Liability.--No cause of action shall arise, nor 
shall liability be imposed against any person for the act of 
communicating or delivering information or data to the Commission or 
the Commission's authorized representative or examiner pursuant to an 
examination made under this Act, if such act of communication or 
delivery was performed in good faith and without fraudulent intent or 
the intent to deceive.

SEC. 312. ACTUARIES.

    (a) Requirement To Use Qualified Actuaries.--The Board of Directors 
of each insurer and reinsurer shall appoint an actuary who is qualified 
to issue an opinion on the reasonableness of the reserves of such 
insurer or reinsurer. A qualified actuary is a person who is a member 
in good standing of the American Academy of Actuaries or someone who is 
otherwise qualified as determined by the Commission. The Board of 
Directors of the certified insurer or reinsurer shall notify the 
Commission or the State insurance regulator of the name of the 
appointed actuary at the time of the appointment and shall notify the 
Commission or such regulator within 10 days when an appointed actuary 
is dismissed, resigns, or otherwise leaves the position.

SEC. 313. LIMITATION ON SUBSEQUENT EMPLOYMENT.

    (a) In General.--Neither any member of the Commission nor any 
former officer or employee of the Commission may accept compensation 
from any reinsurer during the 2-year period beginning on the date of 
separation from employment by the Commission.
    (b) Applicability.--The limitation contained in subsection (a) 
applies only to any former officer or employee who, while employed by 
the Office, was compensated at a rate in excess of the lowest rate for 
a position classified higher than GS-15 of the General Schedule under 
section 5107 of title 5, United States Code.

SEC. 314. EXCHANGE OF INFORMATION.

    At the request of the Commission, State insurance departments and 
other State authorities shall furnish the Commission with any records, 
reports, results of examination, or other information in their 
possession relevant to matters under this Act.

SEC. 315. ARBITRATION CLAUSES.

    In the event of any difference of opinion between the reinsurer and 
the ceding insurer with respect to the interpretation of an agreement 
or contract to transfer obligations or risks of contract of insurance, 
such disagreements shall be resolved by arbitration under the Federal 
Arbitration Act.

SEC. 316. REINSURANCE INTERMEDIARIES.

    (a) Requirements.--A reinsurer shall not engage the services of any 
person, firm, association or corporation to act as a reinsurance 
intermediary broker or manager, either directly or indirectly, unless 
such intermediary is licensed by the Commission.
    (b) Intermediary License.--
            (1) In general.--The Commission may issue a reinsurance 
        intermediary's license to any person, firm, association or 
        corporation who or which has complied with the rules and 
        regulations adopted by the Commission.
            (2) Firms or association.--Any such license issued to a 
        firm or association and any employees designated to act as 
        reinsurance intermediaries under such license, shall be named 
        in the application and any supplements to the application.
            (3) Corporations.--Any such license issued to a corporation 
        shall authorize all of the officers and any designated 
        employees and directors of the corporation to act as 
        reinsurance intermediaries on behalf of such corporation, and 
        all such persons shall be named in the application and any 
        supplements to the application.
    (c) Written Applications.--
            (1) In general.--Before a reinsurance intermediary's 
        license shall be issued or renewed, the prospective licensee 
        shall properly file with the Commission a written application 
        that shall be in such form or forms and supplements as the 
        Commission prescribes, and pay a fee in an amount determined by 
        the Commission.
            (2) Expiration.--Every reinsurance intermediary's license 
        shall expire on the thirty-first day of August next following 
        the date of issue.
            (3) Renewals.--If an application for renewal has been filed 
        with the Commission before September 1 of the year of 
        expiration, license sought to be renewed shall continue in full 
        force and effect either until the issuance by the Commission of 
        the renewal license applied for, or until five days after the 
        Commission has refused to issue such renewal license and given 
        notice of such refusal to the applicant.
            (4) Refusal to renew.--Before refusing to renew any such 
        license, the Commission shall notify the applicant of the 
        Commission's intention and shall give such applicant an 
opportunity for a hearing.
    (d) Refusal To Issue a License.--The Commission may refuse to issue 
a reinsurance intermediary's license if, in its judgment, the applicant 
or any member, principal, officer or director of such applicant, is not 
trustworthy and competent to act as a reinsurance intermediary, or that 
any controlling person of such applicant is not trustworthy to act as a 
reinsurance intermediary, or that any of the foregoing has given cause 
for revocation or suspension of such license, or has failed to comply 
with any prerequisite for the issuance of such license.
    (e) Examinations.--A reinsurance intermediary shall be subject to 
examination by the Commission as often as may be deemed necessary by 
the Commission to assure compliance with this section and any rules and 
regulations promulgated under this title. The Commission shall have 
access to all books, accounts and records of the reinsurance 
intermediary in a form usable to the Commission.
    (f) Written Contract.--Transactions between a reinsurance 
intermediary broker or manager and the reinsurer it represents in such 
capacity shall only be entered into pursuant to a written 
authorization, specifying the responsibilities of each party and shall 
be specifically approved by the reinsurer's board of directors. At 
least 30 days before a reinsurer assumes or cedes business through a 
reinsurance intermediary or broker, a copy of the approved contract 
shall be filed with the Commission for approval.
    (g) Fiduciary Responsibility.--Every reinsurance intermediary 
acting as such shall be responsible, in a fiduciary capacity, for all 
funds received or collected in such capacity, and shall not, without 
the express consent of the principals, mingle any such funds with the 
intermediary's own funds held by the intermediary in any other 
capacity.

SEC. 317. APPOINTMENT OF RECEIVERS.

    (a) Jurisdiction.--The Commission shall act as a receiver for a 
reinsurer licensed under section 305 and those insurers or reinsurers 
licensed under section 306 who have a Federal certificate for solvency 
(hereinafter referred collectively as ``reinsurers''), for purposes of 
rehabilitation and liquidation when appointed as a receiver in 
proceedings instituted in accordance with the provisions of this Act. 
The United States District Court courts shall have exclusive 
jurisdiction of proceedings to appoint the Commission as receiver for a 
reinsurer.
    (b) Petition for Appointment.--
            (1) The filing of a petition.--A proceeding to appoint the 
        Commission as receiver of a reinsurer shall be commenced by the 
        filing of a petition seeking such appointment in the 
        appropriate United States district court for the district in 
        which the reinsurer has its principal office or domicile, or in 
        the United States District Court for the District of Columbia.
            (2) Who may file.--A petition may be filed by the 
        Commission.
            (3) Qualifications.--The receiver shall be--
                    (A) the Commission or any person or other 
                governmental agency acting under the Commission's 
                authority; and
                    (B) any person acting under the Commission's 
                authority that--
                            (i) has no claim against, or financial 
                        interest in, the reinsurer or other basis of 
                        conflict of interest; and
                            (ii) has the financial and management 
                        expertise necessary to direct the operations 
                        and affairs of the reinsurer.
    (c) Judicial Review.--
            (1) Timing and jurisdiction.--A reinsurer for which a 
        receiver is appointed may bring an action in the United States 
        district court, in the district in which the court ordered the 
        appointment of a receiver, for an order requiring the 
        Commission to terminate the appointment of the receiver. The 
        court, upon the merits, may dismiss such action, or may direct 
        the Commission to terminate the appointment of the receiver. 
        Such an action may be commenced no later than 20 days after the 
        date in which the court ordered an appointment of a receiver.
            (2) Consensual appointments.--The appointment of a receiver 
        under subsection (b) pursuant to consent of the reinsurer shall 
        not be subject to judicial review under this subsection.
            (3) Standard of review.--A decision of the Commission to 
        appoint a receiver may be set aside under this subsection only 
        if the court finds that the decision was arbitrary, capricious, 
        an abuse of discretion, or otherwise not in accordance with 
        applicable laws.
            (4) Limitation on jurisdiction.--Except as otherwise 
        provided in this subsection, no court may take any action 
        regarding the removal of a receiver or otherwise restrain or 
        affect the exercise of powers or functions of a receiver.

SEC. 318. ORDER APPOINTING RECEIVER.

    (a) In General.--An order appointing a receiver shall specify 
whether the receiver is to act to rehabilitate or to liquidate the 
reinsurer.
    (b) Regular Accounting to Court.--The order appointing the 
Commission as receiver shall require regular accounting to the court of 
the receiver's administration of the reinsurer's assets including, but 
not limited to, a listing of all funds received or disbursed by the 
receiver during the period covered by the report. Accounting shall be 
at such intervals as the court specifies in its order or by rule, but 
no less frequently than every quarter.
    (c) Copy of Report to State Insurance Regulator.--A copy of the 
accounting reports shall be provided to the appropriate State insurance 
regulators in the State where the reinsurer transacts any reinsurance 
business.

SEC. 319. EFFECT OF ORDER.

    (a) Transfer of Control.--The order appointing the Commission as 
receiver shall have the effect of immediately transferring to the 
receiver the possession and control and the unconditional right to 
possession and control of all the business, assets, contract and rights 
of action, books, records, and affairs of the reinsurer, wherever 
located.
    (b) No Breach of Contract.--The entry of any order appointing the 
Commission as receiver shall not constitute an anticipatory breach of 
any contract of the reinsurer, nor provide grounds for revocation or 
cancellation of any such contract other than by the receiver.
    (c) Rights and Liabilities.--Upon issuance of the order under 
subsection (a), the rights, and liabilities of the reinsurer and of its 
creditors, and all other persons interested in its estate, shall be 
fixed as of the date of entry of the order.

SEC. 320. JURISDICTION OVER PROPERTY OF REINSURER.

    The filing of a petition under section 315 shall immediately vest 
the district court with exclusive jurisdiction over the reinsurer and 
its property wherever located and over all parties to the proceedings 
by which the receiver acquired the right to possession and control of 
the business, assets and affairs of the reinsurer and shall suspend the 
further jurisdiction of other courts and administrative bodies with 
respect to such proceeding.

SEC. 321. EXAMINATIONS.

    The Commission may examine and supervise a reinsurer in 
receivership during the period in which the reinsurer continues to 
operate as a going concern.

SEC. 322. EXPENSES OF ESTABLISHING RECEIVERSHIP.

    All expenses of the receiver or any person acting under the 
receiver's authority and direction in the taking possession of the 
reinsurer and of conducting the proceedings placing it in receivership, 
of obtaining the appointment of the Commission as receiver, in the 
administration of the receivership, and in the conduct of all 
proceedings related to it, shall be paid out of the funds or assets of 
the reinsurer.

SEC. 323. COMPENSATION OF RECEIVER AND EMPLOYEES.

    A receiver and professional employees (other than Federal 
employees) shall be compensated for activities conducted as receiver. 
Compensation may not be provided in amounts greater than the 
compensation paid to employees of the Federal Government for similar 
services.

SEC. 324. STANDING OF GUARANTY ASSOCIATIONS.

    Any guaranty association shall have standing to appear in any court 
proceeding concerning the rehabilitation or liquidation of a reinsurer 
if such association has paid guaranty obligations for which it has not 
been reimbursed or is or may become liable for as guarantor of 
obligations of the reinsurer in rehabilitation or liquidation.

SEC. 325. APPLICABILITY OF RECEIVERSHIP TO FOREIGN REINSURER.

    The Commission shall be appointed as receiver under this Act for a 
foreign reinsurer or insurer licensed under section 305 or 306 to the 
extent of its assets, operations, and business in the United States. To 
the extent that such assets are insufficient to cover claims against 
the foreign reinsurer or insurer, the Commission may bring an action in 
the United States district court with jurisdiction over the 
receivership to recover amounts due and owing.

SEC. 326. STAY OF ACTIONS.

    (a) In General.--The entry of an order appointing the Commission as 
receiver shall operate as a stay of the commencement or continuation of 
any action or proceeding in any Federal or State court, or any 
administrative or other proceeding, against the insolvent reinsurer or 
against an insured of the insurer on a claim for which the reinsurer 
may be liable, or against the Commission as receiver, except as 
provided in subsection (b).
    (b) Judicial Relief From Stay.--The district court shall have power 
to grant relief from the stay provided in subsection (a) in such cases, 
and upon such terms, as the court determines to be consistent with the 
preservation of assets and the efficient administration of the estate 
of the reinsurer. Such relief may be granted upon the application of 
any party in interest, and may be granted as to particular cases or as 
to classes of cases as may be prescribed by the court's order.
    (c) Actions by the Receiver.--Upon issuance of an order appointing 
the Commission as receiver, the Commission may within 2 years from such 
order, or such other longer time as applicable law may permit, 
institute an action or proceeding on behalf of the estate of the 
reinsurer upon any cause of action against which the period of 
limitation fixed by applicable law has not expired at the time of the 
filing of the petition upon which such order is entered.
    (d) Statute of Limitations.--No statute of limitations or defense 
of laches shall run with respect to any cause of action against a 
reinsurer between the filing of a petition for receivership and the 
denial of the petition. Any action against the reinsurer that might 
have been commenced when the petition was filed may be commenced within 
60 days after the petition is denied.

SEC. 327. COOPERATION OF OFFICERS, OWNERS, AND EMPLOYEES.

    Any officer, manager, director, trustee, owner, employee or agent 
of any reinsurer, or any other person with authority over or in charge 
of any segment of the reinsurer's affairs including any person who 
exercises control directly or indirectly over activities of the 
reinsurer through any holding company or other affiliate of the 
reinsurer, shall cooperate with the receiver. For purposes of this 
section, the term ``cooperate'' shall include, but shall not be limited 
to, the following:
            (1) To reply promptly in writing to any inquiry from the 
        receiver requesting such a reply.
            (2) To make available to the receiver any books, accounts, 
        documents, or other records or information or property of or 
        pertaining to the reinsurer and in the possession, custody or 
        control of such persons.

SEC. 328. INJUNCTIONS AND ORDERS.

    (a) In General.--The United States District Court upon application 
of the Commission, as receiver, may grant injunctions and orders 
directed to any and all courts, persons, and parties as necessary to 
confirm or secure such stays of proceedings, or to extend any such stay 
upon a showing by the Commission that additional time is necessary for 
it to participate completely in the further conduct of the action or 
proceeding.
    (b) Types of Injunctions.--The Commission, as receiver, may at any 
time apply for such restraining orders, preliminary and permanent 
injunctions, and other orders as may be deemed necessary and proper to 
prevent--
            (1) the transaction of further business by or on behalf of 
        the reinsurer;
            (2) the transfer of property by or on behalf of the 
        reinsurer;
            (3) interference with the receiver or with a proceeding 
        under this Act;
            (4) waste of the reinsurer's assets;
            (5) dissipation and transfer of bank accounts of the 
        reinsurer;
            (6) the institution or further prosecution of any actions 
        or proceedings against the reinsurer or the receiver;
            (7) the obtaining of preferences, judgments, attachments, 
        garnishments or liens against the reinsurer, or its assets;
            (8) the levying of execution against the reinsurer, or its 
        assets;
            (9) the making of any sale or deed for nonpayment of taxes 
        or assessments that would lessen the value of the assets of the 
        reinsurer;
            (10) the withholding from the receiver of books, accounts, 
        documents, or other records relating to the reinsurer; or
            (11) any other threatened or contemplated action that might 
        lessen the value of the reinsurer's assets or prejudice the 
        rights of creditors, shareholders, or the administration of any 
        proceeding under this title.
    (c) Bonds or Other Security.--The court shall not require the 
receiver to submit a bond or other security as a condition of issuing 
an order under this section.
    (d) Payment of Creditors.--The Commission may require a receiver to 
set aside and make available for payment to creditors any amounts that 
the Commission determines may safely be used for such purpose. All 
creditors who are similarly situated shall be treated in a similar 
manner.

SEC. 329. PENDING LITIGATION.

    The Commission shall take such action respecting all pending 
litigation as it deems necessary in the interests of justice and for 
the protection of creditors and the public.

SEC. 330. CONFLICTS OF INTEREST AND FINANCIAL DISCLOSURE.

    A receiver shall be subject to any laws and regulations relating to 
conflicts of interest and financial disclosure that apply to employees 
of the Office.

SEC. 331. PROCEEDING AGAINST CULPABLE PERSONS.

    If it appears to the receiver that there has been criminal or 
tortious conduct, or breach of any contractual or fiduciary obligation 
detrimental to the reinsurer by any officer, manager, agent broker, 
employee or other person, the receiver may refer such matter to the 
Commission.

SEC. 332. LIABILITY PROTECTION FOR RECEIVERS.

    (a) Federal Agencies and Employees.--In any case in which a 
receiver appointed under this title is a Federal agency or an officer 
or employee of the Federal Government, the provisions of chapters 161 
and 171 of title 28, United States Code, shall apply with respect to 
the liability of the receiver for acts or omissions performed pursuant 
to and in the course of the duties and responsibilities of the 
receivership.
    (b) Other Receivers.--In any case where the receiver is not a 
receiver described in subsection (a), the receiver shall not be 
personally liable for damages in tort or otherwise for acts or 
omissions performed pursuant to and in the course of the duties and 
responsibilities of the receivership, unless such acts or omissions 
constitute gross negligence or any form of intentional tortious conduct 
or criminal conduct.
    (c) Indemnification.--The Commission may indemnify the receiver on 
such terms as the Commission considers appropriate.

SEC. 333. POWERS OF EXAMINATION; SUBPOENAS.

    The Commission may take depositions, subpoena witnesses or 
documentary evidence, administer oaths and examine under oath any 
person being examined or relative to the subject of any hearing or 
investigation. The subpoena shall be served in the same manner as if 
issued by the Commission.

SEC. 334. GROUNDS FOR THE APPOINTMENT OF RECEIVER FOR REHABILITATION.

    (a) In General.--The Commission may, after providing written notice 
under subsection (c), file a petition in a United States District Court 
to be appointed a receiver of a reinsurer for purposes of 
rehabilitation upon a determination in writing that--
            (1) the reinsurer is not likely to pay its obligations in 
        the normal course of business;
            (2) the reinsurer has incurred or is reasonably likely to 
        incur losses that would deplete substantially all of its 
        capital and is unlikely that the reinsurer will replenish its 
        capital within a reasonable period;
            (3) the reinsurer has concealed or is concealing books, 
        papers, records, or assets of the reinsurer that are material 
        to the discharge of the Commission's responsibilities under 
        this subtitle, or has refused or is refusing to submit such 
        books, papers, records, or information regarding the affairs of 
        the reinsurer for inspection to the Commission upon request;
            (4) the reinsurer has willfully violated, or is willfully 
        violating, a final cease-and-desist order;
            (5) the reinsurer is in such condition that the further 
        transaction of business would be hazardous financially to its 
        creditors, or the public;
            (6) there is reasonable cause to believe that there has 
        been embezzlement from the reinsurer, wrongful sequestration or 
        diversion of its assets, or forgery, fraud affecting it or 
        other illegal conduct in, by, or with respect to it that if 
        established would endanger assets in an amount threatening the 
        solvency of the reinsurer;
            (7) without first obtaining the written consent of the 
        Commission, the reinsurer has transferred, or attempted to 
        transfer, in a manner in violation of any solvency regulation 
        or order of the Commission, substantially its entire property 
        or business, or has entered into any transaction the effect of 
        which is to merge, consolidate, or reinsure substantially its 
        entire property or business in or with the property or business 
        of any other person;
            (8) the reinsurer has failed to file its annual report or 
        other financial report required by statute within the time 
        allowed by law and, after written demand by the Commission, has 
        failed to give an adequate explanation immediately;
            (9) the reinsurer has neglected or refused to comply with 
        an order of the Commission to cure within the time prescribed 
        by the Commission any deficiency, whenever its capital and 
        minimum required surplus, is below statutory requirements; and
            (10) the reinsurer is found to be in such condition that it 
        could not meet the requirements for organization and 
        authorization as required by applicable law.
    (b) Consent of the Reinsurer.--Notwithstanding subsection (a), the 
Commission may file a petition to be appointed a receiver for a 
reinsurer, if a majority of the members of its board of directors or a 
majority of its shareholders by an affirmative vote consent to such 
appointment.
    (c) Notice.--Upon making a determination under subsection (a) of 
this subsection to file a petition to be appointed a receiver for a 
reinsurer, or upon consent of the reinsurer under subsection (b) to 
such an appointment, the Commission shall provide written notice to the 
reinsurer--
            (1) that the Commission will seek to be appointed as 
        receiver for the reinsurer for purposes of rehabilitation; and
            (2) stating the reasons for the appointment of such 
        receiver.

SEC. 335. REHABILITATION ORDERS.

    An order to rehabilitate a reinsurer shall direct the receiver 
forthwith to take possession of the assets of the entity and to 
administer them under the general supervision of the United States 
District Court which ordered the rehabilitation. The filing or 
recording of the order with the clerk of the court or recorder of deeds 
of the county in which the principal business of the insurer or 
reinsurer is conducted, or the county in which its principal office or 
place of business is located, shall impart the same notice as a deed, 
bill of sale, or other evidence of title duly filed or recorded with 
the recorder of deeds would have imparted.

SEC. 336. POWERS OF RECEIVER FOR PURPOSES OF REHABILITATION.

    (a) General Powers.--A receiver shall have all the powers of the 
shareholders, directors, and officers of the reinsurer under 
receivership and may operate the reinsurer in the name of the 
reinsurer. The receiver may take such action as it deems necessary or 
appropriate to reform and revitalize or rehabilitate the reinsurer. It 
shall have full power to direct and manage, to hire and discharge 
employees subject to any contract rights they may have, and to deal 
with the property of the reinsurer.
    (b) Reorganization, Consolidation, Merger and Other 
Transformation.--If the receiver determines that reorganization, 
consolidation, merger, or other transformation of the reinsurer is 
appropriate, it shall prepare a plan to effect such changes. Upon 
application of the receiver for approval of the plan, and after such 
notice and hearings as the court may prescribe, the court may either 
approve or disapprove the plan proposed, or may modify it and approve 
it as modified. Any plan approved under this section shall be, in the 
judgment of the court, fair and equitable to all parties concerned. If 
the plan is approved, the receiver shall carry out the plan.
    (c) Additional Power.--A receiver may avoid any security interest 
taken by a creditor with the intent to hinder, delay, or defraud the 
reinsurer.
    (d) Limitations.--A receiver shall be subject to any rules, 
regulations, and orders issued from time to time by the Commission and, 
except as otherwise specifically provided in rules, regulations, or 
orders, shall have the same rights and privileges and be subject to the 
same duties, restrictions, penalties, conditions, and limitations 
applicable to directors, officers, or employees of the reinsurer.
    (e) Enforcement of Contracts.--
            (1) In general.--A receiver may enforce any contract 
        described in paragraph (2), notwithstanding any provision of 
        the contract providing for the termination, default, 
        acceleration or other exercise of rights upon, or solely by 
        reason of, the insolvency of the reinsurer or the appointment 
        of a receiver.
            (2) Enforceable contracts.--Any contract shall be 
        enforceable under paragraph (1), if the receiver--
                    (A) determines that the continued enforceability of 
                the contract is necessary to achieve the purpose of 
                receivership; and
                    (B) specifically provides for the enforceability of 
                the contract in a regulation or order, issued for the 
                purpose of this subsection, which describes such 
                contract.
            (3) Applicability.--This subsection and any regulation 
        issued under this subsection shall apply only to contracts 
        entered into, modified, extended, or renewed after the 
        effective date of the regulation or order.

SEC. 337. TERMINATION OF THE RECEIVERSHIP FOR REHABILITATION.

    (a) Discretionary.--At any time the receiver determines that 
termination of a receivership for purposes of rehabilitation is in the 
public interest and may safely be accomplished, the receiver may file a 
petition in United States District Court to terminate the receivership 
and permit the reinsurer to resume the transaction of business subject 
to such terms, conditions and limitations as the receiver may 
prescribe.
    (b) Terms.--Any terms, conditions, and limitations imposed by the 
receiver upon termination of a receivership shall be enforceable and 
reviewable.
    (c) Petition the Court.--
            (1) The receiver or the board of directors of the reinsurer 
        may at any time petition the district court for an order 
        terminating the receivership for purposes of rehabilitation on 
        the grounds that the reinsurer may safely recommence the 
        transaction of business.
            (2) If any such petition is denied, another such petition 
        shall not be made by the board of directors of the reinsurer 
        for at least 6 months. The district court may order payment 
        from the estate of the reinsurer of the costs and other 
        expenses of such petition.
            (3) If the district court finds that rehabilitation has 
        been accomplished and that the reinsurer may safely return to 
        the transaction of the reinsurance business under the control 
        of its owners and directors, it shall order that the reinsurer 
        and its owners be restored to possession of its property and 
        the control of the business.

SEC. 338. LIQUIDATION.

    (a) Order.--Whenever the receiver believes further efforts to 
rehabilitate the reinsurer would substantially increase the risk of 
financial loss or would be futile, it may petition the district court 
for an order of liquidation. The district court shall permit the 
directors of the reinsurer to take such actions as are reasonably 
necessary to defend against the petition and may order the payment from 
the estate of the reinsurer of such costs and other expenses of defense 
as the court deems appropriate.
    (b) Grounds for Liquidation.--The receiver may petition the 
district court for an order directing it to liquidate the reinsurer on 
the grounds--
            (1) that the reinsurer is insolvent (and unable to pay 
        debts as they become due); or
            (2) that the reinsurer is in such condition that the 
        further transaction of business would be hazardous, financially 
        or otherwise.
    (c) Receiver.--A court order to liquidate the business of the 
reinsurer shall appoint the Commission as receiver for liquidation.

SEC. 339. LIQUIDATION ORDERS.

    (a) In General.--The filing or recording of the order of 
liquidation with the clerk of the court and the recorder of deeds of 
the county in which the reinsurer's principal office or place of 
business is located, or, in the case of real estate, with the recorder 
of deeds of the county where the property is located, shall impart the 
same notice as a deed, bill of sale, or other evidence of title duly 
filed or recorded with that recorder of deeds would have imparted.
    (b) Fixing of Rights and Liabilities.--Upon issuance of the order, 
the rights and liabilities of the reinsurer in liquidation and of its 
creditors, shareholders, members, and all other persons interested in 
its estate shall become fixed as of the date of entry of the order of 
liquidation.
    (c) Foreign Insurer or Reinsurer.--An order to liquidate the 
business of a foreign insurer or reinsurer shall be in the same terms 
and have the same legal effect as an order to liquidate an insurer or 
reinsurer licensed in the United States, except that the assets, 
operations, and business in the United States shall be the only assets, 
operations, and business included in the order.

SEC. 340. POWERS OF THE COMMISSION AS RECEIVER FOR LIQUIDATION.

    The Commission as receiver shall have the power--
            (1) to employ employees, agent, attorney, actuaries, 
        accountant, appraisers, consultants and such other personnel as 
        it may deem necessary to conduct the liquidation;
            (2) to appoint, with the approval of the court, an advisory 
        committee of representatives of claimants, creditors, and other 
        persons or groups with substantial interest in the liquidation 
        proceeding, if such committee be deemed necessary;
            (3) to audit the books and records of the holding company 
        (when applicable), affiliates, and all agents of the reinsurer 
        insofar as those records relate to the business activities of 
        the reinsurer;
            (4) to collect all assets, debts and moneys due and claims 
        belonging to the reinsurer, wherever located;
            (5) to conduct public and private sales of the property of 
        the reinsurer;
            (6) to continue to prosecute and to institute in the name 
        of the reinsurer or in its own name any and all suits and other 
        legal proceedings, and to abandon the prosecution of claims it 
        deems unprofitable to pursue further;
            (7) to assert all defenses available to the reinsurer as 
        against third persons, including statutes of limitation and 
        statutes of fraud and the defense of usury. A waiver of any 
        defense by the reinsurer after a petition for liquidation has 
        been filed shall not bind the Commission;
            (8) to promulgate rules and regulations with the approval 
        of the Commission regarding the allowance or disallowance of 
        claims and providing for administrative determination of claims 
        and review of such determination;
            (9) to acquire, encumber, lease, improve, sell, transfer, 
        abandon, or otherwise dispose of or deal with, any property of 
        the reinsurer at its market value or upon such terms and 
        conditions as are fair and reasonable;
            (10) to execute, acknowledge, and deliver any deed, 
        assignment, release, and other instrument necessary or proper 
        to effectuate any sale of property or other transaction in 
        connection with the liquidation;
            (11) to hold hearings, to subpoena witnesses to compel 
        their attendance, to administer oaths, to examine any person 
        under oath, and, in connection therewith, to require the 
        production of any books, papers, records, or other documents 
        which the receiver deems relevant to the liquidation;
            (12) to remove any record and property of the reinsurer to 
        such place as may be convenient for the purposes of efficient 
        and orderly execution of the liquidation;
            (13) to prosecute any action or right of action which may 
        exist on behalf of the creditors, or shareholders of the 
        reinsurer against any of its officers or any other person;
            (14) to borrow money on the security of the reinsurer's 
        assets or without security and to execute and deliver all 
        documents necessary to that transaction for the purpose of 
        facilitating the liquidation. Any such funds borrowed may be 
        repaid as an administrative expense;
            (15) to enter into such contracts as are necessary to carry 
        out the order to liquidate and to affirm or disavow any 
        contract to which the reinsurer is a party;
            (16) to deposit in one or more banks such sums as are 
        required for meeting current administrative expenses and 
        dividend distributions;
            (17) to invest all sums not currently needed;
            (18) to file any necessary documents for recording in the 
        office of any recorder of deeds or record office wherever 
        property of the reinsurer is located;
            (19) to exercise and enforce all the rights, remedies, and 
        powers of any creditor, shareholder, or member, including any 
        power to avoid any transfer or lien that may be given by the 
        law;
            (20) to intervene in any proceeding wherever instituted 
        that may affect the reinsurer or its assets; and
            (21) to exercise all powers now held or hereafter conferred 
        upon a receiver by the laws of the United States.

SEC. 341. DISSOLUTION OF REINSURER.

    The receiver may petition for an order dissolving the corporate 
existence of a reinsurer, or its United States branch in the case of a 
foreign insurer or reinsurer, at the time the receiver applies for a 
liquidation order. The court shall order dissolution of the reinsurer 
upon petition by the receiver upon or after the granting of a 
liquidation order.

SEC. 342. OBLIGATION OF REINSURER.

    In the event of a receivership, the reinsurance recoverables due 
under any reinsurance contract shall be payable by the reinsurer 
directly to the receiver. Subject to the right of setoff and 
verification of coverage under the relevant contract, the assuming 
reinsurer shall pay its share of the loss at the time that the amount 
of the claim is ultimately determined in the liquidation proceeding. 
The receiver shall, within a reasonable time after the initiation of 
the receivership, provide the assuming reinsurer with claim information 
in accordance with the reinsurance contracts. During the pendency of 
any such claim, the assuming reinsurer may investigate the claim and, 
at its own expense, interpose in the proceeding where the claim is to 
be adjudicated any defenses which it may deem available to the ceding 
insurer or reinsurer, or its receiver. Expenses of investigation and 
defense incurred by the assuming reinsurer shall be chargeable against 
the ceding insurer or reinsurer as part of the administrative expense 
of liquidation, in proportion to the benefit accruing to the ceding 
insurer or reinsurer solely as a result of the defense undertaken by 
the assuming reinsurer. The reinsurance proceeds shall be payable as 
provided in the agreement, except when such assuming reinsurer has a 
valid contractual obligation to pay reinsurance proceeds to a party 
other than the ceding insurer or reinsurer.

SEC. 343. REINSURER'S LIABILITY.

    The amount recoverable by the receiver from a reinsurer shall not 
be reduced as a result of delinquency proceedings regardless of any 
provision in the reinsurance contract or other agreement. Payment made 
directly to an insured or other creditor shall not diminish the 
reinsurer's obligation to such ceding insurer's or reinsurer's estate 
except when such reinsurer has a valid contractual obligation to pay 
reinsurance proceeds to a party other than the insurer or reinsurer.

SEC. 344. NOTICE TO CREDITORS AND OTHERS.

    (a) Notice of Liquidation.--The Commission shall give or cause to 
be given notice of the liquidation order as soon as possible--
            (1) by first class mail and either by telegram or telephone 
        to the State Insurance Department of each jurisdiction in which 
        the reinsurer is doing business;
            (2) by first class mail to all insurance agents or brokers 
        of the reinsurer;
            (3) by first class mail to all persons known or reasonably 
        expected to have claims against the reinsurer, at their last 
        known address as indicated by the records of the reinsurer; and
            (4) by publication in a newspaper of general circulation in 
        such other locations as the receiver deems appropriate.
    (b) Filing Claims.--Except as otherwise established by the receiver 
with approval of the court, notice to potential claimants under this 
Act shall require claimants to file with the receiver their claims 
together with proper proof, by a date specified in the notice which 
shall be not less than 90 days after the publication of such notice. 
All claimants shall have a duty to keep the liquidator informed of any 
changes of address.

SEC. 345. PROOF OF CLAIMS.

    The Commission shall promulgate rules and regulations regarding--
            (1) the filing of claims;
            (2) information that must be contained in a proof of claim, 
        including any written instruments or other documents that 
        support the claim;
            (3) third-party claims;
            (4) secured creditor's claims;
            (5) claims of surety; and
            (6) disputed claims.

SEC. 346. PAYMENT OF CLAIMS.

    (a) Payment of Claims by Commission.--In the case of a liquidation 
of any insolvent reinsurer, payment of claims against the reinsurer 
shall be made by the Commission as soon as possible, either by cash or 
any other means determined by the rules and regulations promulgated by 
the Commission.
    (b) Disputed Claims.--In the case of any disputed claim relating to 
an reinsurer, the Commission may resolve such disputed claims in 
accordance with regulations promulgated by the Commission. If the 
Commission has not promulgated procedures for resolving disputed 
claims, the Commission may require the final determination of a court 
of competent jurisdiction before paying any such claims.
    (c) Judicial Review of Final Determination.--Final determination 
made by the Commission shall be reviewable in accordance with chapter 7 
of title 5, United States Code (5 U.S.C. 701 et seq.), the United 
States Court of Appeals for the District of Columbia or the Court of 
Appeals for the Federal Judicial Circuit where the district court that 
ordered the liquidation is located. Any request for review of a final 
determination by the Commission shall be filed with the appropriate 
circuit court of appeals not later than 60 days after such 
determination is ordered.

SEC. 347. DUTIES OF AGENTS AND INTERMEDIARIES.

    Every person who receives notice that a reinsurer which the person 
represents as an agent or intermediary is the subject of a liquidation 
order shall within 30 days of such notice provide to the Commission the 
information in the agency's or intermediary's records related to any 
contract agreed to by the reinsurer through the agent.

SEC. 348. FRAUDULENT TRANSFERS.

    (a) In General.--Every transfer made and every obligation incurred 
by a reinsurer within 3 years prior to the filing of a successful 
petition for liquidation under this Act is fraudulent as to then 
existing and future creditors if made or incurred without fair 
consideration, or with actual intent to hinder, delay, or defraud 
either existing or future creditors. A transfer made or an obligation 
incurred by an insurer ordered to be liquidated under this Act, which 
is fraudulent under this section, may be avoided by the liquidator, 
except as to a person who in good faith is a purchaser, lienor, or 
obligee for a present fair equivalent value, and except that any 
purchaser, lienor or obligee, who in good faith has given a 
consideration less than fair for such transfer, lien or obligation, may 
retain the property, lien or obligation as security for repayment. The 
court may, on due notice, order any such transfer or obligation to be 
preserved for the benefit of the estate, and in that event, the 
receiver shall succeed to and may enforce the rights of the purchaser, 
lienor, or obligee.
    (b) Personal Liability.--Every person receiving any property from 
the reinsurer or any benefit thereof which is a fraudulent transfer 
under this title shall be personally liable and shall be bound to 
account to the liquidator.
    (c) Regulations by Commission.--The Commission shall promulgate 
such rules and regulations that are necessary to implement this 
section.

SEC. 349. VOIDABLE PREFERENCES AND LIENS.

    (a) In General.--A preference is a transfer of any of the property 
of a reinsurer to or for the benefit of a creditor, for or on account 
of an antecedent debt, made by the reinsurer within 1 year before the 
filing of a successful petition for liquidation under this Act, the 
effect of which transfer may be to enable the creditor to obtain a 
greater percentage of his debt than another creditor of the same class 
would receive. If a liquidation order is entered while the reinsurer is 
already subject to a receivership order, then such transfers shall be 
deemed preferences if made within 1 year before the filing of the 
successful petition for receivership, or within 2 years before the 
filing of the successful petition for liquidation, whichever time is 
shorter.
    (b) Recovery of Property.--Where the preference is voidable, the 
receiver may recover the property or, if it has been converted, its 
value, from any person who has received or converted the property; 
except where a bona fide purchaser or lienor has given less than fair 
value, he shall have a lien upon the property to the extent of the 
consideration actually given by him. Where a preference by way of lien 
or security title is voidable, the court may on due notice order the 
lien or title to be preserved for the benefit of the estate, in which 
even the lien or title shall pass to the liquidator.
    (c) Regulations by the Commission.--The Commission shall promulgate 
rules and regulations specifying the circumstances under which a 
preference may be 
voided.

SEC. 350. SETOFFS.

    (a) In General.--Mutual debts or mutual credits, whether arising 
out of one or more reinsurance or other contracts between the reinsurer 
in receivership and another person shall be set off and the balance 
only shall be allowed or paid.
    (b) Limitations on Setoff.--No setoff shall be allowed in favor of 
a person if--
            (1) the circumstances creating the obligation of the 
        insurer or reinsurer in receivership occurred after the 
        effective date of the cancellation or termination of policies 
        in effect at the time of the entry of the receivership order;
            (2) the obligation of the insurer or reinsurer to the 
        person was purchased by or transferred to the person with the 
        intent of its being used as a setoff;
            (3) the obligation of the insurer or reinsurer is owed to 
        an affiliate of the person or to any other entity or 
        association other than the person;
            (4) the obligation of the person is owed to an affiliate of 
        the insurer or reinsurer, or to any other person;
            (5) the obligation of the person is to pay an assessment 
        levied against the members or subscribers of the insurer or 
        reinsurer, or is to pay a balance upon a subscription to the 
        capital stock of the insurer or reinsurer, or is in any other 
        way in the nature of a capital contribution; or
            (6) the obligations between the person and the insurer or 
        reinsurer arise out of transactions where either the person of 
        the insurer or reinsurer has assumed risks and obligations from 
        the other party and then has ceded back to that party 
        substantially the same risks and obligations.
    (c) Debts Due and Payable.--The receiver shall provide persons 
claiming a setoff with the accounting statements identifying debts 
which are due and payable. Where a person owes amounts which are due 
and payable, against which the person asserts setoff of mutual credits 
which may become due and payable from the insurer or reinsurer in 
receivership in the future, the person shall promptly pay to the 
receiver the amounts due and payable. The receiver shall promptly and 
fully refund, to the extent of the person's prior payments, any mutual 
credits that become due and payable to the person by the insurer or 
reinsurer in receivership.

SEC. 351. RECOVERY OF PREMIUMS OWED.

    The Commission shall promulgate the rules and regulations regarding 
the recovery of premiums owed to a reinsurer that is being liquidated 
by the Commission.

SEC. 352. PRIORITY OF DISTRIBUTION.

    The priority of distribution of claims from the reinsurer's estate 
shall be in accordance with the order in which each class of claims is 
herein set forth. Every claim in each class shall be paid in full or 
adequate funds retained for such payment before the members of the next 
class receive any payment. No subclasses shall be established within 
any class. The order of distribution of claims shall be:
            (1) Class 1.--The costs and expenses of administration 
        during liquidation, including but not limited to--
                    (A) the actual and necessary costs of preserving or 
                recovering the assets of the insurer;
                    (B) compensation for all authorized services 
                rendered in the liquidation, including reasonable 
                compensation to the receiver as approved by the court 
                to cover the portion of the total expenses of the 
                receiver which are reasonably related to the conduct by 
                it of the rehabilitation or liquidation of the 
                reinsurer, without provision for any profit to the 
                receiver;
                    (C) any necessary filing fees;
                    (D) the fees and mileage payable to witnesses; and
                    (E) reasonable attorney's fees and other 
                professional services rendered in the rehabilitation 
                and liquidation.
            (2) Class 2.--Reasonable compensation to employees for 
        services performed to the extent that they do not exceed 2 
        months of monetary compensation and represent payment for 
        services performed within 1 year before the filing of the 
        petition for liquidation. Principal officers and directors 
        shall not be entitled to the benefit of this priority except as 
otherwise approved by the receiver and the court. Such priority shall 
be in lieu of any similar priority which may be authorized by law as to 
wages or compensation of employees.
            (3) Class 3.--All claims under reinsurance contracts issued 
        by the reinsurer, unearned premiums and other premium refunds.
            (4) Class 4.--Claims for any amount due an assuming 
        reinsurer or ceding insurer for sums due under reinsurance 
        contracts entered into with the reinsurer in receivership.
            (5) Class 5.--Claims for punitive or exemplary damages and 
        any claim for any amount due an insurer, insurance pool, or 
        underwriting association as subrogated recoveries, 
        contribution, indemnification, or otherwise. All other claims 
        of general creditors not falling within any other priority 
        under this section, including claims for taxes and debts due 
        the Federal Government or any State or local government.
            (6) Class 6.--Claims filed late and all other claims other 
        than claims under classes 7 and 8.
            (7) Class 7.--Surplus or contribution notes, or similar 
        obligations, and premium refunds on assessable policies.
            (8) Class 8.--The claims of stockholders or other owners in 
        their capacity as shareholders.

SEC. 353. UNCLAIMED AND WITHHELD FUNDS.

    All unclaimed funds subject to distribution remaining in the 
receiver's possession at the time it applies to the court for discharge 
including the amount distributable to any creditor, shareholder, or 
other person who is unknown or cannot be found, shall be paid into the 
court and disposed of as under chapter 129 of title 28, United States 
Code.

SEC. 354. TERMINATION OF PROCEEDINGS.

    (a) Business Concluded.--When all business regarding the 
liquidation of a reinsurer has been concluded, the Commission as 
receiver shall apply to the court for discharge.
    (b) Petition To Reopen.--After the liquidation proceeding has been 
terminated and the receiver discharged, the Commission or other 
interested party may at any time petition the district court to reopen 
the proceedings for good cause, including the discovery of additional 
assets. If the court is satisfied that there is justification for 
reopening, it shall so order.

SEC. 355. CONSTRUCTION.

    Nothing in this Act may be construed as being in conflict with any 
treaty or other international agreement to which the United States is a 
party.

SEC. 356. LIMITATION ON TRANSACTION OF REINSURANCE.

    No insurer or reinsurer shall transact the business of reinsurance 
in the United States without complying with the applicable provisions 
of this Act.

SEC. 357. PREEMPTION.

    This Act is intended to preempt all State laws regulating 
reinsurers.

SEC. 358. EXISTING LICENSES AND CONTRACTS.

    (a) Disclaimer.--No provision of this title shall apply with 
respect to the transaction of reinsurance until 2 years following the 
date of enactment.
    (b) Contracts.--No provision of this title shall be deemed to 
modify or invalidate any contract lawfully in force prior to 2 years 
following the date of enactment of this title.

SEC. 359. PROTECTION OF CONFIDENTIAL INFORMATION.

    Section 1905 of title 18, United States Code, is amended by 
inserting ``a consultant to the Office of Reinsurance Regulation'' 
after ``or agency thereof,''.

           TITLE IV--NATIONAL INSURANCE GUARANTY CORPORATION

SEC. 401. ESTABLISHMENT OF THE CORPORATION.

    (a) In General.--There is hereby established a non-profit 
Corporation to be known as the ``National Insurance Guaranty 
Corporation'' (herein referred to as ``the Corporation'') which shall 
be an instrumentality of the United States.
    (b) Status.--The Corporation shall be deemed to be an agency of the 
United States for purposes of subchapter II of chapter 5 and chapter 7 
of title 5, United States Code, when it is acting as a corporation. The 
Corporation shall also be deemed to be an agency of the United States 
when it is acting as a liquidator of an insolvent member insurer.
    (c) Duties.--The Corporation shall--
            (1) provide a program for the payment of covered claims 
        under certain life, health, and property and casualty insurance 
        policies, and any other insurance policies deemed appropriate 
        by the Board of Directors;
            (2) assess the cost of such program among member insurers;
            (3) provide a uniform national system of administration for 
        the liquidation of insolvent member insurers; and
            (4) perform any other function authorized under this title.
    (d) Government Assistance.--The Corporation shall receive no 
financial assistance, direct or indirect from the United States except 
as provided by section 416 of this title.
    (e) Audit by the General Accounting Office.--The financial 
transactions of the Corporation shall be subject to audit by the 
General Accounting Office.

SEC. 402. DEFINITIONS.

    As used in this title, the term:
            (1) ``Member insurer'' or ``insurer'' means an insurer 
        which has an interstate insurance license.
            (2) ``State insurance regulator'' means State Insurance 
        Department.

SEC. 403. BOARD OF DIRECTORS.

    (a) Management.--The management of the Corporation shall be vested 
in a Board of Directors consisting of 3 members. The members shall be 
the Insurance Regulatory Commission, the Secretary of the Treasury, and 
the Comptroller of the Currency.
    (b) Chairperson.--The Chairperson of the Corporation shall be the 
Insurance Regulatory Commission.
    (c) Compensation and Expenses.--Members of the Board of Directors 
shall receive allowances in accordance with subchapter I of chapter 57 
of title 5, United States Code, for necessary expenses of travel, 
lodging, and subsistence incurred in attending meetings and other 
activities of the Corporation, as set forth in the bylaws issued by the 
Corporation. Members of the Board of Directors shall receive no 
additional pay by reason of service on such Board.
    (d) Vacancy.--In the event of a vacancy in the Office of the 
Comptroller of the Currency or the Office of Secretary of the Treasury 
and pending the appointment of a successor, or during the absence or 
disability of the Comptroller of the Currency or the Secretary of the 
Treasury, the Acting Comptroller of the Currency or the Acting 
Secretary of the Treasury, as the case may be, shall be a member of the 
Board of Directors.

SEC. 404. DUTIES AND RESPONSIBILITIES OF THE BOARD.

    (a) In General.--The Board of Directors shall have the following 
duties and responsibilities with respect to the Corporation--
            (1) to establish the overall policies, strategies, and 
        goals for the Corporation;
            (2) to establish all rules, regulations, bylaws, 
        principles, procedures, and guidelines that may be adopted or 
        announced by the Corporation; and
            (3) to establish such national advisory and regional boards 
        as the Board of Directors determines to be appropriate.
    (b) Establishment of Fund Accounts and Claims Account.--The Board 
of Directors shall establish ``guarantee fund accounts'' (hereinafter 
referred to as ``fund accounts'') for the principal lines of insurance 
of life, health, property and casualty, and may establish within those 
fund accounts, separate ``claims accounts'' for each line of insurance 
to which this title applies. ``Line of insurance'' for purposes of this 
section shall mean a category of insurance to which premiums are 
allocated for purposes of reporting on the form of annual financial 
statement prescribed by the Commission. The Board of Directors may 
establish claim accounts for such other lines of insurance as 
appropriate.
    (c) Directorates for Fund Accounts.--The Board of Directors shall 
appoint separate directorates for each fund account. Each directorate 
shall be responsible for the administration of the fund account under 
its authority. Each directorate shall consist of 5 members each and 
shall serve for a term of 4 years. Each directorate shall be 
compensated consistent with this Act.
    (d) Review of the Directorates.--The Board of Directors shall--
            (1) review the performance of each directorate on a 
        periodic basis including its work, management activities and 
        internal controls, and the performance of the directorates 
        relative to their approved budgets; and
            (2) require from each directorate any reports, documents, 
        and records it deems necessary to carry out its oversight 
        responsibilities.
    (e) Covered Policies and Contracts.--The Board of Directors shall 
establish the type of insurance policies and contracts that are covered 
under this title and the limits on the amount of benefits available 
pursuant to such coverage. Under no circumstances shall this title 
apply to any portion of a claim which is not based on an insurance 
policy or contract.
    (f) Reinsurance.--The Board of Directors shall determine to what 
extent, if any, reinsurance shall be covered under this title.
    (g) Assessments.--The Board of Directors shall establish the 
assessments that member insurers are required to pay pursuant to 
section 408 of this title.

SEC. 405. NATIONAL INSURANCE GUARANTY FUND.

    (a) Establishment of Fund.--There is hereby established a fund to 
be known as the National Insurance Guaranty Fund (hereinafter referred 
to as ``the Fund'') which shall be used by the Corporation to carry out 
the purposes of this title. The Fund shall consist of all payments made 
by member insurers pursuant to assessments established by the Board of 
Directors under section 404(g), interest received on bank accounts or 
investments, amounts recovered under title V of this Act, and any other 
amounts consistent with this title.
    (b) Treasury Deposits.--All amounts described in paragraph (a) 
shall be deposited with the Treasurer of the United States for the 
account of the Corporation and may be expended by the Corporation to 
defray the expenses incurred in carrying out the provisions of this 
title and 
title V.
    (c) Availability of Fund.--Money in the Fund shall be available 
upon requisition by the Corporation without fiscal year limitation, for 
making payments on covered claims, for providing assistance and making 
expenditures in connection with the Corporation's liquidation 
responsibilities in title V, and for such administrative and other 
expenses incurred in carrying out the purposes of this title as it may 
determine to be proper. Such moneys shall be available for insolvencies 
which occur later than 2 years after the date of enactment of this Act.
    (d) Investments of the Fund.--The Board of Directors may authorize 
the Secretary of the Treasury to invest and reinvest such portions of 
the Fund as the Board may determine are not needed for current 
operations, in any interest-bearing securities of the United States or 
in any securities guaranteed as to both principal and interest by the 
United States or in bonds or other obligations which are lawful 
investments for fiduciary, trust and public funds of the United States, 
and the income therefrom shall constitute a part of the Fund.
    (e) Covered Claims.--Covered claims, including the direct expenses 
of handling such covered claims, which the Corporation pays or becomes 
obligated to pay by reason of its guaranty obligations, shall be 
allocated to the appropriate fund account, or where applicable, the 
appropriate claims account based upon rules and regulations promulgated 
by the Board of Directors. Claims covered by this title shall not 
include any amount awarded as punitive or exemplary damages, any amount 
sought as a return of premium under any retrospective rating plan, or 
any amount due any reinsurer, insurer, insurance pool, or underwriting 
association as subrogation recoveries or otherwise.
    (f) Amounts Recovered on Behalf of Fund.--Amounts recovered from 
any source as reimbursement, subrogation, deferred assessments, or 
other recovery of amounts previously paid out or incurred pursuant to 
the Corporations' guaranty obligations shall be credited to the 
appropriate fund account, or where applicable, the appropriate claims 
account which has been charged with the guaranteed claim.

SEC. 406. CORPORATE POWERS.

    (a) Corporate Body.--Upon the date of enactment of this Act, the 
Corporation shall become a corporate body and shall be an 
instrumentality of the United States, and as such shall have power--
            (1) to adopt, alter, and use a corporate seal;
            (2) to have succession until dissolved by an Act of 
        Congress;
            (3) to pay, as guarantor, claims against insolvent members 
        to the extent and in the manner provided by the rules and 
        regulations promulgated by the Corporation;
            (4) to make contracts, to execute all instruments necessary 
        and appropriate in the exercise of its power, to incur 
        liabilities, and to do any and all other acts and things as may 
        be necessary or incidental to the conduct of its business and 
        the exercise of all other rights and powers granted to the 
        Corporation by this Act;
            (5) to make advances or other payments;
            (6) to sue and be sued in its corporate capacity in any 
        court of competent jurisdiction;
            (7) to appoint such officers, employees, attorneys, agents, 
        adjusters, examiners, and other persons as may be necessary for 
        the performance of its duties, to define their duties, fix 
        their compensation, require bonds of them and fix the penalty 
        thereof, and to dismiss such officers or employees;
            (8) to conduct its business (including the carrying on of 
        operations and the maintenance of offices) and to exercise all 
        other rights and powers granted to it by this Act in any State 
        or other jurisdiction without regard to any qualification, 
        licensing or other statute in such State or other jurisdiction;
            (9) to acquire, hold, lease, purchase, improve, mortgage, 
        maintain or dispose of at public or private sale, real and 
        personal property, and otherwise exercise all the usual 
        incidents of ownership of property necessary and convenient to 
        the operations of the Corporation;
            (10) to levy assessments upon member insurers in the manner 
        and to the extent provided by the rules and regulations of the 
        Corporation, to collect, or enforce by legal proceedings, if 
        necessary, the payment of all assessment for which any insurer 
        may be liable under this title; to collect any other obligation 
        due to the Corporation or the Fund;
            (11) to pay the administrative expenses of the Corporation, 
        and to provide the funds necessary to discharge the 
        Corporation's liquidation obligations under title V of this 
        Act; and
            (12) to use the United States mails in the same manner and 
        under the same conditions as other departments and agencies of 
        the United States.
    (b) National Insurance Guaranty Corporation.--No individual, 
association, partnership, or corporation, other than the Corporation, 
shall hereafter use the words ``National Insurance Guaranty 
Corporation'' or any combination of such words, as the name or part 
thereof under which he or it shall do business. Any violation of this 
subsection shall be punishable by a fine of not more than $100,000 for 
each day during which such violation is committed.

SEC. 407. MEMBERSHIP.

    Member insurers of the Corporation shall be all insurers with an 
interstate insurance license. The Board of Directors shall prescribe 
such additional qualifications for membership as are appropriate for 
the protection of policyholders. Such additional qualifications shall 
be applicable to members 2 years after the adoption of any such 
additional qualification. Such additional qualification shall be 
reasonably related to the enhancement of the financial solidity of 
insurers and shall have uniform application.

SEC. 408. ASSESSMENTS.

    (a) In General.--All members of the Corporation shall be subject to 
assessments to cover administrative costs, guaranteed claims charged 
against the Fund, and any other expense deemed appropriate under this 
title and title V, as prescribed in the rules and regulations 
promulgated by the Corporation.
    (b) Reserve Accounts.--All member insurers shall pay the 
assessments determined under section 404(g) of this title and the 
moneys collected pursuant to such assessments shall be deposited in 
reserve accounts to be used for the purposes outlined in subsection 
(a).
    (c) Direct Premiums, Risk-Based Assessments.--Such assessments 
shall be based on an insurer's direct premiums, risk-based premiums, or 
any other standard determined by the Board of Directors.
    (d) Member Liability.--A member insurer shall have no liability, 
under any State law or State guaranty fund, for any assessments for an 
insurance insolvency which was not commenced on or before the date of 
enactment of this Act. A member insurer shall remain liable, 
notwithstanding its membership in the Corporation, for any assessments 
for which it would have been liable under any State law or State 
guaranty fund, for an insurance insolvency which was commenced on or 
before the date it became a member insurer of the Corporation.

SEC. 409. EXCHANGE OF INFORMATION.

    At the request of the Corporation, State insurance regulators and 
other State authorities shall furnish it with any records, reports, 
results of examinations and inspections, orders, recommendations, or 
other information in their possession relevant to the financial 
condition of a member.

SEC. 410. LIABILITY OF DIRECTORS AND OFFICERS OF THE CORPORATION.

    No director, officer, agent, or other representative of the 
Corporation shall be individually liable to any person, firm or 
corporation, including the Corporation for any act or omission to act, 
or for any liability incurred or assumed, on behalf of the Corporation. 
Any such liability so incurred or assumed shall be collectible only out 
of the Fund.

SEC. 411. TAX EXEMPTION.

    (a) Corporation Exempted From Taxes.--The Corporation, including 
its franchise, capital, reserves, surplus, and its income, shall be 
exempt from all taxation now or hereafter imposed by the United States, 
by any Territory, dependency, or possession thereof, or by any State, 
county, municipality, or local taxing authority, except that any real 
property of the Corporation shall be subject to State, Territorial, 
county, municipal or local taxation to the same extent according to its 
value as other real property is taxed.
    (b) Acting as Liquidator.--When acting as a liquidator, the 
following provisions shall apply:
            (1) The Corporation including its franchise, capital, 
        reserves, surplus, and its income, shall be exempt from all 
        taxation imposed by any State, county, municipality, or local 
        taxing authority, except that any real property of the 
        Corporation shall be subject to State, territorial, county, 
        municipal, or local taxation to the same extent according to 
        its value as other real property is taxed.
            (2) No property of the Corporation shall be subject to 
        levy, attachment, garnishment, foreclosure, or sale without the 
        consent of the Corporation, nor shall any involuntary lien 
        attach to the property of the Corporation.

SEC. 412. REPORTS BY THE CORPORATION.

    (a) Annual Reports.--The Corporation shall annually submit a full 
report of its operations, activities, budget, receipts, and 
expenditures for the preceding 12-month period. The report shall 
include, with respect to the Fund, an analysis by the Corporation of--
            (1) the current financial condition of each fund account;
            (2) the purpose, effect, and estimated cost of each 
        resolution action taken for a member insurer during the 
        preceding year;
            (3) the exposure of each fund account to changes in those 
        economic factors most likely to affect the condition of the 
        Fund;
            (4) the current estimate of the resources needed for the 
        Fund to achieve the purpose of this Act; and
            (5) any findings, conclusions, and recommendations for 
        legislative and administrative action considered appropriate in 
        order for the Corporation to handle future insurance 
        insolvencies.
Such report shall be submitted to the Congress and the President as 
soon as practicable after the first day of January each day.
    (b) Audits by the Comptroller General.--The Comptroller General 
shall audit annually the financial transactions of the Corporation and 
the Fund in accordance with generally accepted government auditing 
standards. All books, records, accounts, reports, files and property 
belonging to or used by the Corporation, the Fund, or by an independent 
certified public accountant retained to audit the Fund's financial 
statements, shall be made available to the Comptroller General.
    (c) GAO Audit.--The financial transaction of the Corporation shall 
be audited by the General Accounting Office, at least once in every 3 
years, in accordance with the principles and procedures applicable to 
commercial corporate transactions and under such rules and regulations 
as may be prescribed by the Comptroller General of the United States. 
The audit shall be conducted at the place or places where accounts of 
the Corporation are normally kept. The representatives of the General 
Accounting Office shall have access to all books, account, records, 
reports, files, and all other papers, things, or property belonging to 
or in use by the Corporation pertaining to its financial transactions 
and necessary to facilitate the audit, and they shall be afforded full 
facilities for verifying transactions with the balances or securities 
held by depositories, fiscal agents and custodians. All such books, 
accounts, records, reports, files, papers, and property of the 
Corporation shall remain in possession and custody of the Corporation.
    (d) Report of Audits.--A report of each audit conducted under this 
section shall be made by the Comptroller General to the Congress not 
later than 6 months following the close of the last year covered by 
such audit. The report to the Congress shall set forth the scope of the 
audit and shall include a statement of assets and liabilities and 
surplus or deficit; a statement of sources and application of funds and 
such comments and information as may be deemed necessary to inform 
Congress of the financial operations and conditions of the Corporation, 
together with such recommendations with respect thereto as the 
Comptroller General may deem advisable. The report shall also show 
specifically any program, expenditure, or other financial transaction 
or undertaking observed in the course of the audit, which in the 
opinion of the Comptroller General has been carried on or made without 
authority of law. A copy of each report shall be furnished to the 
President, to the Secretary of the Treasury, Comptroller of the 
Currency and to the Corporation at the time submitted to Congress.
    (e) Assistance in Audits.--For the purpose of conducting such 
audit, the Comptroller General is authorized to employ by contract, 
without regard to section 3709 of the Revised Statutes (41 U.S.C. 5), 
professional services of firms and organizations of certified public 
accounts, with the concurrence of the Corporation, for temporary 
periods or for special purposes. The Corporation shall reimburse the 
General Accounting Office for the cost of any such audit as billed 
thereof by the Comptroller General, and the General Accounting Office 
shall deposit the sums so reimbursed into the Treasury as miscellaneous 
receipts. The financial statements shall be examined by an independent 
public accountant or firm of independent public accountants, selected 
by the Corporation, and shall be accompanied by the report thereon of 
such accountant or firm. The report shall be submitted to the Congress, 
and to the State insurance regulators in each of the States, and shall 
be made available for dissemination to the public.

SEC. 413. PREEMPTION.

    No State shall assess an insurer with an interstate insurance 
license for any insurer insolvency occurring 2 years after the date of 
enactment of this Act.

                TITLE V--LIQUIDATION OF MEMBER INSURERS

SEC. 501. CORPORATION AS LIQUIDATOR.

    Notwithstanding any other provision of Federal law, the law of any 
State, or the constitution of any State, the Corporation shall act as 
receiver of a member insurer for purposes of liquidation. The United 
States district courts shall have exclusive jurisdiction over a 
proceeding to appoint the Corporation as liquidator of a member insurer 
and, following such appointment, to supervise the liquidation of such 
member in conformity with the provisions of this title.

SEC. 502. DEFINITIONS.

    For the purposes of this title:
            (1) ``Corporation'' means the National Insurance Guaranty 
        Fund Corporation.
            (2) ``Claimant'' means any insured making a first party 
        claim or any person instituting a liability claim, provided 
        that no person who is an affiliate of the insolvent insurer may 
        be a claimant.
            (3) ``The District Court'' and ``the Court'' means the 
        United States District Court which by order approves the 
        transfer of the receivership of an insurer to the Corporation 
        for liquidation purposes and which thereafter has general 
        jurisdiction and control over the receivership proceeding.
            (4) ``Creditor'' is a person having any claim, whether 
        matured or unmatured, liquidated or unliquidated, secured or 
        unsecured, absolute, fixed or contingent.
            (5) ``Insolvency'' or ``insolvent'' means that an insurer 
        is unable to pay its obligations when they are due, or that its 
        admitted assets (as determined under the laws and regulations 
        of the State of domicile) do not exceed its liabilities plus 
        the greater of--
                    (A) any capital and surplus required by law for its 
                organization; or
                    (B) the total par or stated value of its authorized 
                capital stock.
        For purposes of this title, liabilities shall include but not 
        be limited to reserves required by statute imposed by the State 
        insurance regulator upon a subject company at the time of 
        licensing or subsequent thereto.
            (6) ``Liquidator'' means the Corporation when acting as 
        receiver of an insurer in carrying out an order that the 
        insurer's assets, business and affairs be liquidated.
            (7) ``Member Insurer'' or ``insurer'' means an insurer 
        which has an interstate insurance license.
            (8) ``Receiver'' means a person which has possession and 
        control, or the right to possession and control, of the assets, 
        business and affairs of an insurer pursuant to appointment by a 
        court of competent jurisdiction for the purpose of liquidating 
        the affairs of the insurer.

SEC. 503. PETITION FOR APPOINTMENT.

    (a) Filing and Service of Petition.--A proceeding to appoint the 
Corporation as liquidator of a member insurer shall be commenced by the 
filing of a petition seeking such appointment in a United States 
district court and the service of a copy of the petition upon the 
Corporation.
    (b) Who May File.--A petition may be filed by a State insurance 
regulator or a receiver acting under its authority, either of which has 
the unconditional right to possession and control of the business, 
assets and affairs of the member insurer for purposes of conservation 
or rehabilitation pursuant to an order of a court of competent 
jurisdiction which has not been stayed or superseded.
    (c) Where Filed.--The petition, if filed by a State insurance 
regulator or a receiver acting under the authority of a State insurance 
regulator, shall be filed in the United States District Court for the 
district in which the member insurer has its principal office of 
domicile or in which is located the court that issued the order 
referred to in subsection (b).
    (d) Response to Petition.--Within 10 days after the service upon it 
of a petition under subsection (a) the Corporation shall file and serve 
a response thereto, accepting or rejecting the proposed appointment, 
stating the ground or grounds of such rejection. The Corporation may 
reject the proposed appointment only if the insurer was not a member of 
the Corporation on the date the petition was filed.

SEC. 504. ORDER APPOINTING CORPORATION LIQUIDATOR.

    (a) In General.--The Corporation shall accept the appointment as 
receiver for purposes of liquidation of an insolvent member insurer.
    (b) Regular Accounting to Court.--The order appointing the 
Corporation as receiver shall require regular accounting of the 
Corporation's administration of the insurer's assets to the court. 
Accounting shall be at such intervals as the court specifies in its 
order or by rule, but no less frequently than semiannually. Copies of 
the accounting shall be served upon the State insurance regulators of 
the State of the insurer's domicile and of each State in which it is or 
was licensed or transacted an insurance business.
    (c) Corporation Not Subject to Any Other Authority.--When acting as 
a receiver pursuant to an appointment described in this title, the 
Corporation shall not be subject to the direction or supervision of any 
other agency or department of the United States or any State in the 
exercise of the Corporations' rights, powers, and privileges.

SEC. 505. EFFECT OF ORDER.

    (a) Title.--The Corporation shall hold and have title to all of the 
assets, property, contracts and rights of action, books, and records of 
the insurer, wherever located. The State insurance regulator, the State 
receiver, and any ancillary State receivers shall, upon demand by the 
Corporation, promptly transfer all assets and records to the insurer, 
or of their respective receiverships to the Corporation.
    (b) Entry of Order.--The entry of an order appointing the 
Corporation as liquidator shall not constitute an anticipatory breach 
of any contract of the insurer, nor provide ground for revocation or 
cancellation of any such contract other than by the Corporation as 
liquidator.
    (c) Rights and Liabilities.--Upon issuance of the order, the rights 
and liabilities of the insurer and of its creditors, and all other 
persons interested in its estate, shall be fixed as of the date of 
entry of the order of liquidation.

SEC. 506. JURISDICTION OVER PROPERTY OF INSURER.

    The filing of a petition under section 503 shall immediately vest 
the district court with exclusive jurisdiction over the insurer and its 
property wherever located, and over all parties to the proceedings by 
which the State insurance regulator or the receiver acting under its 
authority, acquired the right to possession and control of the 
business, assets and affairs of the insurer and shall suspend the 
further jurisdiction of other courts and administrative bodies with 
respect to any such proceedings.

SEC. 507. STAY OF ACTIONS.

    (a) In General.--The entry of an order appointing the Corporation 
as liquidator shall operate as a stay of the commencement or 
continuation of any action or proceeding in any State or Federal court, 
or any administrative or other proceeding, against the insolvent 
insurer or against an insured of the insurer on a claim for which the 
insurer may be liable, or against the Corporation as liquidator, except 
as provided in subsection (b).
    (b) Judicial Relief From Stay.--The district court shall have power 
to grant relief from the stay provided in subsection (a) in such cases, 
and upon such terms, as the court determines to be consistent with the 
preservation of assets and the efficient administration of the estate 
of the insurer. Such relief may be granted upon the application of any 
party in interest, and may be granted as to particular cases or as to 
classes of cases as may be prescribed by the court's order.
    (c) Actions by the Liquidators.--Upon issuance of an order 
appointing the Corporation as liquidator, the Corporation may within 2 
years from such order, or such other longer time as applicable law may 
permit, institute an action or proceeding on behalf of the estate of 
the insurer upon any cause of action against which the period of 
limitation fixed by applicable law has not expired at the time of the 
filing of the petition upon which such order is entered.
    (d) Statute of Limitations.--No statute of limitations or defense 
of laches shall run with respect to any cause of action against an 
insurer between the filing of a petition for liquidation and the denial 
of the petition. Any action against the insurer that might have been 
commenced when the petition was filed may be commenced within 60 days 
after the petition is denied.

SEC. 508. COOPERATION OF OFFICERS, OWNERS AND EMPLOYEES.

    Any officer, manager, director, trustee, owner, employee or agent 
of any insurer, or any other person with authority over or in charge of 
any segment of the insurer's affairs including any person who exercises 
control directly or indirectly over activities of the insurer through 
any holding company or other affiliate of the insurer, shall cooperate 
with the Corporation. ``Cooperate'' shall include, but shall not be 
limited to the following:
            (1) To reply promptly in writing to any inquiry from the 
        Corporation requesting such a reply.
            (2) To make available to the Corporation any books, 
        accounts, documents, or other records or information or 
        property of or pertaining to the insurer and in the possession, 
        custody or control of such persons.

SEC. 509. EVIDENCE OF WRONGDOING.

    If there is reason to believe that there has been criminal or 
tortious conduct, or breach of any contractual or fiduciary obligation 
detrimental to the insurer by any officer, manager, agent, broker, 
employee or other person, the Corporation shall refer such matter to 
the Commission and the appropriate State regulator for handling.

SEC. 510. CONTINUANCE OF COVERAGE.

    The Corporation shall issue rules and regulations regarding the 
continuance of insurance coverage once an insurer has been ordered 
liquidated.

SEC. 511. POWERS OF THE CORPORATION AS LIQUIDATOR.

    (a) Powers.--The Corporation as liquidator shall have the power--
            (1) to employ employees, agent, attorney, actuaries, 
        accountant, appraisers, consultants and such other personnel as 
        it may deem necessary to conduct the liquidation;
            (2) to appoint, with the approval of the court, an advisory 
        committee of representatives of policy holders, claimants, 
        creditors, and other persons or groups with substantial 
        interest in the liquidation proceeding, if such committee be 
        deemed necessary;
            (3) to audit the books and records of all agents of the 
        insurer insofar as those records relate to the business 
        activities of the insurer;
            (4) to collect all debts and moneys due and claims 
        belonging to the insurer, wherever located;
            (5) to conduct public and private sales of the property of 
        the insurer;
            (6) to continue to prosecute and to institute in the name 
        of the insurer or in its own name any and all suits and other 
        legal proceedings, and to abandon the prosecution of claims it 
        deems unprofitable to pursue further;
            (7) to assert all defenses available to the insurer as 
        against third persons, including statutes of limitation and 
        statutes of fraud; and
            (8) to promulgate rules and regulations regarding the 
        allowance or disallowance of claims and providing for 
        administrative determination of claims and review of such 
        determination.
    (b) Additional Powers.--In addition to and not in derogation of the 
powers conferred and duties imposed by this title on the Corporation as 
receiver for purposes of liquidation, the Corporation, to the extent 
not inconsistent with such powers and duties shall have any other power 
conferred on or any duty (which is related to the exercise of such 
power) imposed on a receiver for any insolvent insurer under any other 
provision of law.

SEC. 512. NOTICE TO CREDITORS AND OTHERS.

    (a) Notice of Liquidation.--The Corporation shall give or cause to 
be given notice of the liquidation order as soon as possible--
            (1) by first class mail and either by telegram or telephone 
        to the Department of Insurance of each jurisdiction in which 
        the insurer is doing business;
            (2) by first class mail to all insurance agents of the 
        insurer;
            (3) by first class mail to all persons known or reasonably 
        expected to have claims against the insurer including all 
        policyholders, at their last known address as indicated by the 
        records of the insurer; and
            (4) by publication in a newspaper of general circulation in 
        the county in which the insurer has its principal place of 
        business and in such other locations as the Corporation deems 
        appropriate.
    (b) Filing Claims.--Except as otherwise established by the 
liquidator with approval of the Court, notice to potential claimants 
under this title shall require claimants to file with the liquidator 
their claims together with proper proof, by a date specified in the 
notice which shall be not less than 90 days after the publication of 
such notice. All claimants shall have a duty to keep the liquidator 
informed of any changes of address.

SEC. 513. PROOF OF CLAIMS.

    (a) Rules and Regulations.--The Corporation shall promulgate rules 
and regulations regarding--
            (1) the filing of claims;
            (2) information that must be contained in a proof of claim;
            (3) third-party claims;
            (4) secured Creditor's claims;
            (5) claims of surety; and
            (6) disputed claims.
    (b) Additional Rules and Regulations.--The Corporation shall 
promulgate any other such rules and regulations it deems necessary 
regarding claims.

SEC. 514. PAYMENT OF CLAIMS.

    (a) Payment of Claims by Corporation.--In the case of a liquidation 
of any insolvent member insurer, payment of claims against the 
insolvent insurer shall be made by the Corporation as soon as possible, 
either by cash or by transferring the policy to a new insurer, or any 
other means determined by the rules and regulations promulgated by the 
Corporation.
    (b) Disputed Claims.--In the case of any disputed claim relating to 
an insolvent insurer, the Corporation may resolve such disputed claims 
in accordance with regulations promulgated by the Corporation. If the 
Corporation has not promulgated procedures for resolving disputed 
claims, the Corporation may require the final determination of a court 
of competent jurisdiction before paying any such claims.
    (c) Judicial Review of Final Determination.--Final determination 
made by the Corporation shall be reviewable in accordance with chapter 
7 of title 5, United States Code (5 U.S.C. 701 et seq.), the United 
States Court of Appeals for the District of Columbia or the Court of 
Appeals for the Federal Judicial Circuit where the district court that 
ordered the liquidation is located. Any request for review of a final 
determination by the Corporation shall be filed with the appropriate 
Circuit Court of Appeals not later than 60 days after such 
determination is ordered.

SEC. 515. DUTIES OF AGENTS.

    (a) In General.--Every person who receives notice that an insurer 
which the person represents as an agent is the subject of a liquidation 
order shall within 30 days of such notice provide to the Corporation 
the information in the agency's records related to any policy issued by 
the insurer through the agent, and, if the agent is a general agent, 
the information in the general agent's records related to any policy 
issued by the insurer through an agent under contract to the general 
agent, including the name and address of such subagent.
    (b) Regulations by Corporation.--The Corporation shall promulgate 
rules and regulations defining an agent and any other rule or 
regulation regarding the duties of an agent as deemed necessary by the 
Board of Directors.

SEC. 516. FRAUDULENT TRANSFERS.

    (a) In General.--Every transfer made and every obligation incurred 
by an insurer within 3 years prior to the filing of a successful 
petition for liquidation under this title is fraudulent as to then 
existing and future creditors if made or incurred without fair 
consideration, or with actual intent to hinder, delay, or defraud 
either existing or future creditors. A transfer made or an obligation 
incurred by an insurer ordered to be liquidated under this title, which 
is fraudulent under this section, may be avoided by the liquidator, 
except as to a person who in good faith is a purchaser, lienor, or 
obligee for a present fair equivalent value, and except that any 
purchaser, lienor or obligee, who in good faith has given a 
consideration less than fair for such transfer, lien or obligation, may 
retain the property, lien or obligation as security for repayment. The 
Court may, on due notice, order any such transfer or obligation to be 
preserved for the benefit of the estate, and in that event, the 
receiver shall succeed to and may enforce the rights of the purchaser, 
lienor, or obligee.
    (b) Personal Liability.--Every person receiving any property from 
the insurer or any benefit thereof which is a fraudulent transfer under 
this title shall be personally liable and shall be bound to account to 
the liquidator.
    (c) Regulations by Corporation.--The Corporation shall promulgate 
such rules and regulations that are necessary to implement this 
section.

SEC. 517. VOIDABLE PREFERENCES AND LIENS.

    (a) In General.--A preference is a transfer of any of the property 
of an insurer to or for the benefit of a creditor, for or on account of 
an antecedent debt, made by the insurer within 1 year before the filing 
of a successful petition for liquidation under this Act, the effect of 
which transfer may be to enable the creditor to obtain a greater 
percentage of his debt than another creditor of the same class would 
receive. If a liquidation order is entered while the insurer is already 
subject to a rehabilitation order, then such transfers shall be deemed 
preferences if made within 1 year before the filing of the successful 
petition for rehabilitation, or within 2 years before the filing of the 
successful petition for liquidation, whichever time is shorter.
    (b) Recovery of Property.--Where the preference is voidable, the 
liquidator may recover the property or, if it has been converted, its 
value, from any person who has received or converted the property; 
except where a bona fide purchaser or lienor has given less than fair 
value, he shall have a lien upon the property to the extent of the 
consideration actually given by him. Where a preference by way of lien 
or security title is voidable, the court may on due notice order the 
lien or title to be preserved for the benefit of the estate, in which 
even the lien or title shall pass to the liquidator.
    (c) Regulations by the Corporation.--The Corporation shall 
promulgate rules and regulations specifying the circumstances under 
which a preference may be avoided.

SEC. 518. SETOFFS AND COUNTERCLAIMS.

    Mutual debts or mutual credits, whether arising out of one or more 
contracts between the insurer and another person in connection with any 
action or proceeding under this title shall be set off and the balance 
only shall be allowed or paid, except as otherwise provided by the 
rules and regulations promulgated by the Corporation.

SEC. 519. RECOVERY OF PREMIUMS OWED.

    The Corporation shall promulgate the rules and regulations 
regarding the recovery of premiums owed to an insolvent member insurer 
that is being liquidated by the Corporation.

SEC. 520. PRIORITY OF DISTRIBUTION.

    The priority of distribution of claims from the insurer's estate 
shall be in accordance with the order in which each class of claims is 
herein set forth. Every claim in each class shall be paid in full or 
adequate funds retained for such payment before the members of the next 
class receive any payment. No subclasses shall be established within 
any class. The order of distribution of claims shall be:
            (1) Class 1.--The costs and expenses of administration 
        during liquidation, including but not limited to--
                    (A) the actual and necessary costs of preserving or 
                recovering the assets of the insurer;
                    (B) compensation for all authorized services 
                rendered in the liquidation, including reasonable 
                compensation to the Corporation as approved by the 
                court to cover the portion of the total expenses of the 
                Corporation which are reasonably related to the conduct 
                by it of the rehabilitation or liquidation of the 
                insurer, without provision for any profit to the 
                Corporation;
                    (C) any necessary filing fees;
                    (D) the fees and mileage payable to witnesses; and
                    (E) authorized reasonable attorney's fees and other 
                professional services rendered in the rehabilitation 
                and liquidation.
            (2) Class 2.--Reasonable compensation to employees for 
        services performed to the extent that they do not exceed 2 
        months of monetary compensation and represent payment for 
        services performed within 1 year before the filing of the 
        petition for liquidation. Principal officers and directors 
        shall not be entitled to the benefit of this priority except as 
        otherwise approved by the Liquidator and the court. Such 
        priority shall be in lieu of any similar priority which may be 
        authorized by law as to wages or compensation of employees.
            (3) Class 3.--All claims under policies, including such 
        claims of the Federal or any State or local government, for 
        losses incurred (``loss claims'') and including third party 
        claims and such claims of the Corporation for claims paid by it 
        except the first $300 of any claim, other than claims for 
        workers' compensation, where the obligation of the insurer is 
        direct to the insured (or ``first party''). That portion of any 
        loss, indemnification for which is provided by other benefits 
        or advantages recovered or recoverable in discharge of familial 
        obligation of support or by way of succession at death or as 
        proceeds of life insurance, or as gratuities. No payment by an 
        employer to its employee shall be treated as a gratuity.
            (4) Class 4.--Claims under nonassessable policies for 
        unearned premium or other premium refunds, claims of general 
        creditors including claims of ceding and assuming insurers and 
        reinsurers in their capacity as such, claims for the first $300 
        of any claim excepted from payment by the deduction in 
        subsection (c) above, and claims of the Federal or any State or 
        local government except those under class 3 above. Claims, 
        including those of any governmental body for a penalty or 
        forfeiture, shall be allowed in this class only to the extent 
        of the pecuniary loss sustained from the act, transaction, or 
        proceeding out of which the penalty or forfeiture arose, with 
        reasonable and actual costs occasioned thereby. The remainder 
of such claims shall be postponed to class of claims under subsection 
(g).
            (5) Class 5.--Claims filed late and all other claims other 
        than claims under classes 6 and 7.
            (6) Class 6.--Surplus or contribution notes, or similar 
        obligations, and premium refunds on assessable policies. 
        Payments to members of domestic mutual insurance companies 
        shall be limited in accordance with applicable State law.
            (7) Class 7.--The claims of stockholders or other owners in 
        their capacity as shareholders.

SEC. 521. UNCLAIMED AND WITHHELD FUNDS.

    The Corporation shall promulgate rules and regulations for the 
handling of unclaimed and withheld funds.

SEC. 522. TERMINATION OF PROCEEDINGS.

    (a) Business Concluded.--When all business regarding the 
liquidation of a member insurer has been concluded, the Corporation as 
liquidator shall apply to the court for discharge.
    (b) Petition To Reopen.--After the liquidation proceeding has been 
terminated and the Liquidator discharged, the Corporation or other 
interested party may at any time petition the district court to reopen 
the proceedings for good cause, including the discovery of additional 
assets. If the court is satisfied that there is justification for 
reopening, it shall so order.

SEC. 523. STUDY BY THE BOARD.

    The Board of Directors for the Corporation shall make 
recommendations, including proposing legislation to the Congress, not 
later than 12 months after the date of enactment of this Act, on how to 
better achieve a uniform system of liquidation of insolvent insurers to 
be handled exclusively by the Corporation.

SEC. 524. PREEMPTION.

    Effective 2 years after enactment of this Act, the Corporation 
shall be the exclusive liquidator of insolvent member insurers.

                 TITLE VI--CRIMINAL AND CIVIL PENALTIES

SEC. 601. CRIMES BY OR AFFECTING PERSONS ENGAGED IN THE BUSINESS OF 
              INSURANCE WHOSE ACTIVITIES AFFECT INTERSTATE COMMERCE.

    (a) In General.--Chapter 47 of title 18, United States Code, is 
amended by adding at the end thereof the following new sections:
``Sec. 1037. Crimes by or affecting persons engaged in the business of 
              insurance whose activities affect interstate commerce
    ``(a)(1) Whoever is engaged in the business of insurance whose 
activities affect interstate commerce and knowingly, with the intent to 
deceive, makes any false material statement or report or willfully and 
materially overvalues any land, property or security--
            ``(A) in connection with any reports or documents presented 
        to any insurance regulatory official or agency or an agent or 
        examiner appointed by such official or agency to examine the 
        affairs of such person, and
            ``(B) for the purpose of influencing the actions of such 
        official or agency or such an appointed agent or examiner,
shall be punished as provided in paragraph (2).
    ``(2) The punishment for an offense under paragraph (1) is a fine 
of not more than $1,000,000 or imprisonment for not more than 10 years, 
or both, except that the term of imprisonment shall be not more than 15 
years if the statement or report or overvaluing of land, property, or 
security jeopardized the safety and soundness of an insurer.
    ``(b)(1) Whoever--
            ``(A) acting as, or being an officer, director, agent, or 
        employee of, any person engaged in the business of insurance 
        whose activities affect interstate commerce, or
            ``(B) is engaged in the business of insurance whose 
        activities affect interstate commerce or is involved (other 
        than as an insured or beneficiary under a policy of insurance) 
        in a transaction relating to the conduct of affairs of such a 
        business,
willfully embezzles, abstracts, purloins, or misappropriates any of the 
moneys, funds, premiums, credits, or other property of such person so 
engaged shall be punished as provided in paragraph (2).
    ``(2) The punishment for an offense under paragraph (1) is a fine 
of not more than $1,000,000 or imprisonment for not more than 10 years, 
or both, except that if such embezzlement, abstraction, purloining, or 
misappropriation described in paragraph (1) jeopardized the safety and 
soundness of an insurer, such imprisonment shall be not more than 15 
years. If the amount or value so embezzled, abstracted, purloined, or 
misappropriated does not exceed $5,000, whoever violates paragraph (1) 
shall be fined as provided in this title or imprisoned not more than 1 
year, or both.
    ``(c)(1) Whoever is engaged in the business of insurance and whose 
activities affect interstate commerce or is involved (other than as an 
insured or beneficiary under a policy of insurance) in a transaction 
relating to the conduct of affairs of such a business, knowingly makes 
any false entry of material fact in any book, report, or statement of 
such person engaged in the business of insurance with intent to deceive 
any person, including any officer, employee, or agent of such person 
engaged in the business of insurance, any insurance regulatory official 
or agency, or any agent or examiner appointed by such official or 
agency to examine the affairs of such person, about the financial 
condition or solvency of such business shall be punished as provided in 
paragraph (2).
    ``(2) The punishment for an offense under paragraph (1) is a fine 
of not more than $1,000,000 or imprisonment for not more than 10 years, 
or both, except that if the false entry in any book, report, or 
statement of such person jeopardized the safety and soundness of an 
insurer, such imprisonment shall be not more than 15 years.
    ``(d) Whoever, by threats or force or by any threatening letter or 
communication, corruptly influences, obstructs, or impedes or endeavors 
corruptly to influence, obstruct, or impede the due and proper 
administration of the law under which any proceeding involving the 
business of insurance whose activities affect interstate commerce is 
pending before any insurance regulatory official or agency or any agent 
or examiner appointed by such official or agency to examine the affairs 
of a person engaged in the business of insurance whose activities 
affect interstate commerce, shall be fined as provided in this title or 
imprisoned not more than 10 years, or both.
    ``(e)(1)(A) Any individual who has been convicted of any criminal 
felony involving dishonesty or a breach of trust, or who has been 
convicted of an offense under this section, and who willfully engages 
in the business of insurance whose activities affect interstate 
commerce or participates in such business, shall be fined as provided 
in this title or imprisoned not more than 5 years, or both.
    ``(B) Any individual who is engaged in the business of insurance 
whose activities affect interstate commerce and who willfully permits 
the participation described in subparagraph (A) shall be fined as 
provided in this title or imprisoned not more than 5 years, or both.
    ``(2) A person described in paragraph (1)(A) may engage in the 
business of insurance or participate in such business if such person 
has the written consent of any insurance regulatory official authorized 
to regulate the insurer, which consent specifically refers to this 
subsection.
    ``(f) As used in this section--
            ``(1) the term `business of insurance' means--
                    ``(A) the writing of insurance, or
                    ``(B) the reinsuring of risks,
        by an insurer, including all acts necessary or incidental to 
        such writing or reinsuring and the activities of persons who 
        act as, or are, officers, directors, agents, or employees of 
        insurers or who are other persons authorized to act on behalf 
        of such persons;
            ``(2) the term `insurer' means any entity the business 
        activity of which is the writing of insurance or the reinsuring 
        of risks, and includes any person who acts as, or is, an 
        officer, director, agent, or employee of that business;
            ``(3) the term `interstate commerce' means--
                    ``(A) commerce within the District of Columbia, or 
                any territory or possession of the United States;
                    ``(B) all commerce between any point in the State, 
                territory, possession, or the District of Columbia and 
                any point outside thereof;
                    ``(C) all commerce between points within the same 
                State through any place outside such State; or
                    ``(D) all other commerce over which the United 
                States has jurisdiction; and
            ``(4) the term `State' includes any State, the District of 
        Columbia, the Commonwealth of Puerto Rico, the Northern Mariana 
        Islands, the Virgin Islands, American Samoa, and the Trust 
        Territory of the Pacific Islands.
``Sec. 1038. Civil penalties and injunctions for violations of section 
              1033
    ``(a) The Attorney General may bring a civil action in the 
appropriate United States district court against any person who engages 
in conduct constituting an offense under section 1033 and, upon proof 
of such conduct by a preponderance of the evidence, such person shall 
be subject to a civil penalty of not more than $50,000 for each 
violation or the amount of compensation which the person received or 
offered for the prohibited conduct, whichever amount is greater. If the 
offense has contributed to the decision of a court of appropriate 
jurisdiction to issue an order directing the conservation, 
rehabilitation, or liquidation of an insurer, such penalty shall be 
remitted to the appropriate regulatory official for the benefit of the 
policyholders, claimants, and creditors of such insurer. The imposition 
of a civil penalty under this subsection does not preclude any other 
criminal or civil statutory, common law, or administrative remedy, 
which is available by law to the United States or any other person.
    ``(b) If the Attorney General has reason to believe that a person 
is engaged in conduct constituting an offense under section 1033, the 
Attorney General may petition an appropriate United States district 
court for an order prohibiting that person from engaging in such 
conduct. The court may issue an order prohibiting that person from 
engaging in such conduct if the court finds that the conduct 
constitutes such an offense. The filing of a petition under this 
section does not preclude any other remedy which is available by law to 
the United States or any other person.''.
    (b) Clerical Amendment.--The table of sections for chapter 47 of 
such title is amended by adding at the end the following new items:

``1037. Crimes by or affecting persons engaged in the business of 
                            insurance whose activities affect 
                            interstate commerce.
``1038. Civil penalties and injunctions for violations of section 
                            1037.''.

SEC. 602. MISCELLANEOUS AMENDMENTS TO TITLE 18, UNITED STATES CODE.

    (a) Tampering With Insurance Regulatory Proceedings.--Section 
1515(a)(1) of title 18, United States Code, is amended--
            (1) by striking ``or'' at the end of subparagraph (C);
            (2) by inserting ``or'' at the end of subparagraph (D); and
            (3) by adding at the end thereof the following new 
        subparagraph:
                    ``(E) a proceeding involving the business of 
                insurance whose activities affect interstate commerce 
                before any insurance regulatory official or agency or 
                any agent or examiner appointed by such official or 
                agency to examine the affairs of any person engaged in 
                the business of insurance whose activities affect 
                interstate commerce;''.
    (b) Limitations.--Section 3293 of such title is amended by 
inserting ``1037,'' after ``1033,''.
    (c) Obstruction of Criminal Investigations.--Section 1510 of title 
18, United States Code, is amended by adding at the end the following 
new subsection:
    ``(e)(1) Whoever--
            ``(A) acting as, or being, an officer, director, agent or 
        employee of a person engaged in the business of insurance whose 
        activities affect interstate commerce, or
            ``(B) is engaged in the business of insurance whose 
        activities affect interstate commerce or is involved (other 
        than as an insured or beneficiary under a policy of insurance) 
        in a transaction relating to the conduct of affairs of such a 
        business, with intent to obstruct a judicial proceeding, 
directly or indirectly notifies any other person about the existence or 
contents of a subpoena for records of that person engaged in such 
business or information that has been furnished to a Federal grand jury 
in response to that subpoena, shall be fined as provided by this title 
or imprisoned not more than 5 years, or both.
    ``(2) As used in paragraph (1), the term `subpoena for records' 
means a Federal grand jury subpoena for records that has been served 
relating to a violation of, or a conspiracy to violate, section 1037 of 
this title.''.

                         TITLE VII--PREEMPTIONS

SEC. 701. GENERAL PROHIBITION.

    No State may prevent or interfere with the ability of a covered 
party to engage in any activity authorized under this Act.

SEC. 702. STATE LICENSE NOT REQUIRED.

    No covered person shall be required to obtain any State license or 
similar authorization in order to engage in any State in any business 
or activity authorized by this Act.

SEC. 703. STATE INSURANCE LAW.

    Except as otherwise provided in this Act, no State law that relates 
to the formation, chartering, supervision, regulation, or business 
practices of an insurer, or any other matter related to the business of 
insurance, including issuance or revocation of a license to conduct the 
business of insurance, regulation of solvency and financial condition, 
mergers and acquisitions, any policy form and endorsement, marketing 
and sales practice, underwriting, damage appraisal and claims 
adjustment, any claims handling and settlement practice, and unfair 
insurance trade practices and market conduct activity (including any 
requirement related to nonrenewal, cancellation, and change in policy 
terms, including rates) shall apply to a covered party, except to the 
extent consistent with the provisions of this Act.

SEC. 704. PROHIBITION OF DISCRIMINATION.

    (a) In General.--Any State law that is not preempted by section 703 
may not discriminate against a covered party or a State-licensed 
insurance producer selling a product of a national insurer or be 
applied to a covered party in a manner different than it is applied to 
a State insurer, State-licensed agency, affiliate of any such insurer 
or agency, or any officer, director, employee, or agent of such 
insurer, agency, or affiliate.

SEC. 705. PERMISSIBLE STATE REGULATION.

    Except as provided by section 704, the following State laws are not 
preempted by section 703 or any other provision of this Act, and the 
following activities of a covered party shall be subject to State 
regulation, to the extent applicable:
            (1) Residual market insurance programs.--Any State law that 
        requires participation in an assigned risk plan, mandatory 
        joint underwriting association, or any other mandatory residual 
        market mechanism designed to make insurance available to those 
        unable to obtain it in the voluntary market. This paragraph 
        shall not apply to any State law governing participation in any 
        voluntary joint underwriting association or similar 
        arrangement. The Commission may review any State law regulating 
        any activity described in this paragraph and may preempt such 
        law if the Commission determines it to be inconsistent with any 
        provision or purpose of this Act.
            (2) Taxes.--Any State law that imposes liability for State 
        and local taxes and assessments on insurers, including premium 
        taxes, retaliatory taxes, tax credits, deductions, and offsets 
        related thereto, as provided in section 401.
            (3) Corporate governance.--Except to the extent 
        inconsistent with any provision or purpose of this Act, any 
        State governing insurance company incorporation, organization, 
        corporate governance, voting rights, and related matters.
            (4) Reparation requirements.--Any State law that prescribes 
        the requirements of the reparations that every insurer must 
        provide if it underwrites and sells policies of a particular 
        type in a State.
            (5) Advisory organizations.--Any State law that mandates 
        the participation of insurers in an advisory or statistical 
        organization that does not require an interstate insurer to use 
        any particular rate, rating element, price, or form.
            (6) Workers' compensation.--Any State law that regulates 
        participation in a workers' compensation administration 
        mechanism if participation is not inconsistent with any 
        provision of this Act.
            (7) Rate regulation.--Any State law that regulates 
        insurance rates.
            (8) Conversion to stock form.--Any State law that regulates 
        the conversion of a mutual State insurer to an insurer in stock 
        form.
            (9) Insurance producer licensing.--Any State law that 
        regulates the licensing of insurance producers.

SEC. 706. SALES ACTIVITIES BY STATE-LICENSED INSURANCE PRODUCERS.

    No State may--
            (1) prevent a State-licensed insurance producer from 
        selling, soliciting, or negotiating an insurance policy or 
        annuity contract issued by an interstate insurer;
            (2) impose any condition on a State-licensed producer that 
        significantly interferes with the ability of selling, 
        soliciting, or negotiating an insurance policy or annuity 
        contract issued by an interstate insurer; or
            (3) discriminate, in any manner, against a State-licensed 
        producer because it sells, solicits, or negotiates an insurance 
        policy or annuity contract issued by an interstate insurer.

SEC. 707. STATE TAXATION.

    (a) In General.--Except as provided in subsection (b), an 
interstate insurer shall be subject to all taxes, including insurance 
retaliatory taxes, imposed under the authority of any State legislation 
to the same extent and in the same manner as an insurer chartered in 
the State where the interstate insurer is considered domiciled pursuant 
to subsection (c).
    (b) Exception.--No State shall have power to impose its insurance 
retaliatory tax on any interstate insurer unless, for any tax purpose 
for which State of domicile is relevant, every interstate insurer is 
treated by such State as domiciled in the State designated by each 
national insurer in accordance with subsection (c) and unless the 
insurance retaliatory tax is imposed on insurers chartered by the State 
to the same extent and in the same manner.
    (c) Designation of Domicile.--For purposes of this section, an 
interstate insurer may designate one of the following States as its 
State of domicile, by filing such designation in writing with the 
Commission. If an interstate insurer makes no designation of a State of 
domicile pursuant to this subsection, it shall be deemed to have 
designated as its State of domicile that State in which is located its 
principal place of business in the United States.
    (d) Change in Domicile.--With the approval of the Director, an 
interstate insurer may change its State of domicile to any other State 
meeting the requirements of subsection (c).
    (e) Status of Interstate Insurer.--For purposes of State taxation, 
an interstate insurer shall not be considered to be a department, 
agency, or instrumentality of the Federal Government, nor, except as 
provided in this section, shall an interstate insurer be exempt from 
any State tax or subject to a lesser burden of any State tax, solely by 
reason of its status as an interstate insurer under this Act.

SEC. 708. DEFINITIONS.

    In this title:
            (1) Covered party.--The term ``covered party'' means an 
        interstate insurer, including any officer, director, or 
        employee of such interstate insurer.
            (2) State law.--The term ``State law'' means any law, rule, 
        regulation, interpretation, or order adopted by a State 
        legislature or promulgated by a State regulatory or enforcement 
        agency, and any provision of a State constitution.

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