[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1880 Introduced in House (IH)]
111th CONGRESS
1st Session
H. R. 1880
To establish a system of regulation and supervision for insurers,
insurance agencies, and insurance producers chartered or licensed under
Federal law that ensures the stability and financial integrity of those
insurers, agencies, and producers and that protects policyholders and
other consumers served by such insurers, agencies, or producers.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 2, 2009
Ms. Bean (for herself and Mr. Royce) introduced the following bill;
which was referred to the Committee on Financial Services, and in
addition to the Committees on the Judiciary and Energy and Commerce,
for a period to be subsequently determined by the Speaker, in each case
for consideration of such provisions as fall within the jurisdiction of
the committee concerned
_______________________________________________________________________
A BILL
To establish a system of regulation and supervision for insurers,
insurance agencies, and insurance producers chartered or licensed under
Federal law that ensures the stability and financial integrity of those
insurers, agencies, and producers and that protects policyholders and
other consumers served by such insurers, agencies, or producers.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``National Insurance
Consumer Protection Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Purposes.
Sec. 3. Definitions.
TITLE I--OFFICE OF NATIONAL INSURANCE
Subtitle A--Establishment of Office and Appointment of National
Insurance Commissioner
Sec. 101. Establishment of office and appointment of National Insurance
Commissioner.
Sec. 102. Duties and powers of the commissioner.
Sec. 103. Independence and GAO audit.
Sec. 104. Office personnel matters.
Sec. 105. Division of Consumer Affairs.
Sec. 106. Division of Insurance Fraud.
Sec. 107. Office of the Ombudsman.
Sec. 108. Insurance self-regulatory organizations.
Sec. 109. Relationship to State law.
Subtitle B--Supervision of National Insurers and National Insurance
Agencies
Sec. 111. Prudential supervision.
Sec. 112. Examinations.
Sec. 113. Reports.
Sec. 114. Annual assessments and other fees.
Sec. 115. Appropriations during start-up period.
Sec. 116. Disclosure of information.
Sec. 117. Anti-money laundering compliance.
Subtitle C--Enforcement Powers of Commissioner
Sec. 121. Revocation or suspension of charter or license.
Sec. 122. Other enforcement powers.
Sec. 123. Insurance fraud.
Sec. 124. Foreign investigations.
Sec. 125. Prompt corrective action.
TITLE II--SYSTEMIC RISK REGULATION, COORDINATING COUNCIL FOR FINANCIAL
REGULATORS, INTERNATIONAL AGREEMENTS
Sec. 201. Systemic risk regulation.
Sec. 202. Coordinating council for financial regulators.
Sec. 203. International agreements.
TITLE III--NATIONAL INSURANCE COMPANIES AND NATIONAL INSURANCE AGENCIES
Subtitle A--Organization, Chartering, and Powers
Sec. 301. Organization and chartering.
Sec. 302. Corporate governance.
Sec. 303. Charter conversions.
Sec. 304. Powers.
Sec. 305. Chartering commencement date.
Subtitle B--Financial, Policy and Market Conduct Standards
Sec. 311. Financial standards.
Sec. 312. Policy standards.
Sec. 313. Market conduct standards.
Sec. 314. General principles.
Subtitle C--State Taxation
Sec. 321. State taxation of national insurers.
Sec. 322. State taxation of national insurance agencies.
Sec. 323. State taxation of nonadmitted and surplus lines of insurance.
TITLE IV--NATIONAL INSURANCE PRODUCERS
Sec. 401. Licensing of national insurance producers.
Sec. 402. Supervision and examination.
Sec. 403. Producer database.
Sec. 404. Duty to supervise.
Sec. 405. Relationship to State law.
Sec. 406. Licensing commencement date.
TITLE V--CHANGE IN CONTROL AND INSURANCE HOLDING COMPANIES
Sec. 501. Change in control.
Sec. 502. Reports by and examinations of insurance holding companies.
Sec. 503. Activities of insurance holding companies and subsidiaries.
Sec. 504. Capital, liquidity, dividend, operational, and other
standards.
Sec. 505. Affiliate transactions.
Sec. 506. Relationship to other laws.
Sec. 507. No delegation permitted.
TITLE VI--CONSERVATORSHIP, RECEIVERSHIP, THE PAYMENT OF BENEFITS AND
CLAIMS TO POLICYHOLDERS, AND ASSESSMENTS ON NATIONAL INSURERS
Sec. 601. Appointment of conservator or receiver.
Sec. 602. Establishment of the National Insurance Guaranty Corporation.
Sec. 603. Payment of claims to policyholders of national insurers.
Sec. 604. Assessments of national insurers.
Sec. 605. Participation in State guaranty associations.
Sec. 606. Report to Congress.
TITLE VII--MISCELLANEOUS PROVISIONS
Sec. 701. Applicable law.
Sec. 702. Application of the Federal antitrust laws.
SEC. 2. PURPOSES.
The purposes of this Act are--
(1) to ensure the financial stability and integrity of
national insurers, national insurance agencies, and national
insurance producers through a comprehensive system of national
supervision and regulation; and
(2) to ensure the fair and equitable treatment of
policyholders, claimants, and other consumers served by
national insurers, national insurance agencies, and national
insurance producers.
SEC. 3. DEFINITIONS.
In this Act:
(1) Affiliate.--The term ``affiliate'' means any person
that controls, is controlled by, or is under common control
with another person.
(2) Annuity.--The term ``annuity'' means all agreements to
make periodical payments for a period certain or where the
making or continuance of all or some of a series of such
payments, or the amount of any such payment, depends upon the
continuance of human life.
(3) Anti-fraud organization.--The term ``anti-fraud
organization'' means an organization--
(A) whose purposes include investigation,
prevention, and detection of insurance-related crime
and fraud, including assistance to and cooperation with
State and national public officials and law enforcement
officers in their anti-fraud activities; and
(B) described in section 501(c)(3) of the Internal
Revenue Code of 1986 and exempt from tax under section
501(a) of such Code.
(4) Business of insurance.--The term ``business of
insurance'' has the meaning given such term in section 1033(f)
of title 18, United States Code.
(5) Commissioner.--The term ``Commissioner'' means the
National Insurance Commissioner appointed under section 101.
(6) Company.--The term ``company'' means any corporation,
partnership, business trust, association, or similar
organization.
(7) Control.--The term ``control''--
(A) means the power of a person--
(i) with an ownership interest in a
national insurer or national insurance agency
(whether direct or indirect) to direct the
management or policies of such national insurer
or national insurance agency; or
(ii) to vote 25 percent or more of any
class of voting securities of a national
insurer or national insurance agency; and
(B) does not include a person that possesses power
referred to in subparagraph (A) as a result of an
official position, corporate office, or fiduciary
relationship held by such person.
(8) Corporation.--The term ``Corporation'' means the
National Insurance Guaranty Corporation established under
section 601.
(9) Federal banking agencies.--The term ``Federal banking
agencies'' means the Office of the Comptroller of the Currency,
the Board of Governors of the Federal Reserve System, the
Federal Deposit Insurance Corporation, and the Office of Thrift
Supervision.
(10) Insurance operations.--The term ``insurance
operations'' includes--
(A) the business of insurance;
(B) all acts and transactions relating to the sale,
solicitation, negotiation, and underwriting of
insurance;
(C) all acts and transactions relating to claims
adjustment and settlement;
(D) all acts and transactions relating to the
establishment of rates, rules, risk classifications,
rating classifications, rating territories, and forms
(including, endorsements, addendums, and policy
language) for insurance;
(E) all acts and transactions relating to marketing
and sales practices;
(F) financial condition and solvency;
(G) holding company transactions; and
(H) corporate governance.
(11) Insurance producer.--The term ``insurance producer''
means any person that sells, solicits, or negotiates policies
of insurance, nonadmitted insurance, and surplus lines of
insurance, but does not include a person that provides
administrative services to an insurer.
(12) Insurer-affiliated party.--The term ``insurer-
affiliated party'' means--
(A) any director, officer, employee, or controlling
shareholder of, or agent for, a national insurer or a
national insurance agency;
(B) any shareholder, consultant, joint venture
partner, and any other person as determined by the
Commissioner who participates in the conduct of the
affairs of a national insurer or a national insurance
agency; and
(C) any independent contractor (including any
attorney, actuary, or accountant) of a national insurer
or a national insurance agency who in that capacity
knowingly or recklessly participates in any violation
of any law or regulation, any breach of fiduciary duty,
or any conduct that involves an undue risk of loss to
the policyholders of a national insurer, and 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.
(13) Insurer in fraternal form.--The term ``insurer in
fraternal form'' means an incorporated society, order, or
supreme lodge without capital stock that--
(A) is conducted solely for the benefit of its
members and their beneficiaries and not for profit;
(B) is operated on a lodge system with ritualistic
form of work;
(C) has a representative form of government;
(D) provides benefits to members and their
dependents; and
(E) operates for one or more social, intellectual,
educational, charitable, benevolent, moral, fraternal,
patriotic, or religious purposes for the benefit of its
members, which may also be extended to others.
(14) Life insurance.--The term ``life insurance'' means
every insurance upon the lives of human beings, and every
insurance appertaining thereto, including disability income
insurance, long-term care insurance, and supplemental health
insurance.
(15) NAIC.--The term ``NAIC'' means the National
Association of Insurance Commissioners.
(16) National insurance agency.--The term ``national
insurance agency'' means a national insurance agency chartered
under section 301.
(17) National insurance holding company.--The term
``national insurance holding company'' means a company that
controls a national insurer or national insurance agency.
(18) National insurance producer.--The term ``national
insurance producer'' means a national insurance agent or broker
licensed under section 401.
(19) National insurer.--The term ``national insurer'' means
a national insurance company chartered under section 301.
(20) National life insurer.--The term ``national life
insurer'' means a national insurer that is chartered under
section 301 to sell, solicit, negotiate, and underwrite life
insurance.
(21) Nonadmitted insurance.--The term ``nonadmitted
insurance'' means property and casualty insurance permitted by
the Commissioner to be placed directly or through an insurance
producer with a nonadmitted insurer eligible to accept such
insurance.
(22) Nonadmitted insurer.--The term ``nonadmitted insurer''
means an insurer that is not licensed to engage in the business
of insurance in a State and that--
(A) satisfies the eligibility requirements of the
State in which an insured maintains its principal place
of business, or, in the case of an individual,
maintains a principal residence; and
(B) is not a national insurer.
(23) Office.--The term ``Office'' means the Office of
National Insurance established under section 101.
(24) Person.--The term ``person'' means any natural person,
business entity, governmental body or entity, voluntary
organization, or similar organization.
(25) Policy.--The term ``policy'' means a policy, contract,
certificate, or other evidence of insurance, or an annuity
contract or a rider or endorsement thereto, but does not
include a funding agreement, a reinsurance contract, or an
agreement, special rider, or endorsement relating only to the
manner of distributing benefits or to the reservation of rights
and benefits used at the request of the individual
policyholder.
(26) Property and casualty insurance.--The term ``property
and casualty insurance'' means a policy that insures,
guarantees, or indemnifies against liability, loss of life,
loss of health, or loss through damage to or destruction of
property, including surety bonds, private passenger or
commercial automobile, homeowners, mortgage guaranty, financial
guaranty, commercial multiperil, general liability,
professional liability, workers' compensation, fire and allied
lines, farm or ranch owners, multiperil, aircraft, fidelity,
surety, medical malpractice, ocean marine, inland marine, and
boiler and machinery insurance.
(27) 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.
(28) State.--The term ``State'' means each of the 50
States, the District of Columbia, the Commonwealth of Puerto
Rico, any territory of the United States, Guam, American Samoa,
the Trust Territory of the Pacific Islands, the United States
Virgin Islands, and the Commonwealth of the Northern Mariana
Islands.
(29) State insurer.--The term ``State insurer'' means an
insurer incorporated in or organized under the laws of a State
that is not chartered as a national insurer under this Act.
(30) Supplemental health insurance.--The term
``supplemental health insurance'' means a group or individual
policy that provides coverage for hospital, medical or surgical
benefits and is sold separately and not dependent upon
comprehensive health or medical insurance, including a policy
for accidents, accidental death and dismemberment, credit
disability, dread disease, dental, hospital accident, hospital
indemnity, hospital confinement indemnity, limited benefit
medical, medical/surgical policies, Medicare supplement,
retiree medical, specific treatment policies, travel, and
vision.
(31) Surplus lines of insurance.--The term ``surplus lines
of insurance'' means insurance on properties, risks, or
exposures located or to be performed in a State with a
nonadmitted insurer that is sold, solicited, or negotiated by a
national insurance agency, national insurance producer, or
other insurance producer.
(32) Title insurance.--The term ``title insurance'' or
``business of title insurance'' means any of the following:
(A) A contract insuring or indemnifying the owners
of real or personal property, or other persons lawfully
interested therein, against loss or damage arising from
any of the following conditions, or the reinsurance
thereof:
(i) Defects in or any liens or encumbrances
on the insured title.
(ii) Unmarketability of the insured title.
(iii) Invalidity, lack of priority, or
unenforceability of any liens or encumbrances
on the stated property.
(iv) Lack of legal right of access to the
land.
(v) Unenforceability of rights in title to
the real or personal property.
(B) Insuring the correctness of searches and
examinations of all instruments, liens, or charges
affecting the title to real or personal property.
(C) Procuring and furnishing information relative
to the title to real or personal property, including
abstracting, searching, and examining titles.
(D) Handling escrows, settlements, or closings done
in conjunction with subparagraph (A), (B), (C), (E), or
(F).
(E) Any product or service defined by the laws of
any State as title insurance.
(F) Doing or proposing to do any business
substantially equivalent to any of the activities
described in this paragraph, in a manner designed to
evade the provisions of this Act.
(33) Title insurer.--The term ``title insurer'' means a
company organized under the laws of a State for the purpose of
conducting the business of title insurance.
TITLE I--OFFICE OF NATIONAL INSURANCE
Subtitle A--Establishment of Office and Appointment of National
Insurance Commissioner
SEC. 101. ESTABLISHMENT OF OFFICE AND APPOINTMENT OF NATIONAL INSURANCE
COMMISSIONER.
(a) In General.--There is established in the Department of the
Treasury the Office of National Insurance.
(b) National Insurance Commissioner.--
(1) In general.--There is established the position of the
National Insurance Commissioner, who shall be the head of the
Office.
(2) Appointment.--The Commissioner shall be appointed by
the President, by and with the advice and consent of the
Senate, from among individuals who are citizens of the United
States, for a term of 5 years, unless removed before the end of
such term for cause by the President.
(3) Vacancy.--A vacancy in the position of the Commissioner
shall be filled in the manner established under paragraph (2).
The Commissioner appointed to fill the vacancy shall be
appointed only for the remainder of the term of the preceding
Commissioner.
(4) Service after term.--An individual may serve as the
Commissioner after the expiration of the term for which
appointed until such time as a successor has been appointed in
accordance with paragraph (2).
(5) Prohibition on financial interests.--The Commissioner
may not have a direct or indirect financial interest in any
national insurer or national insurance agency, except that the
Commissioner may own, directly or indirectly, or may have a
direct or indirect beneficial interest in an insurance policy
written or sold by a national insurer, national insurance
agency, or national insurance producer.
(6) General oversight.--The Commissioner shall be subject
to the general oversight of the Secretary of the Treasury, but
the Secretary may not intervene in any matter or proceeding
before the Commissioner unless otherwise specifically provided
by law.
(7) Executive schedule.--Section 5314 of title 5, United
States Code, is amended by adding at the end following new
item:
``National Insurance Commissioner.''.
SEC. 102. DUTIES AND POWERS OF THE COMMISSIONER.
(a) Duties.--The Commissioner shall--
(1) oversee the organization, incorporation, operation,
regulation, and supervision of national insurers and national
insurance agencies and shall issue charters therefore; and
(2) license, regulate, and supervise national insurance
producers.
(b) Incidental Powers.--The Commissioner may exercise such
incidental powers as may be necessary to fulfill the duties specified
in subsection (a).
(c) Rulemaking Powers.--The Commissioner may issue such rules,
regulations, orders, and interpretations as the Commissioner determines
to be necessary to carry out the purposes of this Act. The Secretary of
the Treasury may not delay or prevent the issuance of any rule,
regulation, order, or interpretation by the Commissioner.
(d) Litigation Powers.--The Commissioner may sue and be sued,
complain and defend, and otherwise litigate, in the Commissioner's name
and through the Commissioner's own attorney, in any Federal or State
court.
(e) Enforcement Powers.--The Commissioner may apply to the United
States district court for the jurisdiction in which the main office of
a national insurer or national insurance agency is located, or in which
an insurer-affiliated party, national insurance producer, or other
person is located, for the enforcement of any rule, regulation, order,
or interpretation issued pursuant to this Act.
SEC. 103. INDEPENDENCE AND GAO AUDIT.
(a) Independence of Congressional Testimony and Recommendations.--
Section 111 of Public Law 93-495 (12 U.S.C. 250) is amended by
inserting ``the National Insurance Commissioner,'' after ``the Director
of the Office of Thrift Supervision,''.
(b) GAO Audit.--The Commissioner shall make available to the
Comptroller General of the United States all books and records
necessary to audit all of the activities of the Office.
SEC. 104. OFFICE PERSONNEL MATTERS.
(a) In General.--The Commissioner may employ such persons as are
necessary to carry out the provisions of this Act.
(b) Compensation.--The Commissioner shall fix the compensation and
number of employees of the Office without regard to chapter 51 or
subchapter III of chapter 53 of title 5, United States Code.
(c) Additional Compensation.--The Commissioner may provide
additional compensation and benefits to employees of the Office if the
same type of compensation or benefits are then being provided by any
Federal banking agency or, if not then being provided, could be
provided by any such agency under applicable provisions of law or
regulation. In setting and adjusting the total amount of compensation
and benefits for employees of the Office, the Commissioner shall
consult, and seek to maintain comparability with, the Federal banking
agencies.
(d) Acting Commissioner.--The Commissioner shall designate an
employee of the Office to serve as the Acting Commissioner during the
absence or disability of the Commissioner.
(e) Delegation of Powers.--
(1) Employees and others.--Unless otherwise prohibited by
this Act, the Commissioner may delegate to any employee,
representative, or agent any power of the Commissioner.
(2) Self-regulatory organizations.--Unless otherwise
prohibited by this Act, the Commissioner may, by regulation,
delegate to any insurance self-regulatory organization any
power of the Commissioner.
SEC. 105. DIVISION OF CONSUMER AFFAIRS.
(a) Establishment.--The Commissioner shall establish a Division of
Consumer Affairs within the Office, and shall appoint a Director of the
Division of Consumer Affairs, who shall report to the Commissioner.
(b) Function.--The Director of the Division of Consumer Affairs
shall--
(1) act as a liaison between the Office and consumers of
insurance;
(2) receive questions and complaints from consumer
regarding acts or practices of national insurers, national
insurance agencies, and national insurance producers; and
(3) take actions to resolve such questions and complaints.
(c) State Offices; Call Center.--The Commissioner shall establish
an office of the Division of Consumer Affairs in each State and a
centralized call center, toll-free telephone number, and Internet
address order to receive and act upon questions and complaints from
consumers regarding acts or practices of national insurers, national
insurance agencies, and national insurance producers.
(d) Reports.--The Commissioner shall annually submit to the
Committee on Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate a report
on the volume of consumer complaints received by the Division of
Consumer Affairs and the ability of the Office to address such
complaints in a timely manner.
SEC. 106. DIVISION OF INSURANCE FRAUD.
(a) Establishment.--The Commissioner shall establish a Division of
Insurance Fraud within the Office, and shall appoint a Director of the
Division of Insurance Fraud, who shall report to the Commissioner.
(b) Duties.--The Director of the Division of Insurance Fraud shall
carry out investigations of insurance fraud in accordance with section
123.
SEC. 107. OFFICE OF THE OMBUDSMAN.
(a) Office of the Ombudsman.--The Commissioner shall establish an
Office of the Ombudsman, and appoint an Ombudsman, who shall report to
the Commissioner.
(b) Duty of the Ombudsman.--The Ombudsman shall act as a liaison
between the Office and any national insurer, national insurance agency,
national insurance producer, or insurer-affiliated party adversely
affected by the supervisory or regulatory activities of the Office,
including the failure of the Office to take a requested action. The
Ombudsman shall assure that safeguards exist to encourage complainants
to come forward and preserve confidentiality.
(c) Powers of the Ombudsman.--The Ombudsman--
(1) with the prior consent of the Commissioner, may stay
any appealable decision or action during the resolution of an
appealable matter; and
(2) shall review and report any weakness in policy or
procedures to the Commissioner, and make recommendations to the
Commissioner regarding changes in such policies or procedures.
(d) Appealable Matters.--Subject to such procedures as the
Commissioner may establish by regulation, any national insurer,
national insurance agency, national insurance producer, or insurer-
affiliated party adversely affected by an Office decision or action may
seek Ombudsman review of such decision or action, other than--
(1) the appointment of a receiver or conservator;
(2) any preliminary examination conclusions communicated to
the regulated person before a final examination report is
issued;
(3) any formal enforcement-related action or decision,
including the issuance of a cease-and-desist order, assessment
of a civil money penalty, or commencement of a formal
investigation;
(4) any formal or informal rulemaking pursuant to
subchapter II of chapter 5 of title 5, United States Code;
(5) any decision or recommended decision following a formal
adjudication conducted pursuant to subchapter II of chapter 5
of title 5, United States Code; or
(6) any request for agency records pursuant to section 552
of title 5, United States Code (commonly referred to as the
Freedom of Information Act).
(e) Decisions of the Ombudsman.--The Ombudsman shall investigate
each matter for which review is sought under subsection (d) and, after
consideration of all relevant information provided to the Ombudsman by
the person seeking such review and the Commissioner, issue a written
determination of the appeal. Such determination shall become the final
decision of the Office, unless reversed, modified, or stayed by the
Commissioner.
(f) Retaliation Prohibited.--An employee of the Office of National
Insurance may not take any adverse action against a complainant for
appealing any decision or action to the Ombudsman.
SEC. 108. INSURANCE SELF-REGULATORY ORGANIZATIONS.
(a) Authority of the Commissioner.--The Commissioner may provide
for the registration of one or more insurance self-regulatory
organizations, and supervise and regulate any such organization.
(b) Authority of Registered Insurance Self-Regulatory
Organization.--Except as otherwise provided in this Act, the
Commissioner may authorize an insurance self-regulatory organization
registered by the Commissioner to carry out the purposes of this Act,
and enforce compliance by its members with the provisions of this Act,
applicable regulations issued by the Commissioner, and the rules of the
organization.
SEC. 109. RELATIONSHIP TO STATE LAW.
(a) In General.--Except as authorized by this Act or otherwise
authorized under Federal law, no national insurer, national insurance
agency, or national insurance producer shall be subject to any form of
licensing, examination, reporting, regulation, or supervision by a
State relating to the insurance operations of such insurer, such
agency, or such producer.
(b) Applicable State Laws.--Notwithstanding subsection (a), a
national insurers, national insurance agencies, and national insurance
producers shall be subject to--
(1) State unclaimed property and escheat laws;
(2) tax laws of a State, in accordance with sections 321,
322, and 323;
(3) State law relating to 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 insurance in the voluntary
market, except to the extent that such State law--
(A) relates to participation in any voluntary joint
underwriting association or similar arrangement;
(B) results in rates in effect for an assigned risk
plan, mandatory joint underwriting association, or any
other mandatory residual market mechanism that fail to
cover the expected value of all future costs associated
with insurance policies written by such residual market
mechanism;
(C) requires a national insurer to use any
particular rate, rating element, price, or form; or
(D) is inconsistent with any provision of this Act;
(4) State insurance law that prescribes the compulsory
coverage requirements for workers' compensation or motor
vehicle insurance, or both, that every insurer must provide if
the insurer issues insurance policies in such State, except to
the extent that such State law requires a national insurer to
use any particular rate, rating element, price, or form;
(5) State insurance law mandating the participation of
insurers in an advisory or statistical organization, except to
the extent that such State law requires a national insurer to
use any particular rate, rating element, price, or form; and
(6) State law relating to participation in a workers'
compensation administration mechanism, except to the extent
that such State law is inconsistent with any provision of this
Act.
(c) Definitions.--In this section:
(1) Advisory or statistical organization.--The term
``advisory or statistical organization'' does not include the
National Association of Insurance Commissioners.
(2) Compulsory coverage.--The term ``compulsory coverage''
does not include any State statutory requirement other than
those prescribing the minimum extent of insurance protection
afforded by a policy of insurance.
(3) Mandatory residual market.--The term ``mandatory
residual market'' means a facility, entity, or plan required by
and established pursuant to State law to provide coverage for
persons that cannot obtain insurance in the private market.
Subtitle B--Supervision of National Insurers and National Insurance
Agencies
SEC. 111. PRUDENTIAL SUPERVISION.
(a) Sense of Congress.--It is the sense of Congress that the
Commissioner should--
(1) promote an open and continuous exchange of information
between national insurers, national insurance agencies, and
national insurance producers and the Office; and
(2) encourage such insurers, agencies, and producers to
self-identify and self-correct actual or potential violations
of law, regulation, or any other supervisory requirements that
the Commissioner considers necessary before such actions harm
policyholders or other consumers.
(b) Regulations.--The Commissioner shall issue regulations on
prudential supervision to--
(1) require national insurers, national insurance agencies,
and national insurance producers to establish and implement
internal risk control practices and procedures that are
designed to detect and prevent violations of laws, regulations,
and any other supervisory requirements that the Commissioner
considers necessary;
(2) require national insurers, national insurance agencies,
and national insurance producers to self-report violations of
applicable laws, regulations, or such other supervisory
requirements and to correct such violations;
(3) provide that if the Commissioner determines a violation
of a law, regulation, or other supervisory requirement upon
which an enforcement action may be based is correctable, the
Commissioner shall provide warning to a national insurer,
national insurance agency, or national insurance producer
regarding such violation before taking such action;
(4) identify the range of enforcement actions the
Commissioner may bring in response to a violation of law,
regulation, or other supervisory requirement, and provide that,
subject to subsection (c), the Commissioner shall pursue a
continuum of enforcement actions that begins with the least
severe sanction or penalty and gradually escalates to the most
severe sanction or penalty;
(5) identify the factors the Commissioner will consider in
determining whether to bring an enforcement action and in
determining the type of action to be brought; and
(6) specify the Commissioner's practices and procedures
related to investigations, and provide that the Commissioner
shall--
(A) notify a national insurer, national insurance
agency, or national insurance producer within 10 days
of completing an investigation; and
(B) review the status of all open investigations on
a semiannual basis and determine if such matter should
remain open or be closed.
SEC. 112. EXAMINATIONS.
(a) In General.--The Commissioner may conduct such examinations of
a national insurer or national insurance agency as the Commissioner
considers necessary.
(b) Frequency.--
(1) National insurers.--The Commissioner shall conduct a
full-scope, on-site examination of each national insurer not
less than once during any 24-month period.
(2) National insurance agencies.--The Commissioner shall
conduct an examination of a national insurance agency in
response to a complaint or evidence that such national
insurance agency has violated or is about to violate--
(A) a law, rule, or regulation;
(B) any condition imposed in writing by the
Commissioner in connection with issuing a license for a
Federally licensed insurance producer; or
(C) any written agreement entered into with the
Commissioner.
(c) Access to People and Records.--
(1) In general.--In the course of examining a national
insurer or national insurance agency, the Commissioner, upon
request, shall be given prompt and reasonable access to
officers, employees, agents, books, records, and documents of
such insurer or agency.
(2) Court order.--If prompt and reasonable access is not
given as required under paragraph (1), the Commissioner may
apply to the United States district court for the judicial
district in which the main office of the national insurer or
the national insurance agency is located for an order requiring
that such information be promptly provided.
(3) Subpoena power.--In connection with examination of a
national insurer or national insurance agency, the Commissioner
may--
(A) administer oaths and affirmations;
(B) examine, take, and preserve testimony under
oath as to any matter in respect of the affairs or
ownership of any such national insurer or national
insurance agency;
(C) issue subpoenas; and
(D) in order to enforce a subpoena issued under
subparagraph (C), apply to the United States district
court for the judicial district--
(i) in which the main office of the
national insurer or national insurance agency
is located; or
(ii) in which the witness resides or
carries on business.
SEC. 113. REPORTS.
Each national insurer and national insurance agency shall submit to
the Commissioner such reports, containing such information and in such
form, as the Commissioner may prescribe by regulation.
SEC. 114. ANNUAL ASSESSMENTS AND OTHER FEES.
(a) In General.--The Commissioner may impose on national insurers,
national insurance agencies, and national insurance producers an annual
assessment and such other fees, including examination fees, as the
Commissioner determines to be necessary and appropriate to fund the
expenses of the Office, and to repay and loan to the Office provided
under section 115.
(b) Regulations.--The Commissioner shall, by regulation, establish
a schedule for the annual assessment and other fees authorized in this
section.
(c) Treatment of Assessments and Fees.--
(1) Deposits.--The Commissioner may deposit assessments and
fees collected under this section into any regular Government
depository or any State or national bank.
(2) Government funds and apportionment.--Notwithstanding
any other provision of law, assessments and fees imposed under
this section shall not be considered government or public funds
or appropriated money, and shall not be subject to
apportionment for purposes of chapter 15 of title 31, United
States Code, or under any other authority.
(d) Working Capital Fund.--The Commissioner may impose assessments
and fees in excess of actual expenses for any given year, to maintain
an appropriate working capital fund, provided that the Commissioner
remits to the payers of such assessments and fees any funds collected
in excess of what the Commissioner determines to be necessary to
maintain such working capital fund.
(e) Use of Funds.--The Commissioner may use the fees and
assessments collected pursuant to this section to pay all operating
costs of the Office, including the salary and administrative expenses
of the Office.
SEC. 115. APPROPRIATIONS DURING START-UP PERIOD.
The Commissioner may borrow from the Secretary of the Treasury such
funds as the Commissioner determines to be necessary and appropriate to
organize and begin operations of the Office. Any such loan shall be
repaid, in full (with interest at a rate set by the Secretary of the
Treasury), from assessments imposed under the terms of section 114 not
later than the date that is 30 years after the date of the enactment of
this Act, with individual payments on any loan to be made in such
amounts and at such times as the Commissioner determines to be
appropriate.
SEC. 116. DISCLOSURE OF INFORMATION.
(a) Regulations Required.--The Commissioner shall issue regulations
for the disclosure of reports, applications, filings, correspondence,
records, and other information prepared by, reported to, obtained by,
or submitted to the Commissioner.
(b) Supervisory Privilege.--The regulations issued pursuant to
subsection (a) shall prohibit the disclosure of confidential
supervisory information, as such information is defined by the
Commissioner in such regulation.
(c) Other Privileges.--The submission by any person of any
information to the Commissioner for any purpose in the course of any
supervisory or regulatory process of the Commissioner shall not be
construed as waiving, destroying, or otherwise affecting any privilege
that such person may claim with respect to such information under
Federal or State law as to any person or entity other than the
Commissioner.
SEC. 117. ANTI-MONEY LAUNDERING COMPLIANCE.
(a) Regulation Required.--The Commissioner shall, by regulation,
require national insurers and national insurance agencies to establish
and maintain procedures reasonably designed to assure and monitor
compliance with the recordkeeping and reporting requirements of
subchapter II of chapter 53 of title 31, United States Code, and
implementing regulations issued by the Department of the Treasury, to
the extent that those requirements apply to a national insurer or
national insurance agency.
(b) Minimum Procedures.--The regulations issued under subsection
(a) shall require--
(1) the establishment of internal controls to monitor
compliance with applicable requirements;
(2) testing for compliance;
(3) training of personnel; and
(4) the designation of an individual or individuals
responsible for coordinating and monitoring compliance.
Subtitle C--Enforcement Powers of Commissioner
SEC. 121. REVOCATION OR SUSPENSION OF CHARTER OR LICENSE.
(a) Charter Revocation.--The Commissioner may order the revocation
of the charter of a national insurer or national insurance agency if
the Commissioner determines that such insurer or agency--
(1) is engaged or has engaged in conduct that is hazardous
to the insurer or agency and an undue risk of loss to the
policyholders of such insurer;
(2) is in a financial or other condition that is not
consistent with the continuation of existing operations; or
(3) is violating or has violated any--
(A) applicable law or regulation;
(B) order or condition imposed in writing by the
Commissioner in connection with the approval of an
application, filing, statement, notice, or other
request by the insurer or agency; or
(C) written agreement entered into between the
insurer or agency and the Commissioner.
(b) License Revocation.--The Commissioner may order the revocation
of the license of a national insurance producer if the Commissioner
determines that such producer--
(1) is violating or has violated any applicable law,
regulation, order, condition imposed in writing by the
Commissioner in connection with the approval of an application,
filing, statement, notice or other request by the producer, or
written agreement entered into between the producer and the
Commissioner;
(2) provided incorrect, misleading, incomplete, or
materially untrue information in an application for a license;
(3) used fraudulent, coercive, or dishonest practices; or
(4) demonstrated incompetence, untrustworthiness, or
financial irresponsibility as an insurance producer.
(c) Suspension Order.--If the Commissioner, in the course of a
charter or license revocation proceeding under this section, finds that
a national insurer, national insurance agency, or national insurance
producer poses an undue risk of loss to the policyholders of a national
insurer as a whole, the Commissioner may order the suspension of the
charter or license of such insurer, agency or producer, as applicable.
(d) Notice.--If the Commissioner orders the revocation of a charter
or a license under subsection (a) or (b), the Commissioner shall
provide the national insurer, national insurance agency, or national
insurance producer that is the subject of such revocation notice of
such revocation. Such notice shall include--
(1) a statement of the reasons for such revocation,
including any determination by the Commissioner under
subsection (a) or (b); and
(2) a date and place for a hearing before the Commissioner
with respect to such revocation.
(e) Hearing; Termination.--If, on the basis of the evidence
presented at a hearing before the Commissioner (or any person
designated by the Commissioner 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 Commissioner (or
such person) with respect to such evidence (which shall be conclusive),
the Commissioner finds an undue risk of loss to the policyholders of a
national insurer as a whole or a violation specified in the notice
given under subsection (d) has been established, the Commissioner may
issue an order terminating the charter or license of the national
insurer, national insurance agency, or national insurance producer
effective as of a date subsequent to that finding.
(f) Judicial Review.--
(1) In general.--Any hearing provided for in this section
(other than the hearing provided for in subsection (e)) shall
be held in the Federal judicial district or in the territory in
which the home office of the national insurer, national
insurance agency, or national insurance producer is located
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 of the United States Code. After such
hearing, and within 90 days after the Commissioner has notified
the parties that the case has been submitted to it for final
decision, it shall render its decision (which shall include
findings of fact upon which its decision is predicated) and
shall issue and serve upon each party to the proceeding an
order consistent with the provisions of this section. Judicial
review of any such order shall be exclusively as provided in
this subsection.
(2) Appeal.--Any party to a proceeding under paragraph (1)
may obtain a review of any order issued pursuant to paragraph
(1) (other than an order issued with the consent of the
national insurer, national insurance agency, or national
insurance producer concerned) by the filing in the court of
appeals of the United States for the circuit in which the home
office of the national insurer, national insurance agency, or
national insurance producer is located, 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 for the order to be modified, terminated, or set
aside. The party filing such a petition shall transmit to the
Commissioner a copy of the petition and the Commissioner shall
file in the court the record in the proceeding, as provided in
section 2112 of title 28 of the United States Code. Review of
such proceedings shall be had as provided in chapter 7 of title
5 of the 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 of the United States Code.
SEC. 122. OTHER ENFORCEMENT POWERS.
(a) In General.--The Commissioner may issue cease and desist
orders, prohibition, suspension, removal orders, and impose civil money
penalties upon a national insurer, national insurance agency, national
insurance producer, and any insurer-affiliated party on the same
grounds and the same terms and conditions applicable to the issuance of
such orders by a Federal banking agency under section 8 of the Federal
Deposit Insurance Act, as if a national insurer, national insurance
agency, or national insurance producer was an insured depository
institution, an insurer-affiliated party was an institution-affiliated
party, the Commissioner was a Federal banking agency, and a
policyholder was a depositor.
(b) Holding Companies and Other Subsidiaries.--This section shall
apply to a national insurance holding company and to any subsidiary of
a national insurance holding company in the same manner as such section
applies to a national insurer.
SEC. 123. INSURANCE FRAUD.
(a) Investigations.--Director of the Division of Insurance Fraud
may investigate suspected fraudulent insurance acts by national
insurers, national insurance agencies, national insurance producers,
and other persons.
(b) Penalty.--
(1) In general.--Except as provided in paragraphs (2) and
(3), whoever commits a fraudulent insurance act or whoever
knowingly and intentionally interferes with the investigations
of a suspected fraudulent insurance act shall be subject to a
fine of not more than $500,000, imprisonment for not more than
5 years or both.
(2) National insurers, agencies, insurance producers.--If
the person committing an offense referred to in paragraph (1)
is a national insurer, national insurance agency, national
insurance producer, or insurer-affiliated party, such person
shall be subject to a fine of not more than $1,000,000 per
violation per day, or imprisonment for not more than 10 years,
or both.
(3) Low amounts.--If the person committing an offense
referred to in paragraph (1) is not a national insurer,
national insurance agency, national insurance producer, or
insurer-affiliated party and the offense is a fraudulent
insurance act involving an amount or value not exceeding
$5,000, such person shall be subject to a fine of not more than
$100,000, imprisonment for not more than one year, or both.
(4) Additional penalties.--The penalties under this
subsection shall be in addition to any other penalties imposed
under this Act.
(5) Restitution required.--Any person convicted of an
offense referred to in paragraph (1) shall make monetary
restitution for any financial loss or damage sustained by any
other person as a result of such offense. Such restitution
shall be the exclusive monetary remedy available to the victim
at law or in equity after entry of judgment.
(c) Immunity From Liability.--
(1) In general.--Except as provided under paragraph (2),
any person who shares, furnishes, discloses, receives,
collects, or uses information concerning a suspected,
anticipated, or completed fraudulent insurance act shall not be
liable to any person under any provision of law of the United
States or of any State or political subdivision of any State,
or under any contract or other legally enforceable agreement,
for such act, if the information is provided to or received
from--
(A) the Commissioner or any employee, agent, or
representative of the Commissioner;
(B) a Federal, State, or local enforcement or
regulatory official or an employee, agent, or
representative of such official;
(C) a self-regulatory organization or an employee,
agent, or representative of such organization;
(D) a person involved in the investigation
(including cooperation or participation in an
investigation), prevention, and detection of fraudulent
insurance acts or an employee, agent, or representative
of such person; or
(E) the NAIC or an employee, agent, or
representative of the NAIC.
(2) Malice.--
(A) In general.--Paragraph (1) shall not apply with
respect to false statements made with actual malice by
a person to a person referred to in subparagraphs (A)
through (E) of paragraph (1).
(B) Contents of complaint.--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 filed the report or furnished
the information with actual malice.
(d) Fraudulent Insurance Act Defined.--In this section, the term
``fraudulent insurance act'' means an act or omission committed by a
person who, knowingly and with intent to defraud, and for the purpose
of depriving another of property or for pecuniary gain, commits,
participates in, or aids, abets, or conspires to commit or solicits
another person to commit, or permits its employees or its agents to
commit, one or more of the following:
(1) Presenting, causing to be presented, or preparing with
knowledge or belief that it will be presented to or by a
national insurer, national insurance agency, State insurer,
State insurance agency, or insurance producer acting with
respect to a policy of insurance written by a national insurer
or State insurer, false information as part of, in support of,
or concerning a fact material to one or more of the following:
(A) An application for a new or renewal of an
insurance policy or reinsurance contract.
(B) The rating of a national insurer or State
insurer that writes an insurance policy or enters into
a reinsurance contract.
(C) A claim for payment or benefit pursuant to an
insurance policy or reinsurance contract.
(D) Premiums paid on an insurance policy or
reinsurance contract.
(E) Payments made in accordance with the terms of
an insurance policy or reinsurance contract.
(F) A document filed with the Commissioner.
(G) The financial condition of a national insurer
or State insurer.
(H) The formation, acquisition, merger,
consolidation, or dissolution of a national insurer or
national insurance agency.
(I) The issuance of evidence of insurance.
(J) The reinstatement of an insurance policy.
(2) Solicitation or acceptance of new or renewal insurance
risks on behalf of a national insurer, national insurance
agency, State insurer, State insurance agency, or insurance
producer, or other persons engaged in the business of insurance
by a person who knows or should know that the national insurer
or State insurer is insolvent at the time of the transaction.
(3) Removal, concealment, alteration, or destruction of the
records of a national insurer, national insurance agency, State
insurer, State insurance agency, or insurance producer.
(4) Transaction of the business of insurance in violation
of laws requiring a charter or license under this Act.
(5) Attempting to commit, aiding or abetting in the
commission of, or conspiracy to commit the acts or omissions
specified in this subsection.
SEC. 124. FOREIGN INVESTIGATIONS.
(a) Requesting Assistance From Foreign Governments.--In conducting
any investigation, examination, or enforcement action under this
subtitle, the Commissioner may request the assistance of any foreign
government.
(b) Providing Assistance to Foreign Governments.--The Commissioner
may assist any foreign government that 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 such foreign
government.
SEC. 125. PROMPT CORRECTIVE ACTION.
(a) Rulemaking.--
(1) In general.--Not later than the expiration of the 6-
month period beginning upon the date of submission of the
report under subsection (b)(3) to the Commissioner, the
Commissioner shall promulgate such regulations, applicable to
national insurers, as the Commissioner determines appropriate
and consistent with the recommendation in that report to ensure
that prompt corrective action is taken to resolve any hazardous
financial condition of a national insurer.
(2) Required content.--Rules required by this subsection
shall include such capital measures and categories, capital
standards, supervisory criteria, restrictions on permissible
actions of such insurers, requirements for such insurers,
procedures, provisions regarding conservatorship and
receivership of such insurers, and other provisions as the
Commissioner considers are appropriate and consistent with any
recommendations in the report and the standards established
pursuant to section 312 of this Act.
(b) GAO Study and Report.--
(1) In general.--The Comptroller General of the United
States shall conduct a study to identify an appropriate
structure of procedures and requirements for taking prompt
corrective actions with respect to national insurers, to ensure
that any hazardous financial condition of such a national
insurer is resolved effectively and efficiently, with the
fewest possible losses.
(2) Requirements.--In conducting the study required by this
subsection, the Comptroller General shall analyze and evaluate
various proposals, structures, methods, and systems for taking
prompt corrective actions with respect to various financial
entities and institutions, including--
(A) the prompt corrective action requirements under
section 38 of the Federal Deposit Insurance Act (12
U.S.C. 1831o) with respect to insured depository
institutions; and
(B) the ``Model Regulation to Define Standards and
Commissioner's Authority for Companies Deemed to be in
Hazardous Financial Condition'' of the NAIC.
(3) Report.--
(A) In general.--Not later than the expiration of
the 6-month period beginning on the date of enactment
of this Act, the Comptroller General shall submit a
report to the Committee on Banking, Housing, and Urban
Affairs of the Senate, the Committee on Financial
Services of the House of Representatives, and the
Commissioner, regarding the study required under this
subsection.
(B) Contents.--The report required under this
paragraph shall describe the study and the results of
the evaluations conducted under the study, and shall
include a specific recommendation to the Commissioner
for establishment of an appropriate structure of
procedures and requirements for taking prompt
corrective actions with respect to national insurers,
to ensure that any hazardous financial condition of a
national insurer is resolved effectively and
efficiently with the fewest possible losses.
TITLE II--SYSTEMIC RISK REGULATION, COORDINATING COUNCIL FOR FINANCIAL
REGULATORS, INTERNATIONAL AGREEMENTS
SEC. 201. SYSTEMIC RISK REGULATION.
(a) Delegation of Authority.--Not later than 90 days after the date
of enactment of this Act, the President shall designate a systemic risk
regulator for covered institutions. In making this designation the
President shall consult with the Chairman of the Senate Committee on
Banking, Housing and Urban Affairs, and the House Committee on
Financial Services, and shall designate a Federal agency, other than
the Office of National Insurance, that has experience in financial
regulation and supervision as the systemic risk regulator for covered
institutions.
(b) Powers of Systemic Risk Regulator.--Notwithstanding any other
provision of law, the agency designated pursuant to subsection (a)
may--
(1) request information on the activities and operations of
a covered institution, or any affiliate of a covered
institution, from such institution or such affiliate, and from
the Office or a State insurance authority responsible for
supervising such covered institution, as applicable;
(2) participate with the Office or a State insurance
authority, as applicable, in an examination of a covered
institution and any affiliate of such covered institution;
(3) if such agency determines that the activities of a
covered institution, any affiliate of a covered institution,
any category of covered institutions, or any product or service
offered by a covered institution is having, or would have,
serious adverse effects on economic conditions or financial
stability, recommend corrective action to the Commissioner or a
State insurance authority, including recommendations to--
(A) restrict or prohibit the covered institution,
any affiliate of the covered institution, or any
category of covered institutions from engaging in such
activity or practice or offering such product or
service; or
(B) take any other action that the agency deems
appropriate to mitigate or avoid the adverse effects of
such activity, practice, product or service;
(4) issue a rule or order to address the activities that
are the subject of a recommendation made pursuant to paragraph
(3), if--
(A) the Commissioner or State insurance authority
fail to implement corrective actions within a
reasonable period of time, as determined by such
agency; and
(B) the Coordinating Council for Financial
Regulators established in section 202 determines, by a
two-thirds vote of its membership, that such corrective
action is necessary to mitigate or avoid an impending
serious adverse effect on economic conditions or
financial stability in the United States; and
(5) in consultation with the Commissioner--
(A) determine if a covered institution is
systemically important; and
(B) if such covered institution is determined to be
systemically important, determine if such covered
institution should be required to be chartered under
title III of this Act.
(c) Access to Information and Confidentiality.--
(1) Court order.--If the agency designated pursuant to
subsection (a) is not given prompt and reasonable access to
officers, employees, agents, books, records and documents of a
covered institution, or any affiliate of a covered institution,
such agency may apply to the United States district court for
the judicial district in which the main office of the covered
institution is located for an order requiring that such access
be promptly provided.
(2) Confidentiality.--Information provided or obtained
under the terms of paragraph (2) or (3) of subsection (b) shall
be treated as confidential supervisory information and exempt
from the requirements of section 552 of title 5, United States
Code.
(d) Judicial Review.--Any covered institution or affiliate of a
covered institution that is the subject of an order issued pursuant to
this section may obtain review of such order in the United States Court
of Appeals within any circuit where such institution or such affiliate
has its principal place of business, or in the Court of Appeals in the
District of Columbia, by filing in the court, within 30 days of after
issuance of such order, a petition praying that the order be set aside.
Such covered institution or affiliate shall transmit to the agency
designated pursuant to subsection (a) a copy of such petition and the
agency shall file in the court the record made before the agency, as
provided in section 2112 of title 28, United States Code. Upon the
filing of such petition, the court shall have jurisdiction to affirm,
set aside, or modify the order and to require the agency to take such
action with regard to the matter under review as the court deems
proper. The findings of the agency as to the facts, if supported by
substantial evidence, shall be conclusive.
(e) Costs.--The agency designated pursuant to subsection (a) shall
recover all direct and indirect costs associated with the exercise of
its authority under this section through the imposition of an
assessment on each covered institution that is equal to the product
of--
(1) an assessment rate established by the agency, by
regulation; and
(2) the amount of the covered institution's average total
assets during the preceding year.
(f) Report to Congress and GAO Review.--
(1) Report to congress.--The agency designated pursuant to
subsection (a) shall provide a written report to Congress of
any action or determination made under paragraph (3), (4), or
(5) of subsection (b), and an explanation of the basis for such
determination.
(2) GAO review.--The Comptroller General of the United
States shall review and report to Congress on any determination
under paragraph (3), (4), or (5) of subsection (b), including
the basis for the determination and the purpose for which any
action was taken.
(g) Covered Institution Defined.--In this section, the term
``covered institution'' means a national insurer and any insurance
company organized and supervised under State law.
SEC. 202. COORDINATING COUNCIL FOR FINANCIAL REGULATORS.
(a) Establishment and Purpose.--There is established the
Coordinating National Council for Financial Regulators (in this section
referred to as the ``Council'') to serve as a forum for financial
regulators to collectively identify and consider issues related to the
regulation and supervision of financial services firms, including the
stability and integrity of financial markets, investor and consumer
protection, the efficiency and effectiveness of regulation and
supervision, and other matters of mutual concern.
(b) Functions of the Council.--
(1) Duties.--The Council shall--
(A) monitor and measure the health and
competitiveness of the financial services industry in
the United States, including its component segments;
(B) develop early warning systems to detect
potential points of weakness or strains in financial
markets;
(C) recommend coordinated actions for national and
State financial regulators and financial services
firms, especially in times of market stress or
financial crisis;
(D) develop model supervisory policies for national
and State financial regulators; and
(E) as necessary, make determinations referred to
in section 201(b)(4)(B).
(2) Limitation.--Except as provided in paragraph (1)(E),
the Council shall not have any independent supervisory or
regulatory authority.
(c) Composition.--The Council shall be composed of--
(1) the Secretary of the Treasury, who shall serve as the
chair of the Council;
(2) the Chairman of the Board of Governors of the Federal
Reserve System;
(3) the Chairman of the Securities and Exchange Commission;
(4) the Chairman of the Commodities Futures Trading
Commission;
(5) the Comptroller of the Currency;
(6) the Director of the Office of Thrift Supervision;
(7) the Chairman of the Federal Deposit Insurance
Corporation;
(8) the Commissioner of National Insurance;
(9) an individual appointed by the President, by and with
the advice and consent of the Senate, who is knowledgeable in
State regulation of depository institutions and other State
licensed lenders;
(10) an individual appointed by the President, by and with
the advice and consent of the Senate, who is knowledgeable in
State regulation of the business of insurance; and
(11) an individual appointed by the President, by and with
the advice and consent of the Senate, who is knowledgeable in
State regulation of securities activities.
(d) Conditions Applicable to Appointed Members of the Council.--
(1) Consultation.--In making the appointments under
paragraphs (9), (10), and (11) of subsection (c), the President
shall consult with the Conference of State Bank Supervisors,
the National Association of Insurance Commissioners, and the
North American Securities Administrators Association, or any
successor organizations formed to represent the interests of
State banking, insurance, and securities regulators.
(2) Term and vacancy.--Members appointed under paragraphs
(9), (10), and (11) of subsection (c) shall serve for a term of
5 years. A vacancy in the Council of a member appointed under
one of such paragraphs shall be filled in the same manner in
which the original appointment was made. The member appointed
to fill the vacancy shall be appointed only for the remainder
of the term of the preceding member.
(3) Travel expenses.--Members appointed under paragraphs
(9), (10), and (11) of subsection (c) shall receive travel
expenses, including per diem in lieu of subsistence, in
accordance with applicable provisions under subchapter I of
chapter 57 of title 5, United States Code.
(4) Prohibition on financial interests.--A member appointed
under paragraph (9), (10), or (11) of subsection (c) may not
have a direct financial interest in any financial services
firm.
(e) Meetings.--The Council shall meet at least every 90 days upon
the call of the Chair. Each member of the Council (other than the
members appointed under paragraphs (9), (10), and (11) of subsection
(c)) may designate a senior policymaking official to represent such
member at a meeting of the Council, as necessary and appropriate.
(f) Consultation.--The Council shall consult, as appropriate, with
major market participants, the various exchanges, clearinghouses, self-
regulatory bodies, trade associations and others, and may seek private
sector solutions to issues whenever possible.
(g) Information Sharing.--The members of the Council shall, to the
extent permitted by law, share information as may be necessary to
fulfill the functions of the Council.
(h) Annual Report.--The Council shall submit an annual report to
the President, Congress, and the governors and legislatures of each
State on its activities.
(i) Administrative Support.--The Secretary of the Treasury shall
provide the Council with such administrative support services as may be
necessary for the performance of its functions.
(j) Authorization.--There is authorized to be appropriated such
funds as may be necessary to carry out this section.
SEC. 203. INTERNATIONAL AGREEMENTS.
(a) In General.--The Commissioner may engage in international
efforts to secure bilateral and multilateral agreements with foreign
insurance regulators and regional and global regulatory organizations
in order to--
(1) promote the stability and integrity of insurance
markets;
(2) encourage open and fair competition in such markets;
and
(3) improve the quality and uniformity of insurance
supervision and regulation internationally and provide the
regulation of cross-border provisions of insurance and
reinsurance services.
(b) Technical Assistance.--The Commissioner may provide technical
assistance to, and cooperation with, foreign insurance regulators and
regional and global regulatory organizations, including the development
and implementation of international regulatory standards for insurance,
and the development and implementation of bilateral and multilateral
mutual recognition agreements on the licensing of insurers and
insurance producers.
(c) Consultation.--In exercising the authority granted under this
section, the Commissioner shall consult and cooperate with the
Executive Office of the President and the United States Trade
Representative.
TITLE III--NATIONAL INSURANCE COMPANIES AND NATIONAL INSURANCE AGENCIES
Subtitle A--Organization, Chartering, and Powers
SEC. 301. ORGANIZATION AND CHARTERING.
(a) Charters.--
(1) In general.--The Commissioner shall, under such
regulations as the Commissioner prescribes, issue charters to
and provide for the organization of--
(A) national insurers in stock, mutual, reciprocal,
or fraternal form; and
(B) national agencies as corporations,
partnerships, limited liability companies, or in other
forms recognized under State law.
(2) National insurers.--A charter for a national insurer
issued under paragraph (1) may limit such national insurer to a
specified line of insurance and shall only be issued for
property and casualty insurance, life insurance, or the
reinsurance of property and casualty insurance and life
insurance. A national insurer may only provide insurance for
the lines of insurance for which such insurer has been issued a
charter under such paragraph.
(3) National agencies.--A charter may be issued under
paragraph (1) to a national insurance agency that sells,
solicits, or negotiates property and casualty insurance, life
insurance, or the reinsurance of property and casualty
insurance and life insurance. A national insurance agency may
sell, solicit, or negotiate lines of insurance other than those
for which such national insurance agency has been issued a
charter under paragraph (1) in accordance with applicable State
laws.
(b) Chartering Criteria.--In determining whether to issue a charter
for a national insurer or national insurance agency, the Commissioner
shall consider the character and competency of the parties seeking the
charter, and the financial resources and future prospects of the
proposed national insurer or proposed national insurance agency.
(c) Licensing of Non-United States Insurers.--
(1) In general.--A non-United States insurer may transact
insurance in the United States through a United States branch
by chartering the United States branch to do business as a
national insurer under this Act, under such regulations as the
Commissioner may prescribe.
(2) Chartering criteria.--In carrying out subsection (b)
with respect to a non-United States insurer, the Commissioner
may take into account the nature of the insurance or
reinsurance business that the non-United States insurer
proposes to conduct through a United States branch and may give
appropriate recognition to the capital and other assets
maintained by the non-United States insurer in a jurisdiction
other than the United States.
(3) Other applicable laws.--Nothing in this section shall
be construed to prohibit a non-United States insurer from doing
business as an insurer without a charter under this Act on any
basis permitted under applicable State laws or an international
agreement.
(4) Nondiscrimination.--
(A) In general.--Except as provided in this
section, the Commissioner may not impose any condition
for the issuance of a charter under this section to a
national insurer solely because the national insurer
is--
(i) a subsidiary of a non-United States
person;
(ii) partially owned by a non-United States
person; or
(iii) a United States branch of a non-
United States insurer.
(B) Exception.--Notwithstanding subparagraph (A),
the Commissioner may impose conditions for the issuance
of a charter under this section that are different from
those imposed on other national insurers if--
(i) the conditions attached are contained
in the charter under which the national insurer
chooses to operate; and
(ii) the Commissioner makes a written
finding that the conditions are related to the
protection of policyholders and are the minimum
conditions necessary to achieve the purposes of
this Act.
(d) No Delegation Permitted.--The Commissioner may not delegate the
authorities of the Commissioner under this section to any insurance
self-regulatory organization.
SEC. 302. CORPORATE GOVERNANCE.
(a) Main Office.--A national insurer or national insurance agency
may designate any office at which it conducts insurance operations as
its main office, and for purposes of jurisdiction, a national insurer
or national insurance agency shall be deemed a citizen of the State in
which its main office is located and of the State in which it has its
principal place of business.
(b) Applicable Law.--A national insurer or national insurance
agency may elect to follow the corporate governance procedures of the
law of the State in which the main office of the such insurer or agency
is located, the law of the State in which a company that controls the
insurer or agency is incorporated, title 8 of the Delaware Code
(Delaware General Corporation Law), r the Model Business Corporation
Act of the American Bar Association. A national insurer or national
insurance agency shall designate in its bylaws the body of law
selected.
(c) Independent Audit Committee for National Insurers.--
(1) In general.--Each national insurer and national
insurance agency shall establish an audit committee of the
board of directors of such insurer or such agency, which shall
be composed entirely of outside directors who are independent
of management of such insurer or such agency.
(2) Satisfaction.--The requirement described in paragraph
(1) shall be satisfied if a company that controls a national
insurer or national insurance agency has established an audit
committee of its board of directors entirely composed of
outside directors who are independent of management of such
controlling person, and such committee reviews the financial
statements of the national insurer or national insurance
agency.
(d) Participating Policy Procedures.--
(1) In general.--A national insurer in mutual form shall
elect to either adhere to participating policy procedures of
the relevant law of the State in which its main office is
located, or adhere to the participating policy procedures
established by the Commissioner under paragraph (2).
(2) Regulations.--The Commissioner shall, by regulation,
establish participating policy procedures, as the Commissioner
determines to be appropriate to carry out paragraph (1).
(e) Consumer Liaison.--
(1) In general.--Each national insurer and national
insurance agency shall appoint a liaison to serve consumers and
address complaints or disputes.
(2) Procedures.--Each national insurer and national
insurance agency shall establish policies and procedures
designed to reasonably ensure fair and expeditious handling of
consumer complaints and disputes.
(3) Regulations.--The Commissioner shall issue regulations
governing the standards for the liaison referred to in
paragraph (1).
SEC. 303. CHARTER CONVERSIONS.
(a) Conversion From State to National Charter.--
(1) In general.--Notwithstanding any other provision of
law, the Commissioner may, pursuant to regulations issued by
the Commissioner, allow a State insurer to convert to a
national insurer and a State insurance agency to convert to a
national insurance agency.
(2) Effect of conversion.--A State insurer or State
insurance agency that converts under this section shall, by
operation of law and without further action, hold and be
subject to all rights, privileges, liabilities, property
interests, and other interests and obligations that the State
insurer or State insurance agency held, or was subject to,
immediately before the conversion.
(3) Special authority.--The Commissioner may, subject to
such conditions as the Commissioner may prescribe by
regulation, permit a national insurer or national insurance
agency resulting from the conversion of a State insurer or
State insurance agency, as applicable, to retain, hold, or
exercise assets, liabilities, powers, and authorities that do
not conform to the legal requirements otherwise applicable to
national insurers or national insurance agencies to the extent
the Commissioner determines is appropriate.
(b) Conversion From National to State Charter.--
(1) In general.--A national insurer may convert to a State
insurer and a national insurance agency may convert to a State
insurance agency in accordance with applicable State law if--
(A) such national insurer or such national
insurance agency notifies the Commissioner of the
intention to convert in accordance with such procedures
as the Commissioner may prescribe by regulation; and
(B) after conducting a review of such national
insurer or such national insurance agency, the
Commissioner approves the conversion.
(2) Savings provision.--Nothing in this section or in the
conversion of a national insurer to a State insurer or a
national insurance agency to a State insurance Agency shall
operate to abrogate any rights, privileges, liabilities,
property interests, or other interests or obligations that a
national insurer or national insurance agency held or was
subject to immediately before the conversion.
(c) No Delegation Permitted.--The Commissioner may not delegate any
authority under this section to any insurance self-regulatory
organization.
SEC. 304. POWERS.
(a) In General.--
(1) National insurer.--A national insurer may, pursuant to
such regulations as the Commissioner prescribes--
(A) engage in the sale, solicitation, negotiation,
and underwriting of property and casualty insurance
(other than title insurance), life insurance, and
reinsurance;
(B) establish and maintain one or more separate
accounts and allocate amounts to such accounts, and
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;
(C) hold and accumulate funds pursuant to funding
agreements;
(D) provide investment advice and investment
management services; and
(E) engage in all other insurance operations and
exercise all such incidental powers as shall be
necessary to carry on insurance operations.
(2) National insurance agency.--A national insurance agency
may, pursuant to such regulations and the Commissioner
prescribes--
(A) engage in the sale, solicitation, and
negotiation of policies of insurance issued by any
national insurer or State insurer, and the sale,
solicitation and negotiation of surplus lines of
insurance and nonadmitted insurance for a nonadmitted
insurer; and
(B) exercise all such incidental powers as shall be
necessary to carry out such activities, including
claims adjustment and settlement, risk management,
employee benefits advice, retirement planning, and any
other insurance-related consulting activities.
(b) Other Powers.--A national insurer or national insurance agency
may, subject to such regulations as the Commissioner prescribes--
(1) adopt and use a corporate seal, or a facsimile of it;
(2) have perpetual succession until such time as it is
liquidated, dissolved, merged, or otherwise wound up in
accordance with applicable law;
(3) adopt, amend, and repeal by-laws;
(4) 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;
(5) 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 national insurer or national insurance
agency), and secure any of its obligations by mortgage or
pledge of any of its property, franchises, or income;
(6) 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 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;
(7) lend money, invest, and reinvest its funds and receive
and hold real and personal property as security for repayment;
(8) participate with others in any corporation,
partnership, limited partnership, joint venture, or other
association, or in any transaction, undertaking, or
arrangement, which the national insurer or national insurance
agency would have power to conduct by itself, whether or not
such participation involves sharing or delegating control with
or to others;
(9) elect or appoint directors, officers, employees, and
agents of the national insurer or national insurance agency,
define their duties, fix their compensation, and lend them
money and credit;
(10) make donations and otherwise devote its resources for
the public welfare or for charitable, scientific, educational,
humanitarian, philanthropic, or religious purposes; and
(11) engage in any other lawful activity that is necessary
or convenient to further its activities and affairs.
(c) Subsidiaries.--No national insurer or national insurance agency
may establish or acquire a subsidiary without prior notice to the
Commissioner, and shall conduct the activities in accordance with
regulations and orders of the Commissioner.
(d) Other Corporate Transactions.--No national insurer or national
insurance agency shall engage in mutual to stock conversions, stock to
mutual conversions, mergers, acquisitions, asset transfers, and other
similar corporate transactions without the prior approval of the
Commissioner, and subject to regulations and orders of the
Commissioner.
(e) Prohibited Activities.--No national insurer or national
insurance agency may engage in any activity that the Commissioner
determines, by regulation or order, poses a serious risk to the
solvency of a national insurer or national insurance agency,
jeopardizes the interests of policyholders of a national insurer or
national insurance agency, or otherwise is incompatible with the public
interest.
(f) Bulk Transfers.--
(1) Bulk transfers authorized.--A national insurer may only
effect the following bulk transfers:
(A) A State insurer as the transferring insurer and
a permitted national insurer as the assuming insurer.
(B) A permitted national insurer as the
transferring insurer and a State insurer as the
assuming insurer.
(C) A national insurer as the transferring insurer
and a national insurer as the assuming insurer.
(D) A State insurer as the transferring insurer and
a national insurer that is not a permitted national
insurer as the assuming insurer.
(E) A national insurer that is not a permitted
national insurer as the transferring insurer and a
State insurer as the assuming insurer.
(2) Commissioner approval.--
(A) In general.--A national insurer shall not
effect a bulk transfer as authorized under subparagraph
(A), (B), (C), or (E) of paragraph (1) without the
prior approval of the Commissioner, in accordance with
such regulations as the Commissioner shall prescribe.
(B) Standard of approval.--The Commissioner shall
approve a bulk transfer under subparagraph (B), after
notice and a hearing, unless the Commissioner
determines that the bulk transfer is likely to be
hazardous to policyholders of transferred insurance
policies, policyholders of the transferring insurer, or
policyholders of the assuming insurer.
(3) Policyholder consent.--
(A) State insurer and permitted national insurer.--
Notwithstanding any other provision of law, a national
insurer is not required to obtain the consent of
policyholders to effect a bulk transfer authorized
under subparagraph (A) or (B) of paragraph (1).
(B) Between national insurers or state insurer and
other national insurer.--Notwithstanding any other
provision of law, the Commissioner shall determine
whether a national insurer wishing to effect a bulk
transfer authorized under subparagraph (C) or (E) of
paragraph (1) is required to obtain the consent of
policyholders to effect such transfer and the form in
which such consent must be obtained.
(4) Release from liability.--Upon the completion of a bulk
transfer under this section, the transferring insurer shall be
released from its obligations under the transferred insurance
policies.
(5) State law.--
(A) Prohibition.--Except as provided in
subparagraph (B), a State may not--
(i) require a national insurer or a State
insurer to--
(I) obtain policyholder consent to
a bulk transfer; or
(II) submit the bulk transfer to
State review or action (including
approval and nondisapproval); or
(ii) prevent or significantly interfere
with a bulk transfer effected pursuant to this
section.
(B) Construction.--Subparagraph (A) shall not be
construed to prohibit any State from--
(i) collecting, reviewing, and taking
action (including approval or disapproval) on
applications and other documents or reports
concerning a proposed bulk transfer authorized
under--
(I) subparagraph (B), (D), or (E)
of paragraph (1) to which a State
insurer (other than a permitted
national insurer) domiciled in that
State is a party; or
(II) subparagraph (D) or (E) of
paragraph (1) to which a State insurer
(other than a permitted national
insurer) doing business in that State,
other than a State insurer domiciled in
that State, is a party, if the review
or action meets the standards set forth
in subparagraph (C); or
(ii) requiring policyholder consent of a
proposed bulk transfer permitted under
paragraph (4) or (5) of subsection (b).
(C) Standards.--A review or action meets the
standards under this paragraph, if it--
(i) is based on standards that are not more
onerous than those imposed by the Commissioner;
(ii) occurs within a reasonable time frame
that advances the purposes of this section;
(iii) is made in close consultation and
cooperation with the Commissioner;
(iv) is without bias or discrimination
toward either the transferring insurer or the
assuming insurer;
(v) serves a legitimate State interest; and
(vi) does not frustrate the proposed bulk
transfer.
(D) Notice of failure.--If the Commissioner finds
that any State review or action under subparagraph
(B)(i) fails to meet any of the standards set forth in
subparagraph (C), the Commissioner may provide the
applicable State with notice of such failure and the
reasons for such failure.
(6) Differential treatment prohibited.--A State may not
treat a national insurer or a State insurer entering into a
bulk transfer agreement with a national insurer or a State
insurer, or any affiliate or subsidiary of such insurer,
differently than any other insurer operating in that State.
(7) No delegation permitted.--The Commissioner may not
delegate to any insurance self-regulatory organization any
authority conferred under this subsection with respect to any
bulk transfer involving a national insurer.
(8) Definitions.--In this subsection:
(A) Assuming insurer.--The term ``assuming
insurer'' means the insurer that purchases or otherwise
acquires existing insurance policies from another
insurer by bulk transfer.
(B) Block of business.--The term ``block of
business'' means all those insurance policies of an
insurer under a particular policy form.
(C) Bulk transfer.--The term ``bulk transfer''--
(i) means the transfer by an insurer to
another insurer of existing insurance policies
constituting all or substantially all of one or
more of its lines of business or blocks of
business; and
(ii) does not include--
(I) any sale in which the
transferring insurer retains direct or
indirect control of the assets
supporting the transferred insurance
policies;
(II) any transaction effected by an
agreement under which the transferring
insurer continues to remain directly
liable to the policyholders under the
insurance policies;
(III) the substitution of one
insurer for another upon the expiration
of insurance coverage pursuant to
statutory or contractual requirements
and the issuance of a new policy of
insurance by that insurer;
(IV) the transfer of policies of
insurance pursuant to merger or
consolidation of two or more insurers
to the extent that those transactions
are regulated by statute;
(V) any transaction effected by an
insurer subject to a judicial order of
receivership, liquidation, or
rehabilitation; or
(VI) any transfer of liabilities
from one insurer to another under a
single group insurance policy upon the
request of the group policyholder.
(D) Permitted national insurer.--The term
``permitted national insurer'' means--
(i) a State insurer that has recently
converted to a national insurer under section
303, as determined by the Commissioner; or
(ii) a national insurer that has been
issued a charter under section 301 for a new
line of insurance, as determined by the
Commissioner.
(E) Transferred insurance policies.--The term
``transferred insurance policies'' means the insurance
policies that are subject to the bulk transfer.
(F) Transferring insurer.--The term ``transferring
insurer'' means the insurer in privity of contract with
the policyholders under the existing insurance policies
that are subject to the bulk transfer.
(g) Effect of State Law.--No State may prevent or restrict a
national insurer or national insurance agency from exercising any power
conferred by this section or by any regulation authorized by this
section.
SEC. 305. CHARTERING COMMENCEMENT DATE.
The Commissioner may not charter a national insurer or national
insurance agency until the Commissioner notifies Congress that the
Office is operational and that all regulations necessary to govern the
organization, formation, operations, and supervision of such insurers
and agencies have been issued in final or interim final form. The
Commissioner shall provide a notification to Congress not later than 2
years after the date of the enactment of this Act.
Subtitle B--Financial, Policy and Market Conduct Standards
SEC. 311. FINANCIAL STANDARDS.
The Commissioner shall establish, by regulation, standards for
national insurers and national insurance agencies on--
(1) accounting and disclosure;
(2) auditing;
(3) risk management;
(4) internal controls;
(5) investments;
(6) capital and liquidity;
(7) actuarial opinions;
(8) reinsurance; and
(9) such other matters as the Commissioner deems necessary
to ensure the financial stability and integrity of national
insurers and national insurance agencies.
SEC. 312. POLICY STANDARDS.
(a) Policy Standards.--The Commissioner shall establish, by
regulation, general policy requirements and requirements for different
categories of policies issued by national insurers.
(b) Filing Requirement.--No national insurer may issue a policy
until the form of the policy has been filed with the Commissioner. The
form shall be accompanied by written certification by an officer of the
national insurer that the policy complies with requirements established
under subsection (a).
(c) Law Applicable.--
(1) Law specified by parties.--The provisions of any
insurance policy or other product of a national life insurer
shall be interpreted in accordance with the law of the
jurisdiction specified by the parties to the insurance policy
or other product if the parties have specified the law of--
(A) the jurisdiction in which the main office of
the national life insurer is located;
(B) the jurisdiction in which the principal place
of business of the national life insurer is located; or
(C) the jurisdiction in which the insurance policy
or other product is delivered.
(2) Default law.--If the parties to an insurance policy or
other product of a national life insurer have not specified the
jurisdiction whose law shall govern the provisions of the
insurance policy or other product, such provisions shall be
interpreted in accordance with the law of the jurisdiction in
which the insurance policy or other product is delivered.
(3) Rulemaking.--The Commissioner shall establish, by
regulation, choice of law rules under this subsection.
(d) Interpretive Rulings.--
(1) Procedures.--The Commissioner shall establish
procedures by which national insurers may obtain interpretive
rulings from the Office regarding the interpretation and
application of the requirements established under this section.
(2) Public availability.--Except as provided under
paragraph (3), requests by national insurers for interpretive
rulings from the Office and the complete text of such
interpretive rulings shall not be made available to the public.
(3) Publication of summaries.--Notwithstanding paragraph
(2), the Commissioner shall publish a summary of each
interpretive opinion, excluding the name of the national
insurer and any other identifying information, either promptly
after the issuance of such opinion or, upon the request of the
national insurer, after such delay as the Commissioner
determines appropriate.
(e) Rates, Rating Elements, and Price.--The Commissioner may not
require a national insurer to use any particular rate, rating element,
or price.
SEC. 313. MARKET CONDUCT STANDARDS.
(a) Standards.--The Commissioner shall establish, by regulation,
market conduct standards for national insurers, national insurance
agencies, and national insurance producers that implement the model
laws of the NAIC entitled ``Unfair Trade Practices Act'' and ``Unfair
Claims Settlement Practices Act''.
(b) Disclosure.--
(1) In general.--Subject to paragraph (2), the Commissioner
shall require each policy issued by a national insurer to
include the following disclosure on the cover page:
``This policy has been issued by a national insurer, which
is supervised by the Office of National Insurance. If you have
any questions or complaints about this policy, you may contact
the Division of Consumer Affairs, Office of National Insurance,
____.''.
(2) Address.--The disclosure required under paragraph (1)
shall, in place of the blank at the end, include the
appropriate address, toll-free number, and Internet address of
the Division of Consumer Affairs for the office of the Division
located in the State in which the policyholder resides.
SEC. 314. GENERAL PRINCIPLES.
(a) General Principles.--The financial, policy, and market conduct
standards issued by the Commissioner pursuant to this subtitle shall--
(1) promote the stability and integrity of national
insurers and national insurance agencies;
(2) protect policyholders and other consumers and
investors; and
(3) encourage innovation and competition by national
insurers and national insurance agencies.
(b) NAIC Standards.--In establishing the financial, policy, and
market conduct standards required by this subtitle, the Commissioner
shall take into consideration standards, models, practices, and
instructions established by the NAIC.
Subtitle C--State Taxation
SEC. 321. STATE TAXATION OF NATIONAL INSURERS.
(a) State Taxation Rule.--Except as provided in subsection (b) and
section 605(b), a national insurer doing business in any State shall be
subject to all applicable State and local taxes, assessments, and
charges, including insurance retaliatory taxes or other similar taxes,
and shall be entitled to all applicable tax credits, deductions, and
offsets provided under State law, as well as all policyholder surcharge
provisions under State law, to the same extent and in the same manner
as an insurer licensed to do business in such State and chartered in
the State where the national insurer is considered domiciled under
subsection (c) or (d), except that, such national insurer shall not be
subject to--
(1) any additional taxes, assessments, and charges imposed
by such State (or local government) by reason of the failure of
the national insurer to be licensed or otherwise authorized to
conduct business or write or sell insurance policies, by such
State; or
(2) special assessments and charges that fund services that
the State does not provide with respect to the national
insurer.
(b) Exception.--No State shall have the power to impose an
insurance retaliatory tax on any national insurer, unless--
(1) for any tax purpose for which the State of domicile is
relevant, every national insurer is treated by such State as
domiciled in the State designated by each national insurer
under subsection (c); and
(2) the insurance retaliatory tax is imposed by such State
on every national insurer to the same extent and in the same
manner as it is imposed on every insurer chartered in the State
where the national insurer is considered domiciled under
subsection (c).
(c) Designation of Domicile.--
(1) In general.--A national insurer may designate as its
State of domicile, by filing such designation in writing with
the Commissioner--
(A) the State in which the national insurer's
principal place of business in the United States is
located; or
(B) in the case of an insurer that has converted
from a State insurer to a national insurer under this
Act, the State in which such insurer was domiciled
immediately before such conversion.
(2) No designation by national insurer.--If a national
insurer does not make a designation of a State of domicile
under this subsection, the national insurer shall be deemed to
have designated as its State of domicile the State in which its
principal place of business in the United States is located.
(3) Change in domicile.--A national insurer may change its
State of domicile, with the approval of the Commissioner, to
any other State in accordance with paragraph (1).
(d) Status of National Insurer.--For purposes of State taxation,
except as provided in this section, a national insurer shall not be
exempt from any State tax or subject to a lesser burden of any State
tax, solely by reason of its status as a national insurer under this
Act.
SEC. 322. STATE TAXATION OF NATIONAL INSURANCE AGENCIES.
(a) State Taxation Rule.--A national insurance agency shall be
subject to all taxes imposed under any applicable provision of State
law, to the same extent and in the same manner as an agency chartered
in the State in which the national insurance agency is considered
domiciled pursuant to subsection (b).
(b) State of Domicile.--For purposes of this section, the State of
domicile of a national insurance agency shall be deemed to be the State
in which the principal place of business of the national insurance
agency in the United States is located.
(c) Status of National Insurance Agency.--For purposes of State
taxation, except as provided in this section, a national insurance
agency shall not be exempt from any State tax or subject to a lesser
burden of any State tax, solely by reason of its status as a national
insurance agency under this Act.
SEC. 323. STATE TAXATION OF NONADMITTED AND SURPLUS LINES OF INSURANCE.
No State, other than the State in which an insured maintains its
principal place of business or, in the case of an individual, maintains
a principal residence, may require a tax, fee, assessment, or other
charge imposed on an insured, either directly or through a producer,
that is based upon any payment made as consideration for nonadmitted
insurance or surplus lines insurance, and any other compensation given
in consideration for a contract of insurance.
TITLE IV--NATIONAL INSURANCE PRODUCERS
SEC. 401. LICENSING OF NATIONAL INSURANCE PRODUCERS.
(a) Authority.--The Commissioner may license an individual person
as a national insurance producer.
(b) Requirements for Sale of National Insurance.--An individual may
sell, solicit, or negotiate insurance for a national insurer only if--
(1) such individual--
(A) is licensed by the Commissioner under
subsection (a); and
(B) is--
(i) an agent or employee of a national
insurer or a national insurance agency; or
(ii) self-employed and not affiliated with
another national insurance producer, as
determined by the Commissioner; or
(2) such individual is licensed as an insurance producer
under the laws of a State and sells, solicits, or negotiates
such insurance to persons in such State.
(c) Scope of License.--
(1) In general.--A national insurance producer may--
(A) sell, solicit, or negotiate insurance in any
State for a national insurer or a State insurer;
(B) sell, solicit, or negotiate surplus lines of
insurance and nonadmitted insurance for a non-admitted
insurer; and
(C) exercise all such incidental powers as shall be
necessary to carry out the activities referred to in
subparagraphs (A) and (B), including claims adjustments
and settlement, risk management, employee benefits
advice, retirement planning, and any other insurance-
related consulting activities.
(2) Limitations.--The Commissioner may limit a license to
one or more specified lines or types of insurance.
(d) Qualifications.--The Commissioner shall, by regulation, specify
educational and examination requirements for obtaining a national
insurance producer license, and may impose different requirements for
different lines or types of insurance.
SEC. 402. SUPERVISION AND EXAMINATION.
(a) Examinations.--
(1) In general.--The Commissioner may examine a national
insurance producer to assess the producer's compliance with
this Act and the regulations issued pursuant to this Act.
(2) Mandatory examinations.--The Commissioner shall provide
for the examination of a national insurance producer in
response to a complaint or any evidence that such producer has
violated or is about to violate--
(A) a law, rule, or regulation;
(B) any condition imposed in writing by the
Commissioner in connection with issuing a national
insurance producer license; or
(C) any written agreement entered into with the
Commissioner.
(b) Reports.--The Commissioner may require a national insurance
producer to make such reports, containing such information and in such
form, as the Commissioner may prescribe by regulation.
(c) Powers.--The powers authorized the Commissioner in section 121
shall apply to reports by and examinations of national insurance
producers.
(d) Limitation on Liability.--
(1) In general.--Subject to paragraph (2), no civil
liability shall be imposed on and no cause of action shall
arise from a national insurer or national insurance agency, an
insurer-affiliated party, or a national insurance producer
submitting a statement or information required under this Act,
or any regulation thereunder, or requested in writing by the
Commissioner relating to the conduct of a national insurance
producer.
(2) Exception.--Paragraph (1) shall not apply with respect
to false statements made with actual malice.
SEC. 403. PRODUCER DATABASE.
(a) In General.--The Commissioner shall develop and implement an
electronic database consisting of information relating to national
insurance producers and an electronic communication network that links
the Commissioner with State insurance regulators and national insurers,
national insurance agencies, and State insurers for an electronic
exchange of such information.
(b) Maintenance.--The Commissioner may delegate authority over the
maintenance of each database described in subsection (a) to an
insurance self-regulatory organization.
SEC. 404. DUTY TO SUPERVISE.
(a) National Insurers.--Unless a national insurance producer is
subject to the supervision of a national insurance agency under
subsection (b), a national insurer shall supervise the sales and
marketing practices of a national insurance producer with respect to
the sale, solicitation, or negotiation of insurance policies of such
national insurer, if--
(1) such producer is an--
(A) employee of the national insurer; or
(B) agent of the national insurer; and
(2) the principal business activity of such producer is
devoted to the sale, solicitation, or negotiation of insurance
policies for such insurer, the supervision of the agents for
such insurer, or both.
(b) National Insurance Agencies.--A national insurance agency shall
supervise the sales and marketing practices of a national insurance
producer with respect to the sale, solicitation, or negotiation of
insurance policies, if such producer--
(1) is an employee of such agency and the sale,
solicitation, and negotiation of insurance is within the scope
of employment of the producer; or
(2) is an agent of such agency and the sale, solicitation,
and negotiation of insurance is pursuant to the terms of an
agreement between the agent and such agency.
(c) Standards for Supervision.--The Commissioner shall, by
regulation, establish standards for the duties under subsections (a)
and (b). Such standards shall not conflict with the rules adopted by
any self-regulatory organization approved by the Securities and
Exchange Commission pursuant to its authority under section 19(b)(1) of
the Securities Exchange Act of 1934 (15 U.S.C. 78s(b)(1)) for broker-
dealer supervision of registered representatives.
(d) Exemption.--The Commissioner may, by regulation, exempt any
class of persons from the duties under subsections (a) and (b), if the
Commissioner determines that, given the nature of the business
relationship with the national insurance producer, it would be
unreasonable or inappropriate to require the class member to supervise
such producer.
(e) No Duty.--A national insurer or national insurance agency is
not required to supervise the sales and marketing practices of persons
other than those referred to in subsections (a) or (b).
(f) Oversight of Independent National Insurance Producers.--
(1) In general.--The Commissioner shall oversee the sales
and marketing practices of a national insurance producer with
respect to the sale, solicitation, or negotiation of insurance
policies if such producer is not a person subject to
supervision under subsection (a) or (b).
(2) Standards and procedures.--The Commissioner shall, by
regulation, establish standards and procedures for the
oversight of the sales and marketing practices of national
insurance producers described in paragraph (1).
SEC. 405. RELATIONSHIP TO STATE LAW.
(a) No State Restrictions.--No State may prevent or restrict a
national insurer or national insurance agency from engaging in the acts
described in subsection (b) or from engaging the services of a person
who engages in such acts for the national insurer or national insurance
agency, nor shall any State require that a person be licensed by reason
of engaging in such acts for a national insurer or national insurance
agency.
(b) Acts Protected From State Restrictions.--The acts referred to
in subsection (a) are the following:
(1) Investigating, evaluating, ascertaining, or determining
the amount of or negotiating, settling, or adjusting or
otherwise participating in the disposal of claims, losses, or
damages arising under insurance policies written by a national
insurer.
(2) Soliciting, negotiating, or placing reinsurance
cessions or retrocessions on behalf of a ceding national
insurer without the authority or power to bind reinsurance on
behalf of such national insurer.
(3) Binding or managing all or part of the assumed
reinsurance business of a national insurer that is a reinsurer
(including the management of a separate division, department,
or underwriting office) and acting as an agent for such
reinsurer.
(4) Directly or indirectly underwriting, collecting charges
or premiums, or adjusting or settling claim, in connection with
policies of insurance written by a national insurer.
(c) Activities of National Insurance Producers.--No State may--
(1) prevent or restrict a national insurance producer from
engaging in any activity authorized by this title; or
(2) require such producer to be licensed by reason of
engaging in such activity on behalf of a national insurer,
national insurance agency, State insurer, or a United States
branch of a non-United States insurer.
(d) Activities of State Insurance Producers.--No State may prevent
or restrict an insurance producer licensed by such State from selling,
soliciting, or negotiating insurance in such State on behalf of a
national insurer or being employed by a national insurance agency.
(e) International Agreements.--To the extent that a non-United
States insurer is eligible to conduct a cross-border business pursuant
to an international agreement, no State may--
(1) prevent or restrict such non-United States insurer from
engaging in the activities authorized under such agreement; or
(2) prevent or restrict a national insurance agency or
national insurance producer from engaging in any activity
authorized by this Act on behalf of such non-United States
insurer or require the agency or producer to be licensed by
reason of engaging in such activity for such non-United States
insurer.
SEC. 406. LICENSING COMMENCEMENT DATE.
The Commissioner shall not license a national insurance producer
until the Commissioner notifies Congress that the Office is operational
and that all regulations necessary to govern the licensing, operations,
and supervision of such producer have been issued in final or interim
final form. The Commissioner shall provide a notification to Congress
not later than 2 years after the date of the enactment of this Act.
TITLE V--CHANGE IN CONTROL AND INSURANCE HOLDING COMPANIES
SEC. 501. CHANGE IN CONTROL.
(a) In General.--
(1) Limitation.--A person shall not, directly or indirectly
or through or in concert with one or more other persons,
acquire control of a national insurer until--
(A) such person has submitted a written notice as
described in subsection (f) to the Commissioner of the
intention of such person to acquire control of such
national insurer; and
(B) the expiration of the disapproval period and
all extensions of such period referred to in paragraph
(2).
(2) Disapproval period.--
(A) In general.--The Commissioner may disapprove
the acquisition of effective control of a national
insurer by issuing notice to the person wishing to
acquire such effective control within 60 days of
receiving a notice referred to in paragraph (1)(A).
(B) Extension authorized.--The period for
disapproval under subparagraph (A) may be extended not
more than twice for a period of not more than 45 days
each time, if--
(i) the Commissioner determines that an
acquiring person has not furnished all the
information required under this section;
(ii) in the judgment of the Commissioner,
any material information submitted is
substantially inaccurate;
(iii) the Commissioner has been unable to
complete the investigation of an acquiring
person required under this section because of
any delay caused by, or the inadequate
cooperation of, such acquiring person; or
(iv) the Commissioner determines that
additional time is needed--
(I) to investigate and determine
that no acquiring person has a record
of failing to comply with the
requirements of subchapter II of
chapter 53 of title 31, United States
Code; or
(II) to analyze the safety and
soundness of any plans or proposals
described in subsection (f)(6) or the
future prospects of the national
insurer.
(b) Investigation of Principals.--
(1) In general.--Upon receiving a notice under subsection
(a)(1), the Commissioner shall--
(A) conduct an investigation of the competence,
experience, integrity, and financial ability of each
person named in a notice of a proposed acquisition as a
person by whom or for whom such acquisition is to be
made; and
(B) make an independent determination of the
accuracy and completeness of any information described
in subsection (f) with respect to such person.
(2) Report.--The Commissioner shall prepare a written
report of any investigation under paragraph (1) that includes a
summary of the results of such investigation and shall make
such report publicly available in accordance with regulations
issued by the Commissioner for the publication of reports under
this paragraph.
(c) Public Comment.--Upon receiving notice of a proposed
acquisition, the Commissioner shall, unless the Commissioner determines
that an emergency exists, within a reasonable period of time--
(1) publish the name of the national insurer to be acquired
and the name of each person identified in such notice as a
person by whom or for whom such acquisition is to be made; and
(2) solicit public comment on such proposed acquisition,
particularly from persons in the geographic area where the
national insurer is located, before final consideration of such
notice by the Commissioner.
(d) Grounds for Disapproval.--The Commissioner may disapprove a
proposed acquisition, if--
(1) either the financial condition of any acquiring person
or the future prospects of the institution is such as might
jeopardize the financial stability of the national insurer or
prejudice the interests of the customers of such insurer;
(2) the competence, experience, or integrity of any
acquiring person or of any of the proposed management personnel
indicates that it would not be in the interest of the customers
of the national insurer, or in the interest of the public to
permit such person to control the national insurer; or
(3) any acquiring person neglects, fails, or refuses to
furnish the Commissioner with all the information required by
the Commissioner.
(e) Notice of Disapproval, Hearing.--
(1) Notice of disapproval.--Not later than 3 days after a
decision to disapprove a proposed acquisition under this
section, the Commissioner shall notify the acquiring person in
writing of the disapproval. Such notice shall provide a
statement of the basis for the disapproval.
(2) Hearing.--
(A) In general.--Not later than 10 days after the
receipt of a notice of disapproval under paragraph (1),
a person may request a hearing before a United States
district court with jurisdiction on the proposed
acquisition.
(B) Standard of review.--A judge reviewing a notice
of disapproval under paragraph (1) shall determine
whether the decision of the Commissioner is reasonable.
(3) Judicial review.--A person whose proposed acquisition
is disapproved after a hearing under paragraph (2) may obtain
review by the United States court of appeals for the circuit in
which the main office of the national insurer is to be acquired
is located, or the United States Court of Appeals for the
District of Columbia Circuit, by filing a notice of appeal in
such court within 10 days from the date of such order, and
simultaneously sending a copy of such notice by registered or
certified mail to the Commissioner. The Commissioner shall
promptly certify and file in such court the record upon which
the disapproval was based. The findings of the Commissioner
shall be set aside if found to be arbitrary or capricious or if
found to violate procedures established by this section.
(f) Information.--A notice described in this subsection is a notice
that includes such relevant information in such form as the
Commissioner may require by regulation or by specific request in
connection with a particular notice.
SEC. 502. REPORTS BY AND EXAMINATIONS OF INSURANCE HOLDING COMPANIES.
(a) Reports.--Each national insurance holding company and each
subsidiary of such company, other than a national insurer, shall file
with the Commissioner such reports as may be required by the
Commissioner. Such reports shall be made under oath, and shall be in
such form and for such periods as the Commissioner may prescribe. Each
report shall contain such information concerning the operations of such
national insurance holding company and its subsidiaries as the
Commissioner may require.
(b) Examinations.--Each national insurance holding company and each
subsidiary thereof shall be subject to such examinations as the
Commissioner may prescribe. The cost of such examinations shall be
assessed against and paid by such national insurance holding company.
(c) Applicability to Non-United States Insurance Holding Companies
and Subsidiaries.--Each non-United States insurance holding company and
each non-United States subsidiary thereof shall be subject to the
report and examination authority of this section only to the extent
authorized by an applicable international agreement.
(d) Reports and Examinations Filed With Other Agencies.--The
Commissioner shall, to the fullest extent deemed feasible, use for the
purposes of this section reports filed with and examinations made by
other Federal agencies.
(e) Powers.--The powers authorized for the Commissioner in section
121 shall apply to reports by and examinations of insurance holding
companies and their subsidiaries.
SEC. 503. ACTIVITIES OF INSURANCE HOLDING COMPANIES AND SUBSIDIARIES.
(a) In General.--No national insurance holding company and no
subsidiary of a national insurance holding company shall engage in any
activity that the Commissioner determines poses a significant risk to
the solvency of a national insurer, jeopardizes the interests of the
policyholders of such insurer, or is incompatible with the public
interest.
(b) Determination and Notice for Corrective Action.--If the
Commissioner determines that a national insurance holding company or
subsidiary of a national insurance holding company is engaged, or has
engaged, or the Commissioner has reasonable cause to believe is about
to engage in an activity in violation of the terms of subsection (a),
the Commissioner shall provide a written notice to such company or
subsidiary, which shall specify the action or actions the company or
subsidiary must take to correct the violation and a time period for
taking such corrective action or actions. The issuance of a notice
under this section does not prevent the Commissioner from taking any
other enforcement action against the company or subsidiary.
(c) Hearing.--
(1) In general.--Not later than 10 days after the date of
receipt of a notice issued pursuant to subsection (b), a
national insurance holding company or subsidiary of such
company may request a hearing before a United States district
court with jurisdiction on the corrective action or actions
specified in the notice and the time period for taking such
action or actions.
(2) Standard of review.--A judge reviewing a notice issued
pursuant to subsection (b) shall determine whether the decision
of the Commissioner is reasonable.
(d) Judicial Review.--A national insurance holding company or
subsidiary of a national insurance holding company that remains subject
to a notice for corrective action following a hearing under subsection
(c) may obtain review of the notice by the United States court of
appeals for the circuit in which the main office of the national
insurer to be acquired is located, or the United States Court of
Appeals for the District of Columbia Circuit, by filing an appeal in
such court not later than 10 days after the date on which the
Commissioner has affirmed or modified the notice, and simultaneously
sending a copy of such appeal by registered or certified mail to the
Commissioner. The Commissioner shall promptly certify and file in such
court the record upon which the notice was based. The determination of
the Commissioner shall be set aside if found to be arbitrary or
capricious.
(e) Applicability to Non-United States Insurance Holding Companies
and Subsidiaries.--Each non-United States insurance holding company and
each non-United States subsidiary thereof shall be subject to the
report and examination authority of this section only to the extent
authorized by an applicable international agreement.
SEC. 504. CAPITAL, LIQUIDITY, DIVIDEND, OPERATIONAL, AND OTHER
STANDARDS.
The Commissioner shall establish, by rule or order, capital,
liquidity, dividend, operational, and any other standards for a
national insurance holding company that the Commissioner deems
appropriate to ensure the solvency and sound operation of each national
insurance holding company.
SEC. 505. AFFILIATE TRANSACTIONS.
(a) In General.--Transactions between a national insurer and any
affiliate shall be subject to the following standards:
(1) The terms shall be fair, reasonable, and at least as
favorable to the national insurer as those that would be
offered to, or would apply to, a nonaffiliate.
(2) Charges or fees for services performed shall be
reasonable and at least as favorable to the national insurer as
those that would be offered to, or would apply to, a
nonaffiliate.
(3) Expenses incurred and payment received shall be
allocated to the national insurer in conformity with customary
insurance accounting practices consistently applied.
(4) The books, accounts, and records of each party to all
such transactions shall be so maintained as to clearly and
accurately disclose the nature and details of the transactions
including such accounting information as is necessary to
support the reasonableness of the charges or fees to the
respective parties.
(5) The national insurer's surplus following any dividends
or distributions to shareholders shall be reasonable in
relation to the outstanding liabilities of the national insurer
and adequate to meet its financial needs.
(b) Approval of Certain Transactions.--The Commissioner may, by
regulation, specify certain transactions involving a national insurer
and any affiliate that are not permissible for a national insurer,
unless the national insurer has notified the Commissioner in writing of
its intention to enter into the transaction and the Commissioner has
either approved or failed to approve the transaction within a specified
time period.
SEC. 506. RELATIONSHIP TO OTHER LAWS.
(a) Permitted Affiliation.--A national insurer may be affiliated
with an insurer or agency that is not chartered or licensed under this
Act.
(b) Reinsurance Pooling Agreements.--The Commissioner shall have
exclusive jurisdiction over reinsurance pooling agreements to which one
or more national insurers and affiliated State insurers are parties
under which policies of insurance sold, solicited, negotiated, and
underwritten by, and reinsurance assumed by, affiliated national
insurers and State insurers are pooled.
(c) Conflict With Other Federal Laws.--This title shall not be
construed to conflict with or supersede the provisions of any other
Federal law or regulation governing the regulation of holding
companies, including financial holding companies, as defined in section
2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841), and savings
and loan holding companies, as defined in section 10 of the Home
Owners' Loan Act (12 U.S.C. 1467a).
SEC. 507. NO DELEGATION PERMITTED.
The Commissioner may not delegate to any insurance self-regulatory
organization any authority conferred under this title with respect to
regulation of a national insurer that is an affiliate of a national
insurance holding company.
TITLE VI--CONSERVATORSHIP, RECEIVERSHIP, THE PAYMENT OF BENEFITS AND
CLAIMS TO POLICYHOLDERS, AND ASSESSMENTS ON NATIONAL INSURERS
SEC. 601. APPOINTMENT OF CONSERVATOR OR RECEIVER.
(a) In General.--Notwithstanding any other provision of law, if any
of the grounds under subsection (b) exist, the Commissioner may appoint
a person as a conservator or receiver for a national insurer.
(b) Grounds for Appointment.--The grounds for establishing a
conservatorship or receivership are as follows:
(1) Insolvency.--The national insurer is insolvent.
(2) Substantial dissipation.--The national insurer has
substantial dissipation of assets or earnings due to--
(A) a violation of any provision of Federal or
State law; or
(B) a hazardous practice.
(3) Hazardous condition.--The national insurer is in such
condition that the further transaction of business would be
hazardous, financially or otherwise, to policyholders,
creditors, or the public.
(4) Cease-and-desist order.--The national insurer has
willfully violated a cease-and-desist order.
(5) Concealment.--The national insurer has concealed the
books, papers, records, or assets of the insurer, or has
refused to submit the books, papers, records, or affairs of the
insurer, for inspection to any examiner or to any lawful agent
of the Commissioner.
(6) Inability to meet obligations.--The national insurer is
likely to be unable to pay its obligations or meet the demands
of its creditors in the normal course of business.
(7) Violation of law.--The national insurer has willfully
and continuously violated any law or regulation, or committed
any hazardous practice or condition, that is likely to--
(A) cause insolvency or substantial dissipation of
assets or earnings; or
(B) weaken the condition of the national insurer.
(8) Consent.--The national insurer, by resolution of its
board of directors or its shareholders or members, consents to
the appointment.
(9) Money laundering.--The Attorney General notifies the
Commissioner in writing that the national insurer has been
found guilty of a criminal offense under section 1956 or 1957
of title 18, United States Code, or section 5322 or 5324 of
title 31, United States Code.
SEC. 602. ESTABLISHMENT OF THE NATIONAL INSURANCE GUARANTY CORPORATION.
(a) Establishment.--There is established the National Insurance
Guaranty Corporation.
(b) Director.--The head of the National Insurance Guaranty
Corporation shall be the Director of the National Insurance Guaranty
Corporation, who shall be appointed by the Commissioner.
(c) Nonprofit and Succession.--The Corporation shall be a nonprofit
corporation and shall have succession until dissolved by an Act of
Congress.
(d) Application of District of Columbia Nonprofit Corporation
Act.--The Corporation shall, except as otherwise provided in this
title, be subject to, and have all the powers conferred upon a
nonprofit corporation by the District of Columbia Nonprofit Corporation
Act (D.C. Code, 29-301.01 et seq., or any successor thereto).
SEC. 603. PAYMENT OF CLAIMS TO POLICYHOLDERS OF NATIONAL INSURERS.
(a) Life Insurance Policies.--If a national insurer is placed into
receivership for purposes of liquidation, the Director of the
Corporation shall pay the claims on life insurance policies issued by
such insurer in a manner that is consistent with the terms and limits
of the ``Life and Health Insurance Guaranty Association Model Act'' of
the NAIC.
(b) Property and Casualty Policies.--If a national insurer is
placed into receivership for purposes of liquidation, the Director of
the Corporation shall pay the claims of property and casualty insurance
policies issued by such insurer in a manner that is consistent with the
terms and limits of the ``Post-Assessment Property and Liability
Insurance Guaranty Association Model Act'' of the NAIC.
SEC. 604. ASSESSMENTS OF NATIONAL INSURERS.
(a) Assessments Authorized.--For the purpose of paying the claims
of policyholders and other claims against a national insurer that is
placed into receivership, the Director of the Corporation shall impose
an assessment against all other national insurers in accordance with
this section.
(b) Notice and Imposition of Assessments.--
(1) Assessments only to insurers in same line of
business.--
(A) In general.--The Director of the Corporation
shall only impose an assessment against a national
insurer if such national insurer is in the business of
providing the same type of insurance as the national
insurer that is placed into receivership.
(B) Lines of insurance.--In determining whether a
national insurer is in the business of providing the
same type of insurance as the national insurer that is
placed into receivership under subparagraph (A), the
Director may consider subsets of property and casualty
insurance or life insurance as different types of
insurance.
(2) Written notice required.--The Director of the
Corporation shall provide each national insurer a written
notice of an assessment, and assessments shall be payable not
later than 30 days after the date of receipt of such notice.
(3) Late payment.--A national insurer that fails to pay an
assessment when due shall be subject to an interest charge on
the assessment, as set by the Director of the Corporation.
(4) Assessments not imposed until needed.--The Director of
the Corporation shall not impose an assessment upon a national
insurer until such funds are needed.
(5) Amount of assessment.--Each national insurer shall be
assessed its share of all claims incurred by the receivership,
including administrative costs of the Director of the
Corporation, in an amount equal to the product of--
(A) an assessment rate established by the Director
of the Corporation by regulation; and
(B) the proportion that the net direct written
premiums of the insurer for the calendar year preceding
the assessment bears to the net direct written premiums
of all national insurers determined by the Commissioner
to be in the business of providing the same type of
insurance as the national insurer that is placed into
receivership under paragraph (1)(A) for the calendar
year preceding the assessment.
(c) Abated or Deferred Assessments.--The Director of the
Corporation may abate or defer, in whole or in part, an assessment
imposed on a national insurer if payment of the assessment would
endanger the ability of the insurer to fulfill its contractual
obligations. In the event an assessment against a national insurer is
abated or deferred, in whole or in part, the amount by which the
assessment is abated or deferred may be assessed against all other
national insurers, in a manner consistent with the basis for
assessments set forth in this section. Once the conditions that caused
action under this subsection have been removed or rectified, the
insurer shall pay all assessments that were deferred pursuant to a
repayment plan approved by the Director of the Corporation.
SEC. 605. PARTICIPATION IN STATE GUARANTY ASSOCIATIONS.
(a) In General.--A national insurer shall participate in the State
guaranty association for a line of insurance in each State in which
such insurer is doing business in such line of insurance, provided that
no State may charge an assessment rate or otherwise treat a national
insurer in a manner differently than such State treats a State insurer
doing business in such State.
(b) Taxation.--No State shall impose a premium tax, franchise tax,
income tax, retaliatory tax, or other primary tax applicable to
insurance companies on any national insurer, unless such State allows
the national insurer to recoup assessments allocable to such State in
the same manner and to the same extent that a State insurer is allowed
to recoup such assessments.
SEC. 606. REPORT TO CONGRESS.
Not later than two years after the date of the enactment of this
Act, the Director of the Corporation shall submit to Congress a
recommendation on--
(1) whether national insurers should continue to be members
of State guaranty associations;
(2) whether State insurance commissioners should be given
the opportunity to require State insurers to be covered by the
National Insurance Guaranty Corporation instead of State
guaranty associations; and
(3) whether policyholders of national insurers would be
better protected if assessments under section 604 were imposed
before such funds are necessary to make payments on claims
against a national insurer that is placed into receivership.
TITLE VII--MISCELLANEOUS PROVISIONS
SEC. 701. APPLICABLE LAW.
(a) Inapplicability of State Law.--Except to the extent expressly
provided in this Act, national insurers, national insurance agencies,
and national insurance producers shall not be subject under State law
to any form of licensing, examination, reporting, regulation, or other
supervision relating to the sale, solicitation, or negotiation of
insurance, to the underwriting of insurance, or to any other insurance
operations.
(b) No Discrimination.--No State may discriminate against--
(1) any State insurer because such insurer or any affiliate
has applied to become, or has declared its intention to become,
a national insurer chartered under this Act;
(2) any State-licensed insurance producer because such
insurance producer or an affiliate has applied to become, or
has declared its intention to become, a national insurance
agency chartered under this Act or a national insurance
producer licensed under this Act;
(3) any affiliate of a national insurer, national insurance
agency, or a national insurance producer because the affiliate
is so affiliated;
(4) any policyholder, insured, claimant, State-licensed
insurance producer, or any person engaged in the acts described
in section 405(b) because of any dealing with a national
insurer, national insurance agency, a national insurance
producer, or an affiliate of a national insurer, national
insurance agency, or a national insurance producer; or
(5) any State-licensed insurance producer (including with
respect to such producer's sales, solicitation, or negotiation
of any insurance policy written or sold by a State insurer)
because it sells, solicits, or negotiates an insurance policy
written or sold by a national insurer.
SEC. 702. APPLICATION OF THE FEDERAL ANTITRUST LAWS.
(a) In General.--Subject to subsection (b), the Sherman Act (15
U.S.C. 1 et seq.), the Clayton Act (15 U.S.C. 12 et seq.), the Federal
Trade Commission Act (15 U.S.C. 41 et seq.), and the Act of June 19,
1936 (49 Stat. 1526) (commonly known as the Robinson-Patman
Antidiscrimination Act), shall be applicable to national insurers,
national insurance agencies, and national insurance producers to the
same extent as other businesses are subject to such laws, except as
follows:
(1) Such laws shall not apply to the development,
dissemination, or use of standard insurance policy forms
(including standard endorsements, addendums, and policy
language), or to activities incidental thereto, by national
insurers, national insurance agencies, and national insurance
producers.
(2) Section 3 of the Act of March 9, 1945 (59 Stat. 33; 15
U.S.C. 1013), shall apply to national insurers, national
insurance agencies, and national insurance producers to the
extent that such insurers and producers are subject to State
law.
(b) Exception.--Notwithstanding any other provision of law, section
5 of the Federal Trade Commission Act (15 U.S.C. 45) shall not apply
with respect to a national insurer, national insurance agency, or
national insurance producer.
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