Reestablishment of the National Association of Registered Agents and Brokers

(a)

In general

Subtitle C of title III of the Gramm-Leach-Bliley Act (15 U.S.C. 6751 et seq.) is amended to read as follows:

National Association of Registered Agents and Brokers

321.

National association of registered agents and brokers

(a)

Establishment

There is established the National Association of Registered Agents and Brokers (hereafter in this subtitle referred to as the Association). (b)

Status

The Association shall— (1)be a nonprofit corporation; (2)have succession until dissolved by an Act of Congress; (3)not be an agent or instrumentality of the United States Government; and (4)except as otherwise provided in this subtitle, be subject to, and have all the powers conferred upon a nonprofit corporation by the District of Columbia Nonprofit Corporation Act (D.C. Code, sec. 29–301.01 et seq.).

322.

Purpose

The purpose of the Association shall be to provide a mechanism through which licensing, continuing education, and other nonresident insurance producer qualification requirements and conditions can be adopted and applied on a multi-state basis (without affecting the laws, rules, and regulations pertaining to resident insurance producers or appointments or producing a net loss of producer licensing revenues to States), while preserving the right of States to license, supervise, discipline, and establish licensing fees for insurance producers, and to prescribe and enforce laws and regulations with regard to insurance-related consumer protection and unfair trade practices.

323.

Membership

(a)

Eligibility

(1)

In general

Any insurance producer licensed in its home State shall be eligible to become a member of the Association. (2)

Ineligibility for suspension or revocation of license

Notwithstanding paragraph (1), a State-licensed insurance producer shall not be eligible to become a member if a State insurance regulator has suspended or revoked such producer’s license in that State during the 3-year period preceding the date on which such producer applies for membership. (3)

Resumption of eligibility

Paragraph (2) shall cease to apply to any insurance producer if— (A)the State insurance regulator reissues or renews the license of such producer in the State in which the license was suspended or revoked; or (B)the suspension or revocation is subsequently overturned. (4)

Criminal background check required

(A)

In general

A State-licensed insurance producer shall not be eligible to become a member unless the producer has submitted to a national criminal background record check. (B)

Criminal background check ordered by home state

Any insurance producer licensed in a State that, as a condition for such licensure, requires the submission of identification information to the Federal Bureau of Investigation for a national criminal background record check shall be deemed to have submitted to a national criminal background record check for purposes of subparagraph (A). (C)

Criminal history check ordered by association

(i)

In general

The Association may submit identification information obtained from any State-licensed insurance producer licensed in a State that has not submitted to a national criminal background record check, and a request for a national criminal background record check of such producer, to the Federal Bureau of Investigation. (ii)

Bylaws or rules

The board of directors of the Association shall prescribe bylaws or rules for obtaining and utilizing identification information and criminal history record information, including the establishment of fees required to perform a criminal background record check. (D)

Attorney general authorization

Upon receiving a request from the Association, the Attorney General shall— (i)search any records of the Criminal Justice Information Services Division of the Federal Bureau of Investigation that the Attorney General deems appropriate for criminal history records corresponding to the identification information provided under subparagraph (F); (ii)provide any relevant information contained in such records that pertain to the request directly to the Association; and (iii)destroy any fingerprints, fingerprint cards, or other copies or images of fingerprints obtained pursuant to this section upon completion of the criminal history record check. (E)

Relevant information defined

For purposes of subparagraph (D)(ii), the term relevant information means any of the following records: (i)All felony convictions. (ii)All misdemeanor convictions involving— (I)violation of a law involving financial activities; (II)dishonesty or breach of trust, within the meaning of section 1033 of title 18, United States Code, including taking, withholding, misappropriating, or converting money or property; (III)failure to comply with child support obligations; (IV)failure to pay taxes; and (V)domestic violence, child abuse, burglary of a dwelling, or a criminal offense that has as an element the use or attempted use of physical force, or threat of great bodily harm, or the use, attempted use, or threatened use of a deadly weapon, against an individual, including committing or attempting to commit murder, manslaughter, kidnapping, aggravated assault, forcible sex offenses, robbery, arson, extortion, and extortionate extension of credit. (F)

Form of request

A request under subparagraph (C) shall include a copy of any necessary identification information required by the Attorney General concerning the person about whom the record is requested and a statement signed by the person acknowledging that the Association may request the search. (G)

Limitation on permissible uses of information

Information obtained under this section may— (i)be used only for regulatory or law enforcement purposes or for purposes of determining compliance with membership criteria established by the Association; (ii)be disclosed only to the Association, State insurance regulators, or Federal or State law enforcement agencies; and (iii)be disclosed only if the recipient agrees to— (I)maintain the confidentiality of such information; and (II)limit the use of such information to the purposes described in clause (i). (H)

Applicant access to criminal history records

Notwithstanding subparagraph (G), an applicant shall have the right to obtain a copy of any criminal history record information concerning the applicant that is provided to the Association pursuant to this section. (I)

Penalty for improper use

Whoever uses any information obtained under this section knowingly and willfully for an unauthorized purpose shall be fined under title 18, United States Code, imprisoned for not more than 2 years, or both. (J)

Reliance on information

Neither the Association nor any of its directors, officers, or employees who reasonably rely on information provided under this section shall be liable in any action for using information as permitted under this section in good faith. (K)

Clarification of section 1033

(i)

In general

With respect to any action brought under section 1033(e)(1)(B) of title 18, United States Code, no person engaged in the business of conducting financial activities shall be subject to any penalty resulting from such section if the individual whom the person permitted to engage in the business of insurance is a member of the Association or is licensed, or approved (as part of an application or otherwise), by a State insurance regulator that performs criminal background checks, unless such person has actual knowledge that the individual is in violation of section 1033(e)(1)(A) of such title. (ii)

Financial activities defined

For purposes of this subparagraph, the term financial activities— (I)means banking activities (including the ownership of a bank), securities activities, insurance activities, or commodities activities; and (II)includes all activities that are financial in nature or are incidental to a financial activity (as defined under section 4(k) of the Bank Holding Company Act of 1956). (L)

Fees

The Attorney General may charge a reasonable fee for the provision of information under this paragraph, and any such fee shall be collected and remitted by the Association. (M)

Rule of construction

No provision of this paragraph shall be construed as— (i)requiring a State insurance regulator to perform criminal background checks under this section; or (ii)superseding or otherwise limiting any other authority that allows access to criminal background records. (N)

Regulations

The Attorney General may prescribe regulations to carry out this paragraph. (O)

Ineligibility for membership

(i)

In general

The Association may deny membership to any State-licensed insurance producer on the basis of criminal history information obtained pursuant to subparagraph (D). (ii)

Rights of applicants denied membership

The Association shall notify any applicant who is denied membership on the basis of criminal history record information obtained pursuant to subparagraph (D) of the right of the applicant to— (I)obtain a copy of any such criminal history record information provided to the Association; and (II)challenge the accuracy and completeness of the information. (b)

Authority To establish membership criteria

The Association may establish membership criteria that— (1)bear a reasonable relationship to the purposes for which the Association was established; and (2)do not unfairly limit the access of smaller agencies to the Association membership, including imposing discriminatory membership fees on smaller insurance producers. (c)

Establishment of classes and categories of membership

(1)

Classes of membership

The Association may establish separate classes of membership, with separate criteria, if the Association reasonably determines that performance of different duties requires different levels of education, training, experience, or other qualifications. (2)

Categories

(A)

Separate categories for producers permitted

The Association may establish separate categories of membership for producers and for other persons within each class, based on the types of licensing categories that exist under State laws. (B)

Separate treatment for depository institutions prohibited

No special categories of membership, and no distinct membership criteria, shall be established for members which are depository institutions or for employees, agents, or affiliates of depository institutions. (d)

Membership criteria

(1)

In general

The Association may establish criteria for membership which shall include standards for personal qualifications, education, training, and experience. (2)

Qualifications

In establishing criteria under paragraph (1), the Association shall consider the NAIC Producer Licensing Model Act and the highest levels of insurance producer qualifications established under the licensing laws of the States. (3)

Assistance from states

(A)

In general

The Association may request a State to provide assistance in investigating and evaluating a prospective member’s eligibility for membership in the Association. (B)

Rule of construction

Subparagraph (A) shall not be construed as requiring or authorizing any State to adopt new or additional requirements concerning the licensing or evaluation of insurance producers. (4)

Denial of membership

The Association may deny membership to any State-licensed insurance producer for failure to meet the membership criteria established by the Association. (e)

Effect of membership

(1)

Authority of association members

Membership in the Association shall— (A)authorize an insurance producer to sell, solicit, negotiate, effect, procure, deliver, renew, continue, or bind insurance in any State for which the member pays the licensing fee set by such State for any line or lines of insurance specified in such producer’s home State license, and exercise all such incidental powers, as shall be necessary to carry out such activities, including claims adjustments and settlement, risk management, employee benefits advice, retirement planning, and any other insurance-related consulting activities; (B)be the equivalent of a nonresident insurance producer license issued in any State where the member pays the licensing fee; and (C)subject an insurance producer to all laws, regulations, provisions or other action of any State concerning revocation or suspension of a member’s ability to engage in any activity within the scope of authority granted under this subsection and to all State laws, regulations, provisions and actions preserved under paragraph (5). (2)

Duplicative licenses

No State, other than the member’s home State, may require an individual member to obtain a business entity license or membership in order to engage in any activity within the scope of authority granted in paragraph (1) or in order for the member or any employer, employee, or affiliate of the member to receive compensation for the member's performance of any such activity. (3)

Agent for remitting fees

The Association shall act as any member’s agent for purposes of remitting licensing fees to any State pursuant to paragraph (1). (4)

Regulator notification

The Association shall notify the National Association of Insurance Commissioners (hereinafter in this subtitle referred to as the NAIC) or its designee when a producer becomes a member and identify, on an ongoing basis, the States in which the member is authorized to operate. (5)

Preservation of state consumer protection and market conduct regulation

No provision of this section shall be construed as altering or affecting the continuing effectiveness of any law, regulation, provision, or other action of any State which purports to regulate market conduct or unfair trade practices or establish consumer protections to the extent that such law, regulation, provision, or other action is not inconsistent with the provisions of this subtitle, and then only to the extent of such inconsistency. (f)

Biennial renewal

Membership in the Association shall be renewed on a biennial basis. (g)

Continuing education

(1)

In general

The Association shall establish, as a condition of membership, continuing education requirements which shall be comparable to the continuing education requirements under the licensing laws of a majority of the States. (2)

State continuing education requirements

A member may not be required to satisfy continuing education requirements imposed under the laws, regulations, provisions, or actions of any State other than such member’s home State. (3)

Reciprocity

The Association shall not require a member to satisfy continuing education requirements that are equivalent to any continuing education requirements of the member’s home State that have been satisfied by the member during the applicable licensing period. (4)

Limitation on association

The Association shall not directly or indirectly offer any continuing education courses for insurance producers. (h)

Probation, suspension and revocation

(1)

Disciplinary action

The Association may place an insurance producer that is a member of the Association on probation or suspend or revoke such producer's membership in the Association, as the Association determines to be appropriate, if— (A)the producer fails to meet the applicable membership criteria of the Association; or (B)the producer has been subject to disciplinary action pursuant to a final adjudicatory proceeding under the jurisdiction of a State insurance regulator. (2)

Reporting to state regulators

The Association shall notify the NAIC or its designee when a producer’s membership has been suspended, revoked, and otherwise terminated. (i)

Consumer complaints

(1)

In general

The Association shall— (A)receive and, when appropriate, investigate complaints from both consumers and State insurance regulators related to members of the Association; (B)refer any proper complaint received in accordance with subparagraph (A) and make any related records and information available to the NAIC or its designee and to each State insurance regulator for the State of residence of the consumer who filed the complaint; and (C)refer, when appropriate, any such complaint to any additional appropriate State insurance regulator. (2)

Telephone and other access

The Association shall maintain a toll-free telephone number for the purpose of this subsection and, as practicable, other alternative means of communication with consumers, such as an Internet web page.

324.

Board of directors

(a)

Establishment

There is established the board of directors of the Association (hereafter in this subtitle referred to as the Board) for the purpose of governing and supervising the activities of the Association. (b)

Powers

The Board shall have such powers and authority as may be specified in the bylaws of the Association. (c)

Composition

(1)

In general

The Board shall consist of 11 members who shall be appointed by the President, by and with the advice and consent of the Senate, of whom— (A)6 shall be State insurance commissioners appointed in the manner provided in paragraph (2), (B)2 shall be representatives of property and casualty insurance producers, (C)1 shall be a representative of life or health insurance producers, (D)1 shall be a representative of property and casualty insurers, and (E)1 shall be a representative of life or health insurers. (2)

State insurance regulator representatives

(A)In making any appointments pursuant to subparagraph (A) of paragraph (1), the President shall solicit a list of recommended candidates from the NAIC. If the NAIC fails to submit list of recommendations within 15 days of the request, the President shall make the requisite appointments without considering the views of the NAIC. (B)Not more than 3 members appointed to membership on the Board pursuant to subparagraph (A) of paragraph (1) shall belong to the same political party. (C)If fewer than 6 State insurance commissioners accept appointment to the Board, the President may appoint the remaining State insurance commissioner members of the Board from among individuals who are former State insurance commissioners, provided that any former insurance commissioner appointed by the President shall not be employed by or have a present direct or indirect financial interest in any insurer or other entity in the insurance industry other than direct or indirect ownership of, or beneficial interest in, any insurance policy or annuity contract written or sold by an insurer. (3)

Private sector representatives

In making any appointments pursuant to subparagraphs (B) through (E) of paragraph (1), the President may seek recommended candidates from national trade associations representing the category of individuals described. (4)

State insurance commissioner defined

For purposes of this subsection, the term State insurance commissioner means a person who serves in the position in State government, or on the board, commission, or other body that is the principal insurance regulatory authority for the State. (d)

Terms

(1)

In general

The term of each Board member shall be for 2 years, except that— (A)the term of— (i)3 of the State insurance commissioner members of the Board initially appointed under subparagraph (A) of paragraph (1), (ii)1 of the property and casualty insurance producer members of the Board initially appointed under subparagraph (B) of paragraph (1), and (iii)1 of the insurer representative members of the Board initially appointed under subparagraphs (D) and (E) of paragraph (1),

shall be 1 year, as designated by the President at the time of the nomination of such members;

(B)a member of the Board may continue to serve after the expiration of the term to which such member was appointed until a successor is qualified; and (C)any member of the Board appointed to fill a vacancy occurring before the expiration of the term for which the member’s predecessor was appointed shall be appointed only for the remainder of that term. (2)

Successive terms

Board members may be reappointed to successive terms. (e)

Meetings

(1)

In general

The Board shall meet at the call of the chairperson, as requested in writing to the chairperson by at least four members of the Board, or as otherwise provided by the bylaws of the Association. (2)

Quorum required

A majority of directors shall constitute a quorum. (3)

Voting

Decisions of the Board shall require the approval of a majority of all directors present at a meeting.

325.

Officers

(a)

Positions

The officers of the Association shall consist of a chairperson and a vice chairperson of the Board, an executive director, secretary, and treasurer of the Association, and such other officers and assistant officers as may be deemed necessary. (b)

Manner of selection

Each officer of the Board and the Association shall be elected or appointed at such time, in such manner, and for such terms as may be prescribed in the bylaws of the Association.

326.

Bylaws, rules, and disciplinary action

(a)

Adoption and amendment of bylaws

(1)

Copy required to be filed

The board of directors of the Association shall submit to the President and the NAIC any proposed bylaw or rules of the Association or any proposed amendment to the bylaws or rules, accompanied by a concise general statement of the basis and purpose of such proposal. (2)

Effective date

Any proposed bylaw or rule or proposed amendment to the bylaws or rules shall take effect, after notice published in the Federal Register and opportunity for comment, upon such date as the Association may designate. (b)

Disciplinary action by the association

(1)

Specification of charges

In any proceeding to determine whether membership shall be denied, suspended, revoked, or not renewed (hereafter in this section referred to as a disciplinary action) or to determine whether a member of the Association should be placed on probation, the Association shall bring specific charges, notify such member of such charges, give the member an opportunity to defend against the charges, and keep a record. (2)

Supporting statement

A determination to take disciplinary action shall be supported by a statement setting forth— (A)any act or practice in which such member has been found to have been engaged; (B)the specific provision of this subtitle, the rules or regulations under this subtitle, or the rules of the Association which any such act or practice is deemed to violate; and (C)the sanction imposed and the reason for such sanction.

327.

Powers

In addition to all the powers conferred upon a nonprofit corporation by the District of Columbia Nonprofit Corporation Act, the Association shall have the following powers: (1)To establish and collect such membership fees as the Association finds necessary to impose to cover the costs of its operations. (2)To adopt, amend, and repeal bylaws and rules governing the conduct of Association business and performance of its duties. (3)To establish procedures for providing notice and opportunity for comment pursuant to section 326(a). (4)To enter into and perform such agreements as necessary to carry out its duties. (5)To hire employees, professionals or specialists, and elect or appoint officers, and to fix their compensation, define their duties and give them appropriate authority to carry out the purposes of this subtitle, and determine their qualification; and to establish the Association’s personnel policies and programs relating to, among other things, conflicts of interest, rates of compensation. and qualifications of personnel. (6)To borrow money. (7)To secure funding from board member organizations and other industry associations for such amounts that the Association determines to be necessary and appropriate to organize and begin operations of the Association, which shall be treated as loans to be repaid by the Association with interest at market rate.

328.

Report by association

(a)

In general

As soon as practicable after the close of each fiscal year, the Association shall submit to the President and the NAIC a written report regarding the conduct of its business, and the exercise of the other rights and powers granted by this subtitle, during such fiscal year. (b)

Financial statements

Each report submitted under subsection (a) with respect to any fiscal year shall include financial statements setting forth the financial position of the Association at the end of such fiscal year and the results of its operations (including the source and application of its funds) for such fiscal year.

329.

Liability of the association and the directors, officers, and employees of the association

(a)

In general

The Association shall not be deemed to be an insurer or insurance producer within the meaning of any State law, rule, regulation, or order regulating or taxing insurers, insurance producers, or other entities engaged in the business of insurance, including provisions imposing premium taxes, regulating insurer solvency or financial condition, establishing guaranty funds and levying assessments, or requiring claims settlement practices. (b)

Liability of the association, its directors, officers, and employees

Neither the Association nor any of its directors, officers, or employees shall have any liability to any person for any action taken or omitted in good faith under or in connection with any matter subject to this subtitle.

330.

Presidential oversight

(a)

Removal

If the President determines that the Association is acting in a manner contrary to the interests of the public or the purposes of this subtitle or has failed to perform its duties under this subtitle, the President may remove the entire existing Board for the remainder of the term to which the members of the Board were appointed and appoint, in accordance with section 324 and with the advice and consent of the Senate, new members to fill the vacancies on the Board for the remainder of such terms. (b)

Removal of Board Members

The President may remove a member of the Board only for neglect of duty or malfeasance in office. (c)

Suspension of rules or actions

The President, or a person designated by the President for such purpose, may suspend the effectiveness of any rule, or prohibit any action, of the Association which the President or the designee determines is contrary to the purposes of this subtitle.

331.

Relationship to State law

(a)

Preemption of state laws

State laws, regulations, provisions, or other actions purporting to regulate insurance producers shall be preempted to the extent provided in subsection (b). (b)

Prohibited actions

(1)

In general

No State shall— (A)impede the activities of, take any action against, or apply any provision of law or regulation to, any insurance producer because that insurance producer or any affiliate plans to become, has applied to become, or is a member of the Association; (B)impose any requirement upon a member of the Association that it pay fees different from those required to be paid to that State were it not a member of the Association; (C)impose any continuing education requirements on nonresident insurance producers; or (D)impose any licensing, registration, or appointment requirements upon any nonresident insurance producer that sells, solicits, negotiates, effects, procures, delivers, renews, continues, or binds insurance for commercial property and casualty risks to an insured with risks located in more than 1 State, provided that such nonresident insurance producer is otherwise licensed as an insurance producer in the State where the insured maintains its principal place of business and the contract of insurance insures risks located in that State. (2)

States other than a home state

No State, other than a member’s home State, shall— (A)impose any licensing, integrity, personal or corporate qualifications, education, training, experience, residency, continuing education, or bonding requirement upon a member of the Association that is different from the criteria for membership in the Association or renewal of such membership; (B)impose any requirement upon a member of the Association that it be licensed, registered, or otherwise qualified to do business or remain in good standing in such State, including any requirement that such insurance producer register as a foreign company with the secretary of state or equivalent State official; or (C)require that a member of the Association submit to a criminal history record check as a condition of doing business in such State.

332.

Coordination with other regulators

(a)

Coordination with state insurance regulators

The Association may— (1)establish a central clearinghouse, or utilize the NAIC or any other entity as a central clearinghouse, through which members of the Association may pursuant to section 323(e) disclose their intent to operate in 1 or more States and pay the licensing fees to the appropriate States; and (2)establish a national database for the collection of regulatory information concerning the activities of insurance producers or contract with the NAIC or any other entity to utilize such a database. (b)

Coordination with the financial industry regulatory authority

The Association shall coordinate with the Financial Industry Regulatory Authority in order to ease any administrative burdens that fall on persons that are members of both associations, consistent with the purposes of this subtitle and the Federal securities laws.

333.

Judicial review and enforcement

(a)

Jurisdiction

The appropriate United States district court shall have exclusive jurisdiction over litigation to which the Association is a party or any matter arising under this subtitle, including disputes between the Association and its members that arise under this subtitle, subject to chapter 7 of title 5, United States Code. (b)

Exhaustion of remedies

An aggrieved person shall be required to exhaust all available administrative remedies before the Association before it may seek judicial review of an Association decision. (c)

Equal weight and deference

In any other proceeding involving this subtitle, the court shall give at least equal weight and deference to the interpretations of the Association as would be given to any State or Federal agency with respect to any law, regulation, interpretation, or order addressing the same issues.

334.

Definitions

For purposes of this subtitle, the following definitions shall apply: (1)

Home state

The term home State means the State in which the insurance producer maintains its principal place of residence or business and is licensed to act as an insurance producer. (2)

Insurance

The term insurance means any product, other than title insurance, defined or regulated as insurance by the appropriate State insurance regulatory authority. (3)

Insurance producer

The term insurance producer means any insurance agent or broker, excess or surplus lines broker or agent, insurance consultant, limited insurance representative, and any other individual or entity that solicits, negotiates, effects, procures, delivers, renews, continues or binds policies of insurance or offers advice, counsel, opinions or services related to insurance. (4)

State

The term State includes any State, the District of Columbia, any territory of the United States, and Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, and the Northern Mariana Islands. (5)

State law

(A)

In general

The term State law includes all laws, decisions, rules, regulations, or other State action having the effect of law, of any State. (B)

Laws applicable in the district of columbia

A law of the United States applicable only to or within the District of Columbia shall be treated as a State law rather than a law of the United States.

(b)

Clerical amendment

The table of contents for the Gramm-Leach-Bliley Act is amended by striking the items relating to subtitle C of title III and inserting the following new items:

Subtitle C—National Association of Registered Agents and Brokers

Sec. 321. National association of registered agents and brokers.

Sec. 322. Purpose.

Sec. 323. Membership.

Sec. 324. Board of directors.

Sec. 325. Officers.

Sec. 326. Bylaws, rules, and disciplinary action.

Sec. 327. Powers.

Sec. 328. Report by association.

Sec. 329. Liability of the association and the directors, officers, and employees of the association.

Sec. 330. Presidential oversight.

Sec. 331. Relationship to State law.

Sec. 332. Coordination with other regulators.

Sec. 333. Judicial review and enforcement.

Sec. 334. Definitions.