[Congressional Record Volume 140, Number 30 (Thursday, March 17, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: March 17, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
      COMMUNITY DEVELOPMENT BANKING AND FINANCIAL INSTITUTIONS ACT

  The Senate continued with the consideration of the bill.


                           amendment no. 1548

  Mr. METZENBAUM. Madam President, I send a sense-of-the-Senate 
amendment to the desk and ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from Ohio [Mr. Metzenbaum] proposes an 
     amendment numbered 1548.

  Mr. METZENBAUM. Madam President, I ask unanimous consent that reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       At the appropriate place in the Committee Substitute insert 
     the following:
       It is the sense of the Senate that: No insurer shall enter 
     into a transfer agreement or transfer a contract of insurance 
     pursuant to a transfer agreement unless the transferring 
     insurer has first provided or caused to be provided to each 
     policyholder of the insurer affected by the agreement a 
     notice of the intent of the insurer to transfer the contract 
     of insurance held by such policyholder.
       (b) Form of Notice.--The notice shall be sent by first-
     class mail, addressed to the last known address of the 
     policyholder or to the address to which premium notices or 
     other policy documents are sent or, with respect to home 
     service business, by personal delivery with acknowledged 
     receipt. A notice of intent to transfer shall also be sent to 
     the transferring insurer's agent or broker of record on the 
     affected policy.
       (c) Content of Notice.--The notice required by subsection 
     (a) shall state or provide--
       (1) the date the intended transfer and novation of the 
     contract of insurance of the policyholder is proposed to take 
     place and become effective;
       (2) the name, address, and telephone number of the 
     transferring insurer and the assuming insurer under the 
     proposed transfer agreement;
       (3) that the transfer and novation of the insurance 
     contract of the policyholder cannot take effect without the 
     written consent of the policyholders except as provided in 
     section 5 of this Act;
       (4) the procedures and any time limitation for consenting 
     to the transfer and novation;
       (5) a summary informing the policyholder regarding any 
     adverse effect that the policyholder might experience as a 
     result of consenting to the transfer and novation;
       (6) a statement that, without the written consent of the 
     policyholder, the transferring insurer will remain as the 
     insurance company of the policyholder or beneficiary, except 
     as provided in section 5 of this Act;
       (7) a statement that the assuming insurer is licensed to 
     write the type of business being transferred in the State 
     where the policyholder resides, or is otherwise authorized, 
     under applicable law, to assume such business;
       (8) the name, address, and telephone number of the person 
     designated by the transferring insurer as the person for 
     receiving the written consent of the policyholder affected by 
     the proposed transfer and novation;
       (9) the address and telephone number of the chief insurance 
     regulatory official of the State in which the policyholder 
     resides;
       (10) financial data for the transferring insurer and the 
     assuming insurer involved in the proposed transfer agreement, 
     including--
       (A)(i) the ratings, together with enough information to 
     understand where the ratings fall within the range of rating 
     categories of each rating agency, for the last 5 years, if 
     available, or if not available for 5 years, for such lesser 
     period as is available, from each nationally recognized 
     insurance company rating organization that has rated the 
     insurer, including an explanation of the meaning of each 
     rating category of each rating organization;
       (ii) if ratings are unavailable for any year of the 5-year 
     period, a disclosure of this fact; and
       (iii) a statement that any or all of the above insurance 
     company rating organization reports may be obtained at no 
     cost by writing or calling an address or phone number listed 
     in the statement;
       (B) a balance sheet as of December 31 for each of the 3 
     years immediately preceding the notice, if available, or for 
     such lesser period as is available, and as of the date of the 
     most recent quarterly statement;
       (C) a copy of the Management's Discussion and Analysis that 
     was filed as a supplement to the annual statement of the 
     preceding year; and
       (D) an explanation of the reason for the proposed transfer 
     signed by the highest executive official of the transferring 
     insurer and the assuming insurer;
       (11) a statement setting forth the financial condition of 
     the transferring insurer and of the assuming insurer under 
     the proposed transfer agreement, and the effect the 
     transaction will have on the financial condition of each such 
     insurer;
       (12) an opinion by a disinterested third-party expert, such 
     as an actuary, finding that the transfer is fair and in the 
     best interests of the policyholders affected by the transfer, 
     and a statement that the report on which the opinion is based 
     is available at no cost by writing or calling an address and 
     phone number listed in the statement;

  Mr. METZENBAUM. Madam President, it is rather late in the evening, I 
am aware, but there is a matter that has caused me great concern and 
is, in my opinion, one of the most audacious acts conducted by the 
insurance industry--not all of them, but a certain portion of them--
where ``John Jones'' takes out a policy with company ``X'', and he 
wakes up one day to find that company ``X'' has transferred his policy 
to company ``Y,'' without giving him any notice, without asking for his 
consent.
  There is no other industry in the country, no other business deal in 
the country that could be made in that manner, where you put your money 
in a bank, and then the bank transfers your deposits to another bank 
and says: Now you are doing business with another bank. And that bank 
may be far weaker. This is not a figment of my imagination. This is 
something that has occurred in this country, not once, but a number of 
times.
  It is only fair to point out that the National Association of 
Insurance Commissioners has been looking at the problem, and they have 
come up with some model legislation. But realistically speaking, model 
legislation of the NAIC normally does not become law for many years 
after the suggestion is made by the commissioners themselves. Even so, 
the model legislation does not provide for adequate notice and consent 
to the individual involved.
  I believe we ought to change the law in this respect. Senator Bryan 
and I expect to introduce legislation to that effect and will do so at 
an appropriate time, probably the first of this coming week. But 
because I think it is necessary that the insurance industry be aware of 
the attitude of the U.S. Senate on this question of an insurance 
company transferring an insured's policy without the consent of the 
insured, I offer this sense-of-the-Senate amendment spelling out the 
notice that would be required, and the consent of the insured, before 
it could become effective.
  I yield the floor.
  Mr. RIEGLE. Madam President, we are prepared to accept the sense-of-
the-Senate resolution.
  I urge its adoption.
  The PRESIDING OFFICER. Is there further debate?
  The question is on agreeing to the amendment.
  The amendment (No. 1548) was agreed to.
  Mr. METZENBAUM. Madam President, I move to reconsider the vote.
  Mr. RIEGLE. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. RIEGLE. Madam President, I now ask unanimous consent that the 
committee substitute be agreed to, the bill be read a third time, and 
the Banking Committee be discharged from further consideration of H.R. 
3474, the House companion measure, and that the Senate then proceed to 
its immediate consideration; that all after the enacting clause be 
stricken and the text of S. 1275, as amended, be inserted in lieu 
thereof; that the bill be read the third time and the Senate proceed to 
vote on final passage of H.R. 3474; that upon the disposition of H.R. 
3474, the Senate insist on its amendment, request a conference with the 
House on the disagreeing votes of the two Houses, and that the Chair be 
authorized to appoint conferees, and that all of the above occur 
without intervening action or debate.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The bill will be stated by title.
  The assistant legislative clerk read as follows:

       A bill (H.R. 3474) to reduce administrative requirements 
     for insured depository institutions to the extent consistent 
     with safe and sound banking practices to facilitate the 
     establishment of community development financial 
     institutions, and for other purposes.

  The Senate proceeded to consider the bill.
  The PRESIDING OFFICER. Under the previous order, all after the 
enacting clause is stricken, the text of S. 1275, as amended, is 
inserted in lieu thereof.
  The clerk will read the bill for the third time.
  The bill was read a third time.
  Mr. FAIRCLOTH. Madam President, if a rollcall vote were held on H.R. 
3474, I would have been recorded in the negative.
  Mr. WALLOP. Madam President, if a rollcall vote were held on H.R. 
3474, I would have been recorded in the negative.
  The PRESIDING OFFICER. The question is on the passage of the bill, as 
amended.
  So the bill (H.R. 3474) was passed.
  (The text of the bill (H.R. 3474) as passed by the Senate will appear 
in a future edition of the Record.)
  Mr. RIEGLE. Madam President, I move to reconsider the vote.
  Mr. D'AMATO. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. RIEGLE. Madam President, I ask unanimous consent that upon 
disposition of H.R. 3474, S. 1275 be indefinitely postponed.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. RIEGLE. Madam President, if I may, I want to just take a moment 
to thank my colleague, Senator D'Amato, and thank the other members of 
the committee on both sides of the aisle for their hard work and 
cooperation in committee leading up to the bill today and then the work 
over the last 2 days to get this bill to final passage.
  I also thank the staff on both sides for really an extraordinary work 
effort. They are here many of them--not all are here--there are others 
in other places. Wherever they are I want to thank them for the 
extraordinary amount of work that has gone into this all the time 
leading up through the Senate floor action and now final passage.
  I say the same with respect to the minority staff. I think we have an 
exceptionally good working relationship on our committee. It has sort 
of been the hallmark of our committee, as the Presiding Officer knows, 
over the now 6 years that I have been chairman of the committee, and I 
think the work that we have been able to produce is a result of the 
kind of teamwork that we received from all Members and staff on both 
sides.
  So I am grateful for that.
  I think we passed a good bill here. I think it will help the country 
when finally enacted, coming back from the conference committee and put 
into written law and then fully implemented.
  So I thank all involved and I am very grateful for that support.
  With that, Madam President, I yield back the floor.
  Mr. D'AMATO. Madam President, let me just take several seconds to 
commend the distinguished chairman of the committee, Senator Riegle, to 
commend his staff, and to commend the staff on the minority side for an 
outstanding job. So many Members have worked to bring this bill to a 
point where we are really, I think, on a threshold of accomplishing 
unusual things: ``Securization'' in the area of small business loans, 
making commercial loans hopefully more accessible, providing capital 
for the loans, and seeing to it that we have a sound flood insurance 
program.
  None of this was accomplished with a great deal of ease. It was a lot 
of hard work, and I might say a very bipartisan effort.
  So, may I start by again thanking the staff, both on the Republican 
side and on the Democratic side, and commending the chairman and all of 
our colleagues who participated in putting forth a bill that I believe 
is going to help put people to work.
  I believe you are going to see a great deal of capital that otherwise 
would not be made available to the little people, small businesses, and 
entrepreneurs. They in turn will be able to put their expertise to use, 
move this country forward, and in the truest sense provide real jobs 
and job opportunities.
  I just want to take this opportunity to thank the chairman again and 
all those who participated.
  The PRESIDING OFFICER. The Senator from Kentucky, the majority whip.

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