[Congressional Record Volume 154, Number 148 (Wednesday, September 17, 2008)]
[House]
[Pages H8363-H8368]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  NATIONAL ASSOCIATION OF REGISTERED AGENTS AND BROKERS REFORM ACT OF 
                                  2008

  Mr. SCOTT of Georgia. Mr. Speaker, I move to suspend the rules and 
pass the bill (H.R. 5611) to reform the National Association of 
Registered Agents and Brokers, and for other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 5611

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``National Association of 
     Registered Agents and Brokers Reform Act of 2008''.

     SEC. 2. 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:

  ``Subtitle C--National Association of Registered Agents and Brokers

     ``SEC. 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.).

     ``SEC. 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.

     ``SEC. 323. MEMBERSHIP.

       ``(a) Eligibility.--
       ``(1) In general.--Any insurance producer licensed in its 
     home State shall be eligible to become a member in 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 renews the license of 
     such producer in the State in

[[Page H8364]]

     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 background 
     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 the records of the Criminal Justice 
     Information Services Division of the Federal Bureau of 
     Investigation, and any other similar database over which the 
     Attorney General has authority and deems appropriate, for any 
     criminal background records (including wanted persons 
     information) corresponding to the identification information 
     provided under subparagraph (F); and
       ``(ii) provide any relevant information contained in such 
     records that pertain to the request directly to the 
     Association.
       ``(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) 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.
       ``(I) 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.
       ``(J) 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 under this section, 
     unless such person knows 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).

       ``(K) Fees.--The Attorney General may charge a reasonable 
     fee for the provision of information under this paragraph.
       ``(L) 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.
       ``(M) Regulations.--The Attorney General may prescribe 
     regulations to carry out this paragraph.
       ``(N) Ineligibility for membership.--The Association may 
     deny membership to any State-licensed insurance producer on 
     the basis of criminal history information obtained pursuant 
     to subparagraph (D).
       ``(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 (4).
       ``(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

[[Page H8365]]

     purposes of remitting licensing fees to any State pursuant to 
     paragraph (1).
       ``(4) 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.--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--
       ``(1) the producer fails to meet the applicable membership 
     criteria of the Association; or
       ``(2) the producer has been subject to disciplinary action 
     pursuant to a final adjudicatory proceeding under the 
     jurisdiction of a State insurance regulator.
       ``(i) Office of Consumer Complaints.--
       ``(1) In general.--The Association shall establish an 
     office of consumer complaints that shall--
       ``(A) receive and, when appropriate, investigate complaints 
     from both consumers and State insurance regulators related to 
     members of the Association;
       ``(B) maintain records of all complaints received in 
     accordance with subparagraph (A) and make such records 
     available to the National Association of Insurance 
     Commissioners (hereinafter in this subtitle referred to as 
     the `NAIC') 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 
     appropriate State insurance regulator.
       ``(2) Telephone and other access.--The office of consumer 
     complaints 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.

     ``SEC. 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 and the members 
     of the Association.
       ``(b) Powers.--
       ``(1) In general.--The Board shall have such powers and 
     authority as may be specified in the bylaws of the 
     Association.
       ``(2) Quorum required.--All decisions of the Board shall 
     require an affirmative vote of a simple majority of Board 
     members.
       ``(c) Composition.--
       ``(1) In general.--The Board shall be composed of 11 
     members, of whom--
       ``(A) 6 shall be State insurance commissioners appointed in 
     the manner provided in paragraph (2), and
       ``(B) 5 shall be insurance industry representatives 
     appointed in the manner provided in paragraph (3).
       ``(2) Members appointed by the naic.--
       ``(A) In general.--The NAIC shall appoint 1 member of the 
     Board from among State insurance commissioners in each of the 
     following 3 categories of States:
       ``(i) The 18 States with the smallest total direct written 
     premiums from all insurance policies written in such States.
       ``(ii) The 18 States with the largest total direct written 
     premiums from all insurance policies written in such States.
       ``(iii) The States that are not among the States described 
     in clauses (i) and (ii).
       ``(B) At-large members.--The NAIC shall appoint 3 Board 
     members pursuant to criteria established by the NAIC's 
     membership.
       ``(3) Members appointed by insurance trade associations.--
       ``(A) Insurance producer representatives.--3 of the 5 
     members who are insurance industry representatives shall be 
     appointed as follows by the following trade associations or 
     their successor organizations:
       ``(i) 1 member appointed by the Council of Insurance Agents 
     and Brokers from among representatives of such association.
       ``(ii) 1 member appointed by the Independent Insurance 
     Agents and Brokers of America from among representatives of 
     such association.
       ``(iii) 1 member appointed by the National Association of 
     Insurance and Financial Advisors from among representatives 
     of such association.
       ``(B) Property and casualty insurer representative.--1 of 
     the 5 members who are insurance industry representatives 
     shall be appointed by the American Insurance Association, the 
     National Association of Mutual Insurance Companies, and the 
     Property and Casualty Insurers Association of America from 
     among representatives of each such association, on a rotating 
     basis.
       ``(C) Life and health insurer representative.--1 of the 5 
     members who are insurance industry representatives shall be 
     appointed by the American Council of Life Insurers and the 
     Association of Health Insurance Plans from among 
     representatives of each such association, on a rotating 
     basis.
       ``(4) Alternate appointment.--
       ``(A) In general.--If the NAIC or a nominating group of 
     insurance trade associations fails to make appointments to 
     the Board as required under paragraph (2) or (3), the 
     President shall appoint such members of the Association's 
     Board from lists of candidates provided by the NAIC, in the 
     case of a member described in paragraph (2) or the nominating 
     group of insurance trade associations pursuant to the 
     relevant subparagraph of paragraph (3), in the case of a 
     member described in any such subparagraph.
       ``(B) Procedures for obtaining naic appointment 
     recommendations.--
       ``(i) Presidential appointment from list.--If the NAIC 
     fails to appoint members of the Board as provided under 
     subparagraph (A) or (B) of paragraph (2) within 60 days after 
     the date of the enactment of the National Association of 
     Registered Agents and Brokers Reform Act of 2008, the 
     President shall, with the advice and consent of the Senate, 
     appoint 6 members to the Board who are current State 
     insurance commissioners in accordance with the requirements 
     of subparagraphs (A) and (B) of paragraph (2) from a list of 
     candidates recommended to the President by the NAIC.
       ``(ii) Presidential appointment without a list.--If the 
     NAIC fails to provide a list within 90 days after the date of 
     the enactment of the National Association of Registered 
     Agents and Brokers Reform Act of 2008, or if any list that is 
     provided does not include at least 10 recommended candidates 
     or comply with the requirements of paragraph (2), the 
     President shall, with the advice and consent of the Senate, 
     appoint 6 members to the Board without considering the views 
     of the NAIC, in accordance with requirements of paragraph 
     (2).
       ``(C) Procedures for obtaining insurance trade association 
     group appointment recommendations.--
       ``(i) Presidential appointment from list.--If any group of 
     nominating insurance trade associations identified under 
     subparagraph (A), (B), or (C) of paragraph (3) fails to 
     appoint members of the Board as provided under such 
     subparagraph within 60 days after the date of the enactment 
     of the National Association of Registered Agents and Brokers 
     Reform Act of 2008, the President shall, with the advice and 
     consent of the Senate, make the requisite appointments 
     pursuant to each such subparagraph from a list of candidates 
     recommended to the President by such group.
       ``(ii) Presidential appointment without a list.--If the 
     nominating group of insurance trade associations identified 
     under subparagraph (A), (B), or (C) of paragraph (3) fails to 
     provide a list within 90 days after date of the enactment of 
     the National Association of Registered Agents and Brokers 
     Reform Act of 2008, or if any list that is provided does not 
     comply with the requirements of the subparagraph, the 
     President shall, with the advice and consent of the Senate, 
     make the requisite appointments without considering the views 
     of such group.
       ``(iii) List of recommendations.--Any list of recommended 
     candidates provided to the President by a nominating group of 
     insurance trade associations identified under subparagraph 
     (A), (B), or (C) of paragraph (3) shall include--

       ``(I) at least 2 recommended candidates from each 
     association identified under paragraph (3)(A);
       ``(II) at least 2 recommended candidates, in the case of 
     associations identified under paragraph (3)(B); and
       ``(III) at least 2 recommended candidates, in the case of 
     associations identified under paragraph (3)(C).

       ``(D) Alternate appointment of state insurance 
     commissioners.--If fewer than 6 State insurance commissioners 
     accept appointment to the Board pursuant to subparagraph (B), 
     the President, with the advice and consent of the Senate, may 
     appoint the remaining State insurance commissioner members of 
     the Board from among individuals who are current or former 
     State insurance commissioners, to the extent that--
       ``(i) 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; and
       ``(ii) not more than 3 members appointed to membership on 
     the Board under this subparagraph belong to the same 
     political party as the President.

[[Page H8366]]

       ``(5) 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, 
     after the initial appointment of the members of the Board, be 
     for 2 years, with \1/2\ of the members to be appointed each 
     year and divided as evenly as possible between members 
     appointed under paragraphs (2) and (3) of subsection (c).
       ``(2) Limitation on successive terms.--Only Board members 
     appointed under subsections (c)(2) and (c)(3)(A) may be re-
     appointed for an additional term.
       ``(e) Board Vacancies.--
       ``(1) In general.--Any vacancy on the board of directors 
     shall be filled as provided under subparagraph (A) or (B) of 
     paragraph (2), and any member 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) Alternate appointment.--If the NAIC or a nominating 
     group of trade associations fails to appoint a member to the 
     Board to fill a vacancy within 60 days from the date that 
     such vacancy occurs, the President shall, with the advice and 
     consent of the Senate, make the requisite appointment 
     pursuant to the procedures established under the applicable 
     subparagraph of subsection (c)(4).
       ``(f) Meetings.--The Board shall meet at the call of the 
     chairperson, or as otherwise provided by the bylaws of the 
     Association.

     ``SEC. 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.

     ``SEC. 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, the Congress, 
     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 an insurance trade journal 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.

     ``SEC. 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 assess board member organizations and associations 
     fees 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.

     ``SEC. 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, the Congress, 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.

     ``SEC. 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.

     ``SEC. 330. PRESIDENTIAL REVIEW.

       ``(a) Removal.--If the President determines and certifies 
     to the Speaker of the House, the House Minority Leader, the 
     Senate Majority Leader and the Senate Minority Leader that 
     the Association is acting in a manner contrary to 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(c)(4) with the advice and consent 
     of the Senate, new members to fill the vacancies on the Board 
     for the remainder of such terms.
       ``(b) 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 and certifies to the Speaker of the 
     House, the House minority leader, the Senate majority leader, 
     and the Senate minority leader is contrary to the purposes of 
     this subtitle.

     ``SEC. 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.

     ``SEC. 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

[[Page H8367]]

     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.

     ``SEC. 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.

     ``SEC. 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 review.
``Sec. 331. Relationship to state law.
``Sec. 332. Coordination with other regulators.
``Sec. 333. Judicial review and enforcement.
``Sec. 334. Definitions.''.

                              {time}  1845

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Georgia (Mr. Scott) and the gentleman from Kentucky (Mr. Davis) each 
will control 20 minutes.
  The Chair recognizes the gentleman from Georgia.


                             General Leave

  Mr. SCOTT of Georgia. Mr. Speaker, I ask unanimous consent that all 
Members may have 5 legislative days within which to revise and extend 
their remarks on this legislation and to insert extraneous material 
thereon.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Georgia?
  There was no objection.
  Mr. SCOTT of Georgia. Mr. Speaker, I yield myself such time as I may 
consume.
  First, I want to thank Chairman Kanjorski of the Capital Markets 
Subcommittee, as well as Chairman Frank, for working with us and 
allowing H.R. 5611, the National Association of Registered Agents and 
Brokers Reform Act, to be considered today. This is, indeed, an 
important piece of legislation.
  I was pleased to introduce this bill, along with my good friend, the 
gentleman from Kentucky (Mr. Davis), as insurance regulatory reform is 
an issue many involved agree requires action. It, indeed, has been a 
pleasure to work with Representative Davis on this, who is one of my 
distinguished colleagues on the Committee on Financial Services. We 
both believe that this bill is a good starting point for leveling the 
playing field for insurance agents and brokers.
  Never before, Mr. Speaker, have we really seen the significance and 
importance of the financial services industry as we are seeing it 
today. There are so many, many, many pieces that need to be reformed 
and looked at and improved upon, and this legislation happens to be one 
of those pieces.
  H.R. 5611 will simply establish the National Association of 
Registered Agents and Brokers, which we refer to as NARAB, to provide 
for nonresident insurance agent and broker licensing while preserving 
the rights of States to supervise and discipline insurance agents and 
brokers. The legislation will further benefit consumers through 
increased competition among agents and brokers, leading to greater 
consumer choice.
  This legislation is straightforward. Insurance agents and brokers who 
are licensed in good standing in their home States can apply for 
membership in the National Association for Registered Agents and 
Brokers, NARAB, which will allow them to operate in multiple States. 
This is very much needed. Membership will be voluntary and not 
affecting the rights of a nonmember producer under any State license, 
respecting the sanctity of the State. This legislation will benefit 
policyholders by increasing marketplace competition and consumer choice 
by enabling insurance producers to more quickly and responsibly serve 
the needs of the consumer.
  A private, nonprofit NARAB entity consisting of State insurance 
regulators and marketplace representatives will serve as a portal for 
agents and brokers to obtain nonresident licenses in additional States. 
This is provided that they pay the required State nonlicensing fees and 
meet the NARAB standards for membership.
  This bill would also establish membership criteria which would 
include standards for personal qualifications, education, training and 
experience; and further, member applicants must be required to undergo 
a national criminal background check. And, to be very clear, NARAB 
would not, I repeat, would not be part of nor report to any Federal 
agency and would not have any Federal regulatory power. This is being 
done to streamline and bring greater efficiency and greater choice to 
consumers.
  Federal legislation is needed to ensure a reciprocal licensing 
process for insurance agents and brokers, and Congress already endorsed 
this concept when we passed the Gramm-Leach-Bliley Act in 1999. The 
Gramm-Leach-Bliley Act would have created NARAB if a number of States 
had not reached a certain number of licensing reciprocity, and although 
enough reciprocity was provided to avoid the creation of NARAB, it has 
been brought to my attention and to Mr. Davis' attention by agents 
across this country that there is a frustration over incomplete 
insurance licensing reciprocity, and this legislation addresses that 
important fact. It is abundantly clear that the bar was not set high 
enough in Gramm-Leach-Bliley, thus the reason behind this important 
legislation that we are considering today. We, my colleague, Mr. Davis 
and I, are simply working to ensure an updated version of NARAB.
  I believe the increased competition among agents and brokers this 
bill would create will be beneficial to all, and on all accounts, be 
more fair; and, in addition, lead to greater consumer choice. Mr. 
Speaker, this is what is important. The bottom line, it is the benefit 
to the consumer.
  As more and more agents operate across State lines, this problem of 
reciprocity has become worse, and it has become apparent to us that 
true nonresident licensing reform for insurance

[[Page H8368]]

agents could only really be achieved through legislation at the Federal 
level. That is why this Congress is acting today.
  The NARAB Reform Act that we are looking at today has garnered 
support from both sides of the aisle, both Democrats and Republicans, 
with 48 bipartisan cosponsors, and 27 of these cosponsors are Members 
serving on the Financial Services Committee.
  Again, I was very much pleased to work with the gentleman from 
Kentucky (Mr. Davis) on this legislation which again narrowly targets 
only the area where there is a problem. We have gone in with a laser 
beam and simply targeted where there is a problem to fix, and we have 
done that.
  Our manager's amendment was recently endorsed by the NAIC, showing 
that the State insurance regulators believe that this type of 
legislation is badly needed reform. Other groups that support this bill 
include the Independent Insurance Agents and Brokers of America, the 
IIABA; the National Association of Insurance and Financial Advisers, 
the NAIFA; the National Association of Mutual Insurance Companies, the 
NAMIC; the Property Casualty Insurers Association of America, PCI; and 
the Council of Insurance Agents and Brokers, the CIAB; as well as a 
number of individual insurance companies.
  As talks continue on this issue, we are very hopeful for the 
expansion of our regulatory board to include PIA, the National 
Association of Professional Insurance Agents. This has been a very 
inclusive process, Mr. Speaker, working in a very much needed area to 
bring a greater degree of consumer choice and benefits to the American 
consumer of insurance products.
  I am proud to have the opportunity again to work along with my 
colleagues on the Financial Services Committee and Mr. Davis on this 
important legislation. And to close, I would just simply urge all of my 
fellow Members to support H.R. 5611.
  Mr. Speaker, I reserve the balance of my time.
  Mr. DAVIS of Kentucky. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise today in support of H.R. 5611, the National 
Association of Registered Agents and Brokers Reform Act, or NARAB II.
  First, I would like to commend my friend, David Scott. We come from 
two different parties, but a common background in the business 
community, in the small business community, understanding the issues 
that business people deal with on a daily basis, and crossing multiple 
regulatory frameworks dealing with multiple States.
  My experience has led to my support and working to develop this bill 
and to get it passed tonight and hopefully signed into law before the 
end of year. It was based on my experience as a small business owner, 
not as an agent, but as a business owner who had employees in several 
different States, and suddenly found when I reached out to a good 
friend of mine who was an agent himself that he had to deal with 
several different agents. It suddenly became very complicated and very 
costly from a time standpoint. It was inefficient and not cost 
effective at all for any of us to get these different plans to fit the 
needs and in compliance with each State.
  After I came to Congress, with that experience in the back of my 
mind, I also heard from many, many agents in the insurance industry, 
and many small business owners who encountered situations like I had 
sitting astride the nexus of three States.
  Insurance reform has been the subject of discussion for many years 
now. There are many different perspectives on it. What David and I have 
tried to do through this bill, and our staffs, is to simply solve a 
process problem that allows people to work together more effectively. 
To me, this is the height of bipartisanism at its best. We are working 
to common cause, to fix a process that helps our citizens across the 
country.
  I am very pleased to see this meaningful and targeted reform measure 
make it to the floor today after over a year of work. NARAB II goes 
straight to the heart of the difficulties that insurance agents and 
brokers, and small business owners who are their customers, face on a 
daily basis as they try to navigate this web of State licensing 
requirements.
  The Gramm-Leach-Bliley Act would have created the original NARAB 
system in the event that the States did not satisfy the producer 
licensing reform objectives outlined in the underlying bill. 
Ultimately, the States were perceived to have achieved a specified 
level of licensing reciprocity, and NARAB was never created. Thus, the 
problem remained.
  Nearly 10 years since the passage of Gramm-Leach-Bliley, we are still 
in need of progress on this issue. H.R. 5611 mandates the creation of 
NARAB. The board's purposes and function will be generally the same as 
the provisions of Gramm-Leach-Bliley. In short, agents and brokers 
licensed in good standing in their home State and meeting NARAB-member 
criteria will be able to join NARAB. Members will pay the appropriate 
fees required by each State in which they are licensed, and so this 
will not eliminate any revenue States currently generate from 
licensing. NARAB would not have any Federal regulatory authority, an 
important point that my friend from Georgia highlighted during his 
remarks as well. This is not an expansion of the Federal bureaucracy, 
it is a correction to allow the private sector to continue to grow 
business and create jobs.
  I would like to think of NARAB as a stamp of approval for an 
insurance agent acknowledged and accepted nationwide.
  I appreciate the hard work, expertise and advice from all of the 
insurance industry groups in helping us to come to compromise on H.R. 
5611. In particular, the NAIC has been an invaluable source of 
knowledge, and I appreciate their substantive suggestions for ways we 
can improve the bill.
  We made sure that the State insurance commissioners had a voice in 
the shaping of this legislation to ensure that State rights were 
protected, and at the same time we were able to address a direct issue 
that was affecting these brokers and small business customers.
  H.R. 5611 takes a significant step toward improving the way our 
insurance markets operate within the existing State-based system. I 
would like to thank in particular Chairman Frank, Ranking Member 
Bachus, Chairman Kanjorski, and Ranking Member Pryce for their 
leadership on the important issue of insurance reform and for their 
support of this bill that Mr. Scott and I introduced.
  Lastly, I want to thank my good friend, David Scott, for his work and 
also his staff, Michael Andel and Tammy McAthey, and my legislative 
director, Lauren O'Brien, who have worked long and hard to bring this 
to pass. This has been a great piece of legislation. I urge support for 
the bill.
  Mr. Speaker, I yield back the balance of my time.

                              {time}  1900

  Mr. SCOTT of Georgia. Mr. Speaker, in conclusion, I just want to 
again echo my sentiments, and appreciate the fine work that Mr. Davis 
has done on this. It's been a pleasure working with him and the full 
committee and all of our staffs combined and working with the insurance 
industry itself and especially our agents to make their work smoother 
and to pass a bill that is very forward-looking to improve consumer 
benefits on their end.
  Mr. Speaker, I have no further requests for time, and I yield back 
the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Georgia (Mr. Scott) that the House suspend the rules and 
pass the bill, H.R. 5611, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

                          ____________________