Insurance Policy Transfer Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Insurance Policy Transfer Act''.

SEC. 2. PURPOSE.

    It is the purpose of this Act to prohibit the transfer and novation 
of a contract of insurance without the prior informed written consent 
of the policyholder.

SEC. 3. DEFINITIONS.

    As used in this Act:
            (1) Assuming insurer.--The term ``assuming insurer'' means 
        an insurer that assumes an insurance obligation or risk, or 
        both, from a transferring insurer pursuant to a transfer 
        agreement.
            (2) Transferring insurer.--The term ``transferring 
        insurer'' means an insurer that transfers insurance obligations 
        or risks, or both, of existing or in-force contracts of 
        insurance to an assuming insurer pursuant to a transfer 
        agreement.
            (3) Transfer agreement.--The term ``transfer agreement'' 
        means a contract that--
                    (A) transfers insurance obligations or risks, or 
                both, of existing or in-force contracts of insurance 
                from a transferring insurer to an assuming insurer; and
                    (B) is intended to effect a novation of the 
                transferred contract of insurance with the result 
                that--
                            (i) the assuming insurer becomes directly 
                        liable to the policyholders of the transferring 
                        insurer; and
                            (ii) the insurance obligations or risks, or 
                        both, of the transferring insurer under the 
                        contract are extinguished.
            (4) Contract of insurance.--The term ``contract of 
        insurance'' means a written agreement between an insurer and a 
        policyholder pursuant to which the insurer, in exchange for a 
        premium or other consideration, agrees to assume an obligation 
        or risk, or both, of the policyholder, or to make payments on 
        behalf of, or to, the policyholder or his or her beneficiaries. 
        The term includes all property, casualty, life, health, 
        accident, surety, title, and annuity business authorized to be 
        written pursuant to the laws of any State.

SEC. 4. NOTICE.

    (a) Requirement.--Except as provided in section 6, 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 in 
accordance with this section.
    (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 policyholder, 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;
            (13)(A) a statement by the chief insurance regulatory 
        official of the States of domicile of the transferring and 
        accepting companies finding that--
                    (i) the proposed transfer is fair, reasonable, and 
                in the best interests of the policyholders of the 
                transferring insurer and the assuming insurer; and
                    (ii) the notice of the proposed transfer required 
                by this Act is fair, adequate, and not misleading; and
            (B) a statement that the report on which the finding is 
        based is available at no cost by writing or calling an address 
        and phone number listed in the statement; and
            (14) a statement describing the effect of the transfer, if 
        any, on the State insurance guaranty fund coverage, if any, of 
        the policyholder or beneficiary.

SEC. 5. CONSENT REQUIREMENT.

    (a) Prohibited Transfers.--Except as provided in subsection (b), no 
insurer shall enter into a transfer agreement or transfer a contract of 
insurance pursuant to a transfer agreement without the written consent 
of the policyholder or a beneficiary of the policyholder.
    (b) Implied Consent.--A transfer of an insurance contract may take 
place without the written consent of the insured if--
            (1) the transferring insurer and the assuming insurer are 
        rated by the same 3 insurance company rating organizations for 
        each of the 3 years immediately preceding the transfer;
            (2) the rating by each of the 3 insurance company rating 
        organizations for the assuming insurer is the highest possible 
        rating or is a higher rating than the transferring insurer; and
            (3) the policyholder or beneficiary--
                    (A) has been provided with the notice required by 
                section 4 not sooner than February 28 and not later 
                than May 1 of each of the 3 years immediately preceding 
                the transfer pursuant to this section; and
                    (B) has not responded to the notice with an 
                objection to the transfer or transaction prior to the 
                expiration of the 90-day-period beginning on the date 
                the third notice is sent pursuant to subparagraph (A).

SEC. 6. TRANSFERS NOT SUBJECT TO THE ACT.

    Subject to such regulations as the Secretary of Commerce shall 
issue, this Act shall not apply to--
            (1) a transfer agreement or transaction in which the 
        transferring insurer continues to remain directly liable for 
        its insurance obligations or risks, or both, under the 
        contracts of insurance subject to the transfer agreement;
            (2) the substitution of one insurer for another upon the 
        expiration of insurance coverage pursuant to statutory or 
        contractual requirements and the issuance of a new contract of 
        insurance by another insurer;
            (3) the transfer of contracts of insurance pursuant to 
        mergers or consolidations of 2 or more insurers to the extent 
        that those transactions are regulated by the laws of the 
        affected State or States; and
            (4) an insurer subject to a judicial order of liquidation 
        or rehabilitation.

SEC. 7. REGULATIONS.

    The Secretary of Commerce shall promulgate such regulations as may 
be necessary to carry out this Act.

SEC. 8. CAUSE OF ACTION.

    (a) Remedies.--In any case in which an insurer violates this Act 
regarding a policyholder, the policyholder or the Attorney General may 
bring an action for relief in the appropriate United States district 
court.
    (b) Jurisdiction.--The United States district court for the 
judicial district in which a policyholder resides, or in which a 
transferring insurer or assuming insurer is incorporated, or licensed 
to do business or is doing business, shall have jurisdiction over an 
action brought pursuant to this section.
    (c) Venue.--The judicial district in which a policyholder resides, 
or in which a transferring insurer or assuming insurer is incorporated, 
is licensed to do business, or is doing business shall be regarded as 
the residence of such corporation for venue purposes.
    (d) Relief.--The district court shall have jurisdiction to grant 
such relief as is necessary or appropriate to redress a violation of 
this Act, including--
            (1) permanent or temporary injunctive relief;
            (2) compensatory damages;
            (3) punitive damages; and
            (4) costs, including reasonable attorneys' fees.

Summary: Insurance Policy Transfer Act - Requires an insurer to notify a policyholder before the insurer enters into a transfer agreement or transfers the policyholder's insurance contract to another insurer, provided that such requirement shall not apply to: (1) a transfer agreement or transaction in which the transferring insurer continues to remain directly liable for its insurance obligations, risks, or both, under the insurance contracts subject to the transfer agreement. (2) the substitution of one insurer for another upon the expiration of insurance coverage pursuant to statutory or contractual requirements and the issuance of a new insurance contract by another insurer. (3) the transfer of insurance contracts pursuant to mergers or consolidations of two or more insurers to the extent that those transactions are regulated by the laws of the affected State or States. And (4) an insurer subject to a judicial order of liquidation or rehabilitation. Sets forth provisions regarding the form and content of such notice. Requires the written consent of the policyholder or a beneficiary before an insurer can enter into a transfer agreement or transfer an insurance contract pursuant to a transfer agreement unless: (1) the transferring insurer and the assuming insurer are rated by the same three insurance company rating organizations for each of the three years immediately preceding the transfer. (2) such rating is the highest possible rating or is a higher rating than the transferring insurer. And (3) the policyholder or beneficiary has been provided with the required notice between February 28 and May 1 of each of the three years immediately preceding the transfer and has not responded to the notice with an objection to the transfer or transaction within 90 days after the third notice is sent. Allows the policyholder or the Attorney General to bring an action for relief in the appropriate United States district court if an insurer violates this Act. Empowers the district court to grant such relief as is necessary or appropriate to redress a violation of this Act, including permanent or temporary injunctive relief, compensatory damages, punitive damages, and costs, including reasonable attorney's fees.