II 

109TH CONGRESS 

2D SESSION S. 2509 

To authorize the issuance of charters and licenses for carrying on the sale, 

solicitation, negotiation, and underwriting of insurance or any other 

insurance operations, to provide a comprehensive system for the regulation and supervision of National Insurers and National Agencies, to 

provide for policyholder protections in the event of an insolvency or 

impairment of a National Insurer, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 5, 2006 

Mr. SUNUNU (for himself and Mr. JOHNSON) introduced the following bill; 

which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To authorize the issuance of charters and licenses for carrying on the sale, solicitation, negotiation, and underwriting of insurance or any other insurance operations, 

to provide a comprehensive system for the regulation 

and supervision of National Insurers and National Agencies, to provide for policyholder protections in the event 

of an insolvency or impairment of a National Insurer, 

and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

2 (a) SHORT TITLE.—This Act may be cited as the 

3 ‘‘National Insurance Act of 2006’’. 

4 (b) TABLE OF CONTENTS.—The table of contents for 

5 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Purpose. 

Sec. 3. Definitions. 

TITLE I—OFFICE OF NATIONAL INSURANCE 

Subtitle A—Establishment of Office of National Insurance 

Sec. 1101. Establishment. 

Sec. 1102. Commissioner of National Insurance. 

Sec. 1103. Office personnel matters. 

Sec. 1104. Division of Insurance Fraud. 

Sec. 1105. Division of Consumer Affairs. 

Sec. 1106. Insurance self-regulatory organizations. 

Sec. 1107. Office of the Ombudsman. 

Subtitle B—Supervision of National Insurers and National Agencies 

Sec. 1121. Examination of National Insurers and National Agencies. 

Sec. 1122. Examination fees and other assessments. 

Sec. 1123. Disclosure of information. 

Sec. 1124. Reporting requirement. 

Sec. 1125. Relationship to State law. 

Subtitle C—Enforcement of Federal Insurance Laws 

Sec. 1141. National Insurer license suspension, restriction, or revocation. 

Sec. 1142. Suspension, restriction, or revocation of Federal license of National 

Agencies and federally licensed insurance producers. 

Sec. 1143. Cease-and-desist proceedings. 

Sec. 1144. Affirmative action to correct conditions resulting from violations or 

conduct. 

Sec. 1145. Suspension, removal, and prohibition authority. 

Sec. 1146. Suspension or prohibition based on criminal activity. 

Sec. 1147. Ancillary provisions. 

Sec. 1148. Hearings and judicial review of removal, suspension, or prohibition 

order. 

Sec. 1149. Civil and criminal penalties. 

Sec. 1150. Public disclosures of final orders and agreements. 

Sec. 1151. Foreign investigations. 

Sec. 1152. Action or proceeding against non-United States Insurers. 

Sec. 1153. Cooperation between Commissioner and State commissioners. 

Subtitle D—Insurance Fraud 

Sec. 1161. Investigation of insurance fraud. 

Sec. 1162. Penalties. 


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TITLE II—NATIONAL INSURANCE COMPANIES AND NATIONAL 

INSURANCE AGENCIES 

Subtitle A—Organization, Licensing, and Operations 

Sec. 1201. Organization, operation, and regulation of National Insurance Companies and National Insurance Agencies. 

Sec. 1202. United States branches of non-United States Insurers. 

Sec. 1203. Federal licensing of National Insurers. 

Sec. 1204. Corporate governance. 

Sec. 1205. Conversion of State Insurer to National Insurer or State Insurance 

Agency to National Agency. 

Sec. 1206. Conversion of National Insurer to State Insurer or National Agency 

to State Agency. 

Sec. 1207. Powers. 

Sec. 1208. Separate accounts of National Life Insurer. 

Sec. 1209. Protected cells. 

Sec. 1210. Chartering and licensing commencement date. 

Subtitle B—Financial, Product, and Market Regulation 

Sec. 1211. Transitional financial regulations. 

Sec. 1212. Other financial regulations. 

Sec. 1213. Product regulation for National Life Insurers. 

Sec. 1214. Product regulation for National Property/Casualty Insurers. 

Sec. 1215. Regulation of sales and marketing. 

Subtitle C—Reinsurance 

Sec. 1221. Federal licensing of reinsurers. 

Sec. 1222. Credit for reinsurance. 

Sec. 1223. Relationship to State law. 

Subtitle D—Acquisitions of Control; Mergers; Bulk Transfers; Domestication 

Sec. 1231. Acquisition of control of National Insurers and National Agencies. 

Sec. 1232. Mergers, consolidations, and acquisitions of National Insurers. 

Sec. 1233. Bulk transfers. 

Sec. 1234. Domestication of United States branch of a non-United States Insurer. 

Sec. 1235. Mergers, consolidations, and acquisitions of National Agencies. 

Subtitle E—Conversions 

Sec. 1241. Definitions. 

Sec. 1242. Conversion of stock life insurer to National Life Insurer in mutual 

form. 

Sec. 1243. Conversion of mutual insurer to National Insurer in stock form. 

Subtitle F—State Taxation 

Sec. 1251. State taxation of National Insurers. 

Sec. 1252. State taxation of National Agencies. 

TITLE III—INSURANCE PRODUCERS AND OTHER INSURANCE 

SERVICING PERSONS 

Sec. 1301. Federal licensing of insurance producers. 


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Sec. 1302. Producer database. 

Sec. 1303. Supervision and oversight of federally licensed insurance producers. 

Sec. 1304. Relationship to State law. 

Sec. 1305. Licensing commencement date. 

TITLE IV—HOLDING COMPANIES 

Sec. 1401. Definitions. 

Sec. 1402. Registration. 

Sec. 1403. Standards and management of a National Insurer within an insurance holding company system. 

Sec. 1404. Relationship to State law. 

Sec. 1405. Conflict with other Federal laws. 

Sec. 1406. No delegation permitted. 

TITLE V—RECEIVERSHIP 

Sec. 1501. Appointment of Office as receiver. 

Sec. 1502. Automatic stay. 

Sec. 1503. Powers and duties. 

Sec. 1504. Rulemaking. 

Sec. 1505. Judicial review. 

TITLE VI—INSOLVENCY PROTECTION 

Sec. 1601. Participation in guaranty associations. 

Sec. 1602. Qualified and nonqualified State. 

Sec. 1603. Establishment of the National Insurance Guaranty Corporation. 

Sec. 1604. Benefits for policy holders of National Insurers. 

Sec. 1605. Claims covered for policyholders of National Property/Casualty Insurers. 

Sec. 1606. Powers and duties of the Corporation. 

Sec. 1607. Subrogation. 

Sec. 1608. Assessments. 

Sec. 1609. Regulation. 

Sec. 1610. State taxation. 

Sec. 1611. Examination of the Corporation; annual report. 

TITLE VII—CONFORMING AMENDMENTS AND MISCELLANEOUS 

PROVISIONS 

Sec. 1701. Nondiscrimination. 

Sec. 1702. Application of the Federal antitrust laws to National Insurers, National Agencies, and federally licensed insurance producers. 

Sec. 1703. Application of State law and regulation to National Insurers, National Agencies, and federally licensed insurance producers. 

Sec. 1704. Federal Court jurisdiction. 

Sec. 1705. Federal Court venue. 

Sec. 1706. Judicial review. 

Sec. 1707. Amendment to Freedom of Information Act. 

Sec. 1708. Amendments to the Federal securities laws. 

Sec. 1709. Amendments to the Employee Retirement Income Security Act of 

1974. 

Sec. 1710. Amendments to the Gramm-Leach-Bliley Act. 

Sec. 1711. Amendments to the Federal Deposit Insurance Act. 

Sec. 1712. Amendments to the Bank Holding Company Act of 1956. 

Sec. 1713. Amendments to title 18 (crimes and criminal procedure). 


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Sec. 1714. Amendments to Americans with Disabilities Act of 1990. 

Sec. 1715. Amendment to Age Discrimination in Employment Act. 

Sec. 1716. Amendments to the Fair Credit Reporting Act. 

1 SEC. 2. PURPOSE. 

2 The purpose of this Act is to— 

3 (1) establish a comprehensive system of Federal 

4 chartering, licensing, regulation, and supervision for 

5 insurers and insurance producers that is inde6 pendent of the State system of insurance licensing, 

7 regulation, and supervision, yet that requires feder8 ally chartered and licensed insurers and producers to 

9 comply with certain State laws, including State tax 

10 laws; 

11 (2) provide for the creation of an Office of Na12 tional Insurance within the Department of the 

13 Treasury that is funded by assessments imposed 

14 upon federally chartered and licensed insurers and 

15 insurance producers; and 

16 (3) provide for the appointment of a Commis17 sioner of National Insurance, who, among other du18 ties, is authorized to— 

19 (A) issue Federal charters and licenses to 

20 insurers and insurance producers; 

21 (B) exclusively regulate and supervise the 

22 operations and solvency of federally chartered 

23 or licensed insurers and producers on a uni24 form, nationwide basis, including the conduct of 


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1 such insurers and producers with policyholders; 

2 and 

3 (C) protect the interests of policyholders 

4 by establishing a comprehensive scheme for the 

5 receivership for federally chartered insurers 

6 that requires federally chartered insurers to 

7 participate in qualified State guaranty funds. 

8 SEC. 3. DEFINITIONS. 

9 In this Act: 

10 (1) AFFILIATE.—The term ‘‘affiliate’’ means 

11 any person that controls, is controlled by, or is 

12 under common control with another person. 

13 (2) AFFILIATE INSURER.—The term ‘‘affiliate 

14 insurer’’ means any person that controls, is con15 trolled by, or is under common control with, a Na16 tional Insurer or a National Agency. 

17 (3) BUSINESS OF INSURANCE.—The term 

18 ‘‘business of insurance’’ has the meaning given to 

19 such term in section 1033(f) of title 18, United 

20 States Code. 

21 (4) COMMISSIONER.—The term ‘‘Commis22 sioner’’ means the Commissioner of National Insur23 ance. 

24 (5) CONTROL.—The term ‘‘control’’, including 

25 the terms ‘‘controlling’’, ‘‘controlled by’’, and ‘‘under 


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1 common control with’’, means the possession, direct 

2 or indirect, of the power to direct or cause the direc3 tion of the management and policies of a business 

4 entity, whether through the ownership of voting se5 curities, by contract or otherwise, unless the power 

6 is the result of an official position with or corporate 

7 office held by a person. For purposes of sections 

8 1204(c), 1231, 1243(g), and title III, control shall 

9 be presumed to exist if any person, directly or indi10 rectly, owns, controls, holds with the power to vote, 

11 or holds proxies representing, 10 percent or more of 

12 the voting securities of any other person. 

13 (6) CORPORATION.—The term ‘‘Corporation’’ 

14 means the National Insurance Guaranty Corporation 

15 that is established in section 1603. 

16 (7) FEDERAL BANKING AGENCIES.—The term 

17 ‘‘Federal banking agencies’’ means the Office of the 

18 Comptroller of the Currency, the Board of Gov19 ernors of the Federal Reserve System, the Federal 

20 Deposit Insurance Corporation, and the Office of 

21 Thrift Supervision. 

22 (8) FEDERALLY LICENSED INSURANCE PRO23 DUCER.—The term ‘‘federally licensed insurance 

24 producer’’ means a person, including a National 

25 Agency and a natural person acting on behalf of a 


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1 National Agency, that is an insurance producer li2 censed pursuant to section 1301. 

3 (9) FRAUDULENT INSURANCE ACT.—The term 

4 ‘‘fraudulent insurance act’’ has the meaning given to 

5 such term in section 1037A(d)(3) of title 18, United 

6 States Code. 

7 (10) FUNCTIONAL REGULATOR.—The term 

8 ‘‘functional regulator’’ shall mean— 

9 (A) in the case of a broker-dealer, invest10 ment advisor or investment Company, the Secu11 rities and Exchange Commission; 

12 (B) in the case of a State insurer or State 

13 insurance producer, the appropriate State in14 surance regulator of a State that has jurisdic15 tion over such insurer or insurance producer; 

16 (C) in the case of a bank holding company 

17 or financial holding company, the Federal Re18 serve Board; 

19 (D) in the case of a savings and loan hold20 ing company, the Office of Thrift Supervision; 

21 (E) in the case of a national bank, the Of22 fice of the Comptroller of the Currency; 

23 (F) in the case of a Federal savings bank 

24 or Federal savings association, the Office of 

25 Thrift Supervision; 


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1 (G) in the case of a State bank, the appro2 priate State banking authority for the State in 

3 which the bank is chartered or the Federal De4 posit Insurance Corporation, in the case of a 

5 State bank that is not a member of the Federal 

6 Reserve System, or the Federal Reserve Board, 

7 in the case of a State bank that is a member 

8 of the Federal Reserve System; 

9 (H) in the case of a State savings bank or 

10 State savings association, the appropriate bank11 ing authority for the State in which the thrift 

12 is chartered; and 

13 (I) in the case of a commodities company, 

14 the Commodities Exchange Commission. 

15 (11) FUNCTIONALLY REGULATED AFFILIATE.— 

16 The term ‘‘functionally regulated affiliate’’ shall 

17 mean— 

18 (A) a broker or dealer that is registered 

19 under the Securities Exchange Act of 1934; 

20 (B) a registered investment adviser, reg21 istered by or on behalf of either the Securities 

22 and Exchange Commission or any State; 

23 (C) an investment company that is reg24 istered under the Investment Company Act of 

25 1940; 


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1 (D) a State insurer or State insurance pro2 ducer that is subject to supervision by a State 

3 insurance regulator; 

4 (E) a bank holding company or financial 

5 holding company registered with or certified by 

6 the Federal Reserve Board; 

7 (F) a national bank subject to the super8 vision of the Office of the Comptroller of the 

9 Currency; 

10 (G) a State bank subject to the supervision 

11 of a State banking regulator; 

12 (H) a Federal savings bank or Federal 

13 savings association subject to the supervision of 

14 the Office of Thrift Supervision; 

15 (I) a State savings bank or State savings 

16 association subject to the supervision of a State 

17 banking regulator; and 

18 (J) a business entity that is subject to reg19 ulation by the Commodity Futures Trading 

20 Commission, with respect to commodities activi21 ties of such entity and activities incidental to 

22 such commodities activities. 

23 (12) INSOLVENCY; INSOLVENT.— 

24 (A) IN GENERAL.—The term ‘‘insolvency’’ 

25 or ‘‘insolvent’’ means the inability of an insurer 


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1 to pay its obligations when they are due or 

2 when assets do not exceed liabilities plus the 

3 greater of— 

4 (i) any capital and surplus required 

5 by law for its organization; or 

6 (ii) the total par or stated value of its 

7 authorized and issued capital stock. 

8 (B) LIABILITIES.—In this paragraph, the 

9 term ‘‘liabilities’’ shall include reserves required 

10 by statute or by rule or specific requirements 

11 imposed by the Commissioner upon an insurer. 

12 (13) INSURANCE OPERATIONS.—The term ‘‘in13 surance operations’’ includes but is not limited to— 

14 (A) the business of insurance; 

15 (B) all acts and transactions relating to 

16 the sale, solicitation, negotiation, and under17 writing of insurance; 

18 (C) all acts and transactions relating to 

19 claims adjustment and settlement; and 

20 (D) all acts and transactions relating to 

21 the establishment of rates, rules, risk classifica22 tions, rating classifications, rating territories 

23 and forms (including, but not limited to, en24 dorsements, addendums and policy language) 

25 for insurance. 


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1 (14) INSURANCE PERSON.—The term ‘‘insur2 ance person’’ has the meaning given such term in 

3 section 1037A(d)(4) of title 18. 

4 (15) INSURANCE PRODUCER.—The term ‘‘in5 surance producer’’ means any person, including a 

6 National Agency and a natural person acting on be7 half of a National Agency, that sells, solicits or ne8 gotiates policies of insurance, except that none of 

9 the following is an insurance producer: 

10 (A) A National Insurer. 

11 (B) An officer, director, or employee of a 

12 National Insurer or of an insurance producer, 

13 provided that the officer, director, or employee 

14 does not receive any commission or other com15 pensation on insurance policies written or sold 

16 by the National Insurer or insurance producer 

17 which commission or other compensation is di18 rectly dependent upon the amount of insurance 

19 policies written or sold and— 

20 (i) the officer, director, or employee’s 

21 activities are executive, administrative, 

22 managerial, clerical or a combination of 

23 these, and are only indirectly related to the 

24 sale, solicitation or negotiation of insur25 ance; 


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1 (ii) the officer, director, or employee’s 

2 function relates to underwriting, loss con3 trol, inspection or the processing, adjust4 ing, investigating, or settling of a claim on 

5 a policy of insurance; or 

6 (iii) the officer, director, or employee 

7 is acting in the capacity of a special agent 

8 or agency supervisor assisting insurance 

9 producers where the person’s activities are 

10 limited to providing technical advice and 

11 assistance to federally licensed insurance 

12 producers and do not include the sale, so13 licitation or negotiation of insurance. 

14 (C) A person who secures and furnishes in15 formation for the purpose of group insurance 

16 policies; or for the purpose of enrolling individ17 uals under plans, or issuing certificates under 

18 plans or otherwise assisting in administering 

19 plans, where no commission or other compensa20 tion directly dependent upon the amount of in21 surance policies written or sold is paid to the 

22 person for the service. 

23 (D) An employer or association or its offi24 cers, directors, employees, or the trustees of an 

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1 ployer, officer, employee, director or trustee is 

2 engaged in the administration or operation of a 

3 program of employee benefits for the employer’s 

4 or association’s own employees or the employees 

5 of its subsidiaries or affiliates, which program 

6 involves the use of insurance written by the Na7 tional Insurer, as long as the employers, asso8 ciations, officers, directors, employees or trust9 ees are not in any manner compensated, di10 rectly or indirectly, by the National Insurer. 

11 (E) An employee of a National Insurer or 

12 an organization employed by a National Insurer 

13 that is engaging in the inspection, rating or 

14 classification of risks, or in the supervision of 

15 the training of insurance producers and that is 

16 not individually engaged in the sale, solicitation, 

17 or negotiation of insurance. 

18 (F) A person whose activities are limited 

19 to advertising without the intent to solicit in20 surance through communications in printed 

21 publications or other forms of electronic mass 

22 media, provided that the person does not sell, 

23 solicit, or negotiate insurance. 

24 (G) A salaried full-time employee who 

25 counsels or advises his or her employer relative 


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1 to the insurance interests of the employer or of 

2 the subsidiaries or business affiliates of the em3 ployer provided that the employee does not sell 

4 or solicit insurance or receive a commission or 

5 other compensation directly dependent upon the 

6 amount of insurance policies written or sold. 

7 (H) A person that sells, solicits, or nego8 tiates a funding agreement. 

9 (I) Any other kind of person identified by 

10 the Commissioner, by regulation, as not being 

11 an insurance producer within the meaning of 

12 this definition. 

13 (16) INSURANCE SECURITIZATION.—The term 

14 ‘‘insurance securitization’’ means the issuance of 

15 debt instruments by a National Insurer, the pro16 ceeds from which support the exposures attributed 

17 to a protected cell, where repayment of principal or 

18 interest, or both, to investors under the transaction 

19 terms is contingent upon the occurrence or non20 occurrence of an event with respect to which the Na21 tional Insurer is exposed to loss under insurance 

22 policies or reinsurance contracts it has written. 

23 (17) INSURER-AFFILIATED PARTY.—The term 

24 ‘‘insurer-affiliated party’’ means— 


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1 (A) any director, officer, employee, or con2 trolling shareholder (other than a holding com3 pany) of, or agent for, a National Insurer or a 

4 National Agency; 

5 (B) any other person who has filed or is 

6 required to file a statement with the Commis7 sioner under section 1231; 

8 (C) any shareholder (other than a holding 

9 company), consultant, joint venture partner, 

10 and any other person as determined by the 

11 Commissioner (by regulation or case-by-case) 

12 who participates in the conduct of the affairs of 

13 a National Insurer or a National Agency; and 

14 (D) any independent contractor (including 

15 any attorney, actuary, or accountant) of a Na16 tional Insurer or a National Agency who in that 

17 capacity knowingly or recklessly participates in 

18 any violation of any law or regulation, any 

19 breach of fiduciary duty, or any conduct that 

20 involves an undue risk of loss to a National In21 surer’s policyholders as a whole, and which vio22 lation, breach or conduct caused or is likely to 

23 cause more than a minimal financial loss to, or 

24 a significant adverse effect on, a National In25 surer or the policyholders of a National Insurer. 


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1 (18) INSURER IN FRATERNAL FORM.—The 

2 term ‘‘insurer in fraternal form’’ means an incor3 porated society, order or supreme lodge, without 

4 capital stock (generally known as a fraternal benefit 

5 society), that— 

6 (A) is conducted solely for the benefit of 

7 its members and their beneficiaries and not for 

8 profit; 

9 (B) is operated on a lodge system with rit10 ualistic form of work; 

11 (C) has a representative form of govern12 ment; 

13 (D) provides benefits to members and their 

14 dependents; and 

15 (E) operates for 1 or more social, intellec16 tual, educational, charitable, benevolent, moral, 

17 fraternal, patriotic, or religious purposes for the 

18 benefit of its members, which may also be ex19 tended to others. 

20 (19) NAIC.—The term ‘‘NAIC’’ means the Na21 tional Association of Insurance Commissioners. 

22 (20) NATIONAL AGENCY.—The term ‘‘National 

23 Agency’’ means a National Insurance Agency char24 tered under section 1201. 


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1 (21) NATIONAL INSURER.—The term ‘‘National 

2 Insurer’’ means a National Insurance Company 

3 chartered under section 1201. 

4 (22) NATIONAL LIFE INSURER.—The term 

5 ‘‘National Life Insurer’’ means a National Insurer 

6 that holds a Federal license to sell, solicit, negotiate, 

7 and underwrite 1 or both of life insurance and annu8 ities, provided that a National Life Insurer may also 

9 sell, solicit, negotiate, and underwrite disability in10 come insurance, long-term care insurance, health in11 surance, and funding agreements. 

12 (23) NATIONAL PROPERTY/CASUALTY IN13 SURER.—The term ‘‘National Property/Casualty In14 surer’’ means a National Insurer that holds a Fed15 eral license to sell, solicit, negotiate, and underwrite 

16 any combination of lines of property/casualty insur17 ance, provided that a National Property/Casualty In18 surer may also sell, solicit, negotiate, and underwrite 

19 health insurance. 

20 (24) NEGOTIATE.—The term ‘‘negotiate’’, in 

21 the context of negotiating insurance, means the act 

22 of conferring directly with or offering advice directly 

23 to a purchaser or prospective purchaser of a par24 ticular policy of insurance concerning any of the 

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1 tract, provided that the person engaged in that act 

2 either sells insurance to or obtains insurance cov3 erage for purchasers. 

4 (25) NON-UNITED STATES INSURER.—The term 

5 ‘‘non-United States Insurer’’ means a business enti6 ty that is chartered or licensed by a foreign country 

7 to sell, solicit, negotiate, and underwrite insurance. 

8 (26) OFFICE.—The term ‘‘Office’’ means the 

9 Office of National Insurance. 

10 (27) PERSON.—The term ‘‘person’’ means any 

11 natural person, business entity, governmental body 

12 or entity, voluntary organization, or similar organi13 zation. 

14 (28) POLICY OF INSURANCE; INSURANCE POL15 ICY.—The term ‘‘policy of insurance’’ or ‘‘insurance 

16 policy’’ means a policy, contract, certificate, or other 

17 evidence of insurance. ‘‘Policy of insurance’’ includes 

18 an annuity contract and a funding agreement. 

19 (29) POLICYHOLDER.—The term ‘‘policyholder’’ 

20 of an insurance policy means the person who is iden21 tified as the legal owner under the terms of the in22 surance policy or who is otherwise vested with legal 

23 title to the insurance policy. An assignment, absolute 

24 on its face, completed in accordance with the terms 

25 of the insurance policy and properly recording the 


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1 assignee as the policyholder on the books of the in2 surer vests legal title in the name of the assignee. 

3 The term ‘‘policyholder’’ does not include a person 

4 with a mere beneficial interest in an insurance policy 

5 or a person to whom an insurance policy is assigned 

6 for collateral security purposes. 

7 (30) PROPERTY/CASUALTY INSURANCE.—The 

8 term ‘‘property/casualty insurance’’— 

9 (A) means a product that insures, guaran10 tees, or indemnifies against liability, loss of life, 

11 loss of health, or loss through damage to or de12 struction of property, including surety bonds, 

13 private passenger or commercial automobile, 

14 homeowners, mortgage guaranty, financial 

15 guaranty, commercial multiperil, general liabil16 ity, professional liability, workers’ compensa17 tion, fire and allied lines, farm or ranch owners 

18 multiperil, aircraft, fidelity, surety, medical 

19 malpractice, ocean marine, inland marine, and 

20 boiler and machinery insurance; and 

21 (B) does not include life insurance, dis22 ability income insurance, long-term care insur23 ance, health insurance, annuities, a funding 

24 agreement, or title insurance. 


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1 (31) PROTECTED CELL.—The term ‘‘protected 

2 cell’’ means an identified pool of assets and liabil3 ities of a National Insurer segregated and insulated 

4 from the remainder of the National Insurer’s assets 

5 and liabilities. The remainder of the National Insur6 er’s assets and liabilities includes general account 

7 assets and liabilities, separate account assets and li8 abilities, and assets and liabilities of other protected 

9 cells. 

10 (32) PROTECTED CELL ACCOUNT.—The term 

11 ‘‘protected cell account’’ means a specifically identi12 fied bank or custodial account established by a Na13 tional Insurer for the purpose of segregating the 

14 protected cell assets of 1 protected cell from the pro15 tected cell assets of other protected cells and from 

16 the assets of the National Insurer’s general account 

17 and separate accounts. 

18 (33) SELL.—The term ‘‘sell’’, in the context of 

19 selling a policy of insurance, includes exchanging a 

20 policy of insurance by any means, for money or any 

21 other valuable consideration, on behalf of an insurer. 

22 (34) SEPARATE ACCOUNT.—The term ‘‘separate 

23 account’’ means an account established and main24 tained by a National Life Insurer under which in25 come, gains, and losses, whether or not realized, 


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1 from assets allocated to such account, are, in accord2 ance with the applicable contract, credited to or 

3 charged against such account without regard to 

4 other income, gains, or losses of the National Life 

5 Insurer. 

6 (35) SOLICIT.—The term ‘‘solicit’’, in the con7 text of soliciting a policy of insurance, means at8 tempting to sell insurance or asking or urging a per9 son to apply for a particular kind of insurance from 

10 a particular insurer. 

11 (36) STATE.—The term ‘‘State’’ means each of 

12 the 50 States, the District of Columbia, the Com13 monwealth of Puerto Rico, any territory of the 

14 United States, Guam, American Samoa, the Trust 

15 Territory of the Pacific Islands, the United States 

16 Virgin Islands, and the Commonwealth of the North17 ern Mariana Islands. 

18 (37) STATE INSURANCE AGENCY.—The term 

19 ‘‘State insurance agency’’ means an insurance pro20 ducer that is incorporated under State law. 

21 (38) STATE INSURER.—The term ‘‘State in22 surer’’ means an insurer incorporated or organized 

23 under the laws of a State. 

24 (39) SUBSIDIARY.—The term ‘‘subsidiary’’ 

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1 rectly, by another business entity. For the purposes 

2 of this definition— 

3 (A) a business entity is conclusively pre4 sumed to be controlled by a person that, di5 rectly or indirectly, with power to vote, owns, 

6 controls, or holds a majority of the outstanding 

7 voting securities of such business entity; 

8 (B) no presumption, either of control or of 

9 absence of control, arises if such ownership, 

10 control, or holding of voting securities is less 

11 than a majority but more than 5 percent; 

12 (C) absence of control is presumed if such 

13 ownership, control or holding of voting securi14 ties is 5 percent or less; and 

15 (D) in determining control, voting securi16 ties held in separate accounts of a business en17 tity shall be deemed to be owned by the busi18 ness entity, but voting securities in an invest19 ment advisory account that are not owned by a 

20 business entity but are held in an account as to 

21 which the business entity is an investment ad22 viser shall not be deemed to be controlled or 

23 held by such business entity. 

24 (40) TRUSTEED ASSETS.—The term ‘‘trusteed 

25 assets’’ means assets required or permitted by this 


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1 title to be deposited by a non-United States insurer 

2 with a qualified trustee for the security of its policy3 holders and creditors in the United States. 

4 (41) TRUSTEED SURPLUS.—The term ‘‘trusteed 

5 surplus’’ means, with respect to a United States 

6 branch, the value of the insurer’s trusteed assets de7 posited with a trustee under section 1202(b), plus 

8 accrued investment income thereon where such in9 come is collectible by the trustee, less the aggregate 

10 net amount of all of its reserves and other liabilities 

11 in the United States as determined under section 

12 1202(b). 

13 (42) UNITED STATES BRANCH.—The term 

14 ‘‘United States branch’’ means the business unit 

15 through which business is transacted within the 

16 United States by a non-United States insurer and 

17 the assets and liabilities of the insurer within the 

18 United States pertaining to such business. 

19 (43) UNITED STATES HOLDING COMPANY.— 

20 The term ‘‘United States holding company’’ means, 

21 with respect to a National Insurer, a person orga22 nized or incorporated in a State that directly or indi23 rectly controls a National Insurer. 

24 (44) VIOLATION.—The term ‘‘violation’’ in25 cludes any action or inaction (alone or with another 


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1 or others) for or toward causing, bringing about, 

2 participating in, counseling, or aiding or abetting a 

3 violation. 

4 (45) VOTING SECURITIES.—The term ‘‘voting 

5 securities’’ means securities of any class or any own6 ership interest having voting power for the election 

7 of directors, trustees, or management of a business 

8 entity, other than securities having such power only 

9 by reason of the happening of a contingency. 

10 TITLE I—OFFICE OF NATIONAL 

11 INSURANCE 

12 Subtitle A—Establishment of Office 

13 of National Insurance 

14 SEC. 1101. ESTABLISHMENT. 

15 (a) IN GENERAL.—There is established, in the De16 partment of the Treasury, the Office of National Insur17 ance, which shall be headed by the Commissioner of Na18 tional Insurance. 

19 (b) OFFICES.—The Commissioner shall establish a 

20 main office in Washington, D.C., not fewer than 6 regional 

21 offices, and such additional offices, within or outside the 

22 United States, as the Commissioner determines to be nec23 essary to carry out the provisions of this Act. 

24 (c) FUNDING.—The operations of the Office, includ25 ing the compensation of the Commissioner and all employVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 ees of the Office, shall be paid from fees and assessments 

2 imposed under the terms of section 1122. 

3 (d) APPLICABILITY OF ADMINISTRATIVE PROCE4 DURES ACT.—The Office shall be an agency of the United 

5 States for purposes of subchapter II of chapter 5 and 

6 chapter 6 of title 5, United States Code. 

7 (e) ANNUAL REPORT.—The Commissioner shall pre8 pare and submit to Congress an annual report on the ac9 tivities of the Office. 

10 SEC. 1102. COMMISSIONER OF NATIONAL INSURANCE. 

11 (a) APPOINTMENT.— 

12 (1) IN GENERAL.—The Commissioner of Na13 tional Insurance shall be appointed by the President, 

14 by and with the advice and consent of the Senate, 

15 from among individuals who are citizens of the 

16 United States. 

17 (2) TERM.—The Commissioner shall be ap18 pointed for a term of 5 years. 

19 (3) VACANCY.—A vacancy in the position of the 

20 Commissioner, which occurs before the expiration of 

21 the term for which the Commissioner was appointed 

22 shall be filled in the manner established under para23 graph (1). The Commissioner appointed to fill the 

24 vacancy shall be appointed only for the remainder of 

25 the term of the preceding Commissioner. 


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1 (4) SERVICE AFTER TERM.—An individual may 

2 serve as the Commissioner after the expiration of 

3 the term for which appointed until the earlier of— 

4 (A) such time as a successor has been ap5 pointed; or 

6 (B) 1 year after the expiration of the indi7 vidual’s term. 

8 (5) PROHIBITION ON FINANCIAL INTERESTS.— 

9 The Commissioner may not have a direct or indirect 

10 financial interest in any National Insurer, National 

11 Agency, or other federally licensed insurance pro12 ducer, except that the Commissioner may own, di13 rectly or indirectly, or may have a direct or indirect 

14 beneficial interest in any insurance policy written or 

15 sold by a National Insurer or National Agency. 

16 (6) OVERSIGHT.—The Commissioner shall be 

17 subject to the general oversight of the Secretary of 

18 the Treasury, who may not intervene in any matter 

19 or proceeding before the Commissioner unless other20 wise specifically provided by law. 

21 (7) EXECUTIVE SCHEDULE.— 

22 (A) IN GENERAL.—The Commissioner 

23 shall receive compensation at the rate pre24 scribed by law under section 5314 of title 5, 


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1 United States Code, for positions at level III of 

2 the Executive Schedule. 

3 (B) TECHNICAL AMENDMENT.—Section 

4 5314 of title 5, United States Code, is amended 

5 by inserting ‘‘Commissioner of National Insur6 ance, Department of the Treasury.’’ as a new 

7 item after ‘‘Administrator, Pipeline and Haz8 ardous Materials Safety Administration.’’. 

9 (b) POWERS OF THE COMMISSIONER.— 

10 (1) IN GENERAL.— 

11 (A) POWERS.—The Commissioner shall— 

12 (i) oversee the organization, incorpo13 ration, operation, regulation, and super14 vision of National Insurers and National 

15 Agencies; 

16 (ii) issue charters and licenses for Na17 tional Insurers and National Agencies; 

18 (iii) license, regulate, and supervise 

19 federally licensed insurance producers 

20 other than National Agencies; and 

21 (iv) have exclusive authority to deter22 mine whether a person subject to this Act 

23 has complied with the Act or the applica24 tion of any State law to matters regulated 


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1 under this Act, including the determination 

2 of any complaint raised by any person. 

3 (B) FINAL AGENCY ACTION.—A deter4 mination of the Commissioner under subpara5 graph (A)(iv) shall be the final agency action 

6 for purposes of judicial review of that action. 

7 (2) RULEMAKING.— 

8 (A) ISSUANCE OF REGULATIONS AND

9 OTHER ACTIONS.—The Commissioner may issue 

10 such rules, regulations, orders, and interpreta11 tions as the Commissioner determines to be 

12 necessary to carry out the purposes of this Act. 

13 (B) AUTONOMY.—The Secretary of the 

14 Treasury may not delay or prevent the issuance 

15 of any rule, regulation, order, or interpretation 

16 by the Commissioner unless otherwise specifi17 cally authorized by law. 

18 (C) NO DELEGATION PERMITTED.—The 

19 Commissioner may not delegate any authority 

20 conferred under subparagraph (A) to any insur21 ance self-regulatory organization. 

22 (3) LITIGATION AUTHORITY.— 

23 (A) IN GENERAL.—The Commissioner may 

24 sue and be sued, complain and defend, and oth25 erwise litigate, in the Commissioner’s name and 


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1 through the Commissioner’s own attorney, in 

2 any Federal or State court, other than the Su3 preme Court of the United States in which the 

4 Commissioner shall be represented by the Solic5 itor General of the United States. 

6 (B) ENFORCEMENT.—The Commissioner 

7 may apply to the United States district court 

8 for the jurisdiction in which the main office of 

9 a National Insurer or National Agency is lo10 cated, or in which any other federally licensed 

11 insurance producer or other person is located, 

12 for the enforcement of any effective and out13 standing rule, regulation, order, or interpreta14 tion issued pursuant to this Act. 

15 (4) CONSULTATION WITH STATE INSURANCE

16 REGULATORS.—The Commissioner may, as appro17 priate, consult with State insurance regulators re18 sponsible for the supervision of States insurers, 

19 State insurance agencies, and State licensed insur20 ance producers regarding regulatory and supervisory 

21 matters of common interest. 

22 (5) INTERNATIONAL COORDINATION AND CO23 OPERATION.— 

24 (A) IN GENERAL.—The Commissioner may 

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1 eral and multilateral cooperation and agree2 ments, as appropriate, with respect to insurance 

3 regulation in global markets in order to pro4 mote open and fair competition in such markets 

5 and to improve the quality and uniformity of in6 surance regulation in all countries. 

7 (B) FOREIGN INSURANCE REGULATORS.— 

8 The Commissioner may provide appropriate 

9 technical assistance to, and cooperation with, 

10 individual foreign insurance regulators and re11 gional and global regulatory organizations in in12 surance matters affecting international com13 merce, including— 

14 (i) the development and implementa15 tion of international regulatory standards; 

16 and 

17 (ii) the development and implementa18 tion of bilateral and multilateral mutual 

19 recognition agreements on the licensing of 

20 insurance companies and insurance pro21 ducers. 

22 (C) CONSULTATION AND COOPERATION.— 

23 In exercising the authority granted under sub24 paragraphs (A) and (B), the Commissioner— 


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1 (i) shall consult and cooperate with 

2 the Executive Office of the President and 

3 the United States Trade Representative; 

4 and 

5 (ii) may include a representative of 

6 any interested State insurance regulators 

7 as the Commissioner determines to be ap8 propriate. 

9 (6) INDEPENDENCE IN CONGRESSIONAL TESTI10 MONY AND RECOMMENDATIONS.—Section 111 of 

11 Public Law 93–495 (12 U.S.C. 250) is amended by 

12 inserting ‘‘the Commissioner of the National Insur13 ance,’’ after ‘‘the Director of the Office of Thrift Su14 pervision,’’. 

15 (c) GAO AUDIT.—The Commissioner shall make 

16 available to the Comptroller General of the United States 

17 all books and records necessary to audit all of the activities 

18 of the Office. 

19 SEC. 1103. OFFICE PERSONNEL MATTERS. 

20 (a) IN GENERAL.—The Commissioner may employ 

21 such examiners, lawyers, accountants, actuaries and other 

22 employees as are necessary to carry out the provisions of 

23 this Act. 

24 (b) COMPENSATION.—The Commissioner shall fix the 

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1 out regard to chapter 51 or subchapter III of chapter 53 

2 of title 5, United States Code. 

3 (c) ADDITIONAL COMPENSATION.—The Commis4 sioner may provide additional compensation and benefits 

5 to employees of the Office if the same type of compensa6 tion or benefits are then being provided by any Federal 

7 banking agency or, if not then being provided, could be 

8 provided by any such agency under applicable provisions 

9 of law or regulation. In setting and adjusting the total 

10 amount of compensation and benefits for employees of the 

11 Office, the Commissioner shall consult, and seek to main12 tain comparability with, the Federal banking agencies. 

13 (d) ACTING COMMISSIONER.—The Commissioner 

14 shall designate an employee of the Office to serve as the 

15 Acting Commissioner during the absence or disability of 

16 the Commissioner. 

17 (e) DELEGATION OF POWERS.— 

18 (1) EMPLOYEES AND OTHERS.—Unless other19 wise prohibited by this Act, the Commissioner may 

20 delegate to any employee, representative, or agent 

21 any power of the Commissioner. 

22 (2) SELF-REGULATORY ORGANIZATIONS.—Un23 less otherwise prohibited by this Act, the Commis24 sioner may, by regulation, delegate to any insurance 

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1 missioner in accordance with the terms of section 

2 1106. 

3 SEC. 1104. DIVISION OF INSURANCE FRAUD. 

4 (a) ESTABLISHMENT.—There is established, within 

5 the Office, a Division of Insurance Fraud. 

6 (b) AUTHORITY.—The Division of Insurance Fraud 

7 shall have all powers necessary to enforce the terms of 

8 subtitle D, other than the power to execute search and 

9 arrest warrants. 

10 SEC. 1105. DIVISION OF CONSUMER AFFAIRS. 

11 (a) ESTABLISHMENT.—There is established, within 

12 the Office, a Division of Consumer Affairs. 

13 (b) AUTHORITY.—The Division of Consumer Affairs 

14 shall support the Commissioner in the implementation and 

15 enforcement of the market conduct regulations issued pur16 suant to section 1215. 

17 SEC. 1106. INSURANCE SELF-REGULATORY ORGANIZA18 TIONS. 

19 (a) AUTHORITY OF THE COMMISSIONER.—Subject to 

20 the terms of this section, and the regulations issued pursu21 ant to this section, the Commissioner shall have the au22 thority to— 

23 (1) provide for the registration of an insurance 

24 self-regulatory organization; and 


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1 (2) supervise and regulate any registered insur2 ance self-regulatory organization, which shall include 

3 the authority to— 

4 (A) review, approve, abrogate, modify, or 

5 add to the operating rules of an insurance self6 regulatory organization; 

7 (B) review, approve, abrogate, or modify 

8 any disciplinary action taken by an insurance 

9 self-regulatory organization; 

10 (C) remove, suspend, or bar an individual 

11 from serving as an officer or director of an in12 surance self-regulatory organization; 

13 (D) remove or suspend a member of an in14 surance self-regulatory organization; and 

15 (E) suspend or revoke the registration of 

16 an insurance self-regulatory organization. 

17 (b) AUTHORITY OF REGISTERED INSURANCE SELF18 REGULATORY ORGANIZATIONS.—An insurance self-regu19 latory organization that is registered by the Commissioner 

20 shall have the authority to— 

21 (1) carry out the purpose of this Act; and 

22 (2) enforce compliance by its members with the 

23 provisions of this Act, applicable regulations issued 

24 by the Commissioner, and the rules of the organiza25 tion. 


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1 (c) MEMBERSHIP.—An insurance self-regulatory or2 ganization may be formed by, and consist exclusively of— 

3 (1) National Insurers; 

4 (2) National Agencies; 

5 (3) federally licensed insurance producers; or 

6 (4) any combination of National Insurers, Na7 tional Agencies and federally licensed insurance pro8 ducers. 

9 (d) REGULATIONS.—Not later than 2 years after the 

10 date of enactment of this Act, the Commissioner shall 

11 issue regulations governing the registration and operations 

12 of insurance self-regulatory organizations. Such regula13 tions shall establish— 

14 (1) the procedures insurance self-regulatory or15 ganizations must follow to be registered by the Com16 missioner, which shall provide for public notice and 

17 an opportunity for public comment on the proposed 

18 registration; 

19 (2) the standards that the Commissioner shall 

20 apply in reviewing a proposed registration, which 

21 shall require an insurance self-regulatory organiza22 tion to demonstrate that— 

23 (A) it has the capacity to— 

24 (i) carry out the purpose of this Act; 

25 and 


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1 (ii) enforce compliance by its members 

2 with the provisions of this Act, applicable 

3 regulations, and the rules of the organiza4 tion; and 

5 (B) its operating rules— 

6 (i) assure a fair representation of its 

7 members in the selection of its directors 

8 and the administration of its affairs; 

9 (ii) provide for the equitable allocation 

10 of fees, dues, and other charges among its 

11 members; 

12 (iii) provide for the organization to 

13 take appropriate disciplinary actions 

14 against members, including the revocation 

15 of membership status, for violations of this 

16 Act, the regulations issued pursuant to this 

17 Act, or the operating rules of the organiza18 tion; and 

19 (iv) include procedures for members 

20 that are subject to disciplinary actions to 

21 obtain review of such actions by the Com22 missioner; 

23 (3) the procedures and standards the Commis24 sioner shall follow in reviewing, approving, abro25 gating, or modifying any new operating rule or any 


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1 amendment to an existing operating rule that is pro2 posed by an insurance self-regulatory organization, 

3 which shall include procedures for public notice and 

4 comment on such rule or amendment; 

5 (4) the procedures and standards the Commis6 sioner shall follow in abrogating, modifying, or add7 ing to the operating rules of an insurance self-regu8 latory organization; 

9 (5) the procedures and standards the Commis10 sioner shall follow in reviewing, approving, abro11 gating, or modifying any disciplinary action by an 

12 insurance self-regulatory organization; 

13 (6) the procedures and standards the Commis14 sioner shall follow in removing, suspending, or bar15 ing any individual from serving as an office, or di16 rector of an insurance self-regulatory organization; 

17 (7) the procedures and standards the Commis18 sioner shall follow in suspending or revoking the reg19 istration of an insurance self-regulatory organiza20 tion; and 

21 (8) such other matters as the Commissioner de22 termines appropriate to ensure and protect the pub23 lic interest and the interests of policyholders. 


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1 SEC. 1107. OFFICE OF THE OMBUDSMAN. 

2 (a) ESTABLISHMENT OF THE OFFICE OF THE OM3 BUDSMAN.—There is established within the Office, an Of4 fice of the Ombudsman. The Commissioner shall appoint 

5 an Ombudsman to administer the Office of the Ombuds6 man. The Ombudsman shall report directly to the Com7 missioner. 

8 (b) DUTIES OF THE OMBUDSMAN.—The Ombudsman 

9 shall act as a liaison between the Office and any person 

10 adversely affected by the Office’s supervisory or regulatory 

11 activities, including the failure of the Office to take a re12 quested action. The Ombudsman shall assure that safe13 guards exist to encourage complainants to come forward 

14 and preserve confidentiality. 

15 (c) POWERS OF THE OMBUDSMAN.—The powers of 

16 the Ombudsman are the following: 

17 (1) with the prior consent of the Commissioner, 

18 the Ombudsman may stay any appealable decision or 

19 action during the resolution of an appealable matter; 

20 and 

21 (2) review and report any weakness in policy or 

22 procedures to the Commissioner, and make rec23 ommendations regarding changes in such policies or 

24 procedures. 

25 (d) APPEALABLE MATTERS.—Any party adversely af26 fected by an Office decision or action may seek OmbudsVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00039 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 man review of such decision or action, except for the fol2 lowing: 

3 (1) Appointments of receiver or conservators. 

4 (2) Preliminary examination conclusions com5 municated to the regulated entity before a final ex6 amination report is issued. 

7 (3) Any formal enforcement-related action or 

8 decision, including the issuance of a formal super9 visory agreement, a cease-and-desist order, a civil 

10 money penalty, or to take prompt corrective action, 

11 issue a safety and soundness order, or commence a 

12 formal investigation. 

13 (4) Formal and informal rulemakings pursuant 

14 to subchapter II of chapter 5 of title 5, United 

15 States Code. 

16 (5) Decisions or recommended decisions fol17 lowing formal adjudications conducted pursuant to 

18 subchapter II of chapter 5 of title 5, United States 

19 Code. 

20 (6) Requests for agency records pursuant to 

21 section 552 of title 5, United States Code (com22 monly referred to as the Freedom of Information 

23 Act). 

24 (e) PROCEDURES FOR FILING AN APPEAL TO THE

25 OMBUDSMAN.—An aggrieved party may seek review of an 


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1 appealable matter by filing a written appeal with the Of2 fice of the Ombudsman. In the case of a National Insurer 

3 or National Agency, the appeal shall be signed by the 

4 President or Chief Executive Officer of the Insurer or 

5 Agency. The appeal shall set forth all of the reasons for 

6 the appeal and supporting documentation. The Ombuds7 man may arrange for a meeting of Office personnel and 

8 the complainants to discuss the appeal. 

9 (f) EFFECT OF FILING AN APPEAL.—Unless the Om10 budsman determines otherwise, and obtains the concur11 rence of the Commissioner, material supervisory decisions 

12 and actions are not stayed pending an appeal. 

13 (g) DECISION OF THE OMBUDSMAN.—After a thor14 ough investigation of the matter, and after considering all 

15 relevant information provided by the complainant and the 

16 Office, the Ombudsman shall issue a written determina17 tion of the appeal. Such determination shall become the 

18 final decision of the Office, unless reversed, modified, or 

19 stayed by the Commissioner. 

20 (h) RETALIATION PROHIBITED.—The Office and its 

21 staff may not take any adverse action against a complain22 ant for appealing any decision or action to the Ombuds23 man. Upon learning of any possible retaliatory actions, the 

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1 clude that retaliation has taken place, shall refer the mat2 ter to the Commissioner. 

3 Subtitle B—Supervision of Na4 tional Insurers and National 

5 Agencies 

6 SEC. 1121. EXAMINATION OF NATIONAL INSURERS AND NA7 TIONAL AGENCIES. 

8 (a) IN GENERAL.— 

9 (1) EXAMINATION.—The Commissioner shall 

10 provide for examinations of National Insurers and 

11 National Agencies. 

12 (2) REGULAR AND SPECIAL EXAMINATIONS OF

13 NATIONAL INSURERS.—Not less than once during 

14 each 36-month period, the Commissioner shall con15 duct an on-site examination of each National In16 surer, and may conduct a special examination of a 

17 National Insurer whenever the Commissioner deter18 mines that a special examination is necessary. 

19 (3) EXAMINATION OF NATIONAL AGENCIES.— 

20 The Commissioner may examine a National Agency 

21 only in response to a complaint or any other evi22 dence that the National Agency has violated or is 

23 about to violate— 

24 (A) a law, rule, or regulation; 


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1 (B) any condition imposed in writing by 

2 the Commissioner in connection with issuing a 

3 license for a federally licensed insurance pro4 ducer; or 

5 (C) any written agreement entered into 

6 with the Commissioner. 

7 (4) AFFILIATES.— 

8 (A) IN GENERAL.—In making examina9 tions of National Insurers or National Agencies, 

10 the Commissioner may, to the extent necessary 

11 to discover information concerning activities of 

12 an affiliate that may have a materially adverse 

13 effect on the operations, management, or finan14 cial condition of the National Insurer or Na15 tional Agency— 

16 (i) require an affiliate to make such 

17 reports and provide such material as the 

18 Commissioner may direct; and 

19 (ii) conduct an examination of the af20 fairs of an affiliate, if— 

21 (I) the Commissioner has reason22 able cause to believe that the activities 

23 of the affiliate may have such an ef24 fect; 


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1 (II) the examination is limited to 

2 the extent necessary to disclose infor3 mation related to such effect; and 

4 (III) the Commissioner is unable 

5 to obtain the necessary information 

6 from the National Insurer or National 

7 Agency. 

8 (B) ACCEPTANCE OF AVAILABLE INFORMA9 TION.—To the extent that the Commissioner re10 quires an affiliate to make reports or provide 

11 material under subparagraph (A), the Commis12 sioner shall, to the fullest extent possible, ac13 cept— 

14 (i) reports that the affiliate has pro15 vided or been required to provide to other 

16 Federal or State regulatory authorities or 

17 appropriate self-regulatory organizations; 

18 (ii) information that is otherwise re19 quired to be reported publicly; and 

20 (iii) audited financial statements. 

21 (C) USE OF REGULATORY REPORTS.—If 

22 the Commissioner determines to conduct an ex23 amination of an affiliate under subparagraph 

24 (B) and such affiliate is a functionally regu25 lated affiliate, the Commissioner shall, to the 


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1 fullest extent possible, rely on the examination 

2 reports made by the functional regulator of 

3 such affiliate. 

4 (b) ACCESS TO PEOPLE AND RECORDS.— 

5 (1) IN GENERAL.—The Commissioner, upon re6 quest, shall be given prompt and reasonable access 

7 to National Insurer or National Agency officers, em8 ployees, and agents, and relevant books, records, and 

9 documents in the course of supervision, oversight, or 

10 examination of any National Insurer or National 

11 Agency. 

12 (2) COURT ORDER.—If prompt and reasonable 

13 access is not given as required under paragraph (1), 

14 the Commissioner may apply to the United States 

15 district court for the judicial district in which the 

16 main office of the National Insurer or the National 

17 Agency is located, or in which the person denying 

18 such access resides or carries on business, for an 

19 order requiring that such information be promptly 

20 provided. 

21 (3) SUBPOENA POWER.—In connection with ex22 aminations of National Insurers, National Agencies, 

23 or affiliates under this section and the examination 

24 of federally licensed insurance producers under sec25 tion 1301, the Commissioner may— 


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1 (A) administer oaths and affirmations; 

2 (B) examine, take, and preserve testimony 

3 under oath as to any matter in respect of the 

4 affairs or ownership of any such National In5 surer, National Agency, affiliate, or federally li6 censed insurance producer; 

7 (C) issue subpoenas; and 

8 (D) in order to enforce a subpoena issued 

9 under subparagraph (C), apply to the United 

10 States district court for the judicial district— 

11 (i) in which the main office of the Na12 tional Insurer, National Agency, or affil13 iate is located; 

14 (ii) in which the federally licensed in15 surance producer is located; or 

16 (iii) in which the witness resides or 

17 carries on business. 

18 SEC. 1122. EXAMINATION FEES AND OTHER ASSESSMENTS. 

19 (a) EXAMINATION FEE.— 

20 (1) NATIONAL INSURERS, NATIONAL AGENCIES, 

21 AND FEDERALLY LICENSED INSURANCE PRO22 DUCERS.—The Commissioner shall assess the cost of 

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1 ducer, as the Commissioner determines to be appro2 priate. 

3 (2) AFFILIATES.—The Commissioner shall as4 sess the cost of conducting examinations of affiliates 

5 against each such affiliate, as the Commissioner de6 termines to be appropriate. 

7 (3) REFUSAL TO PAY.— 

8 (A) IN GENERAL.—Subject to subpara9 graph (B), if any affiliate refuses to pay an as10 sessment imposed pursuant to paragraph (2), 

11 the Commissioner may assess such cost against 

12 the affiliated National Insurer or National 

13 Agency. 

14 (B) SHARED AFFILIATES.—If an affiliate 

15 is an affiliate of more than 1 National Insurer 

16 or National Agency, the assessment with re17 spect to that affiliate may be assessed against, 

18 and collected from, any affiliated National In19 surer or National Agency, in such proportions 

20 as the Commissioner may prescribe. 

21 (b) PROCESSING FEE.—The Commissioner may as22 sess a fee against any person who submits to the Office 

23 an application, filing, statement, notice, or request for ap24 proval to cover the cost of processing such submission. 


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1 (c) OTHER ASSESSMENTS.—The Commissioner may 

2 assess against National Insurers, National Agencies, and 

3 federally licensed insurance producers such additional fees 

4 as the Commissioner determines to be necessary and ap5 propriate to fund the expenses of the Office. 

6 (d) NOTICE.—The Commissioner shall notify Na7 tional Insurers, National Agencies, and federally licensed 

8 insurance producers of— 

9 (1) the initial fees and assessments imposed 

10 under this section; and 

11 (2) any change in fees and assessments. 

12 (e) TREATMENT OF FEES AND ASSESSMENTS.— 

13 (1) DEPOSITS.—Amounts received by the Com14 missioner from fees and assessments imposed under 

15 this section shall be deposited in the manner pro16 vided in section 5234 of the Revised Statutes (12 

17 U.S.C. 192) with respect to assessments by the 

18 Comptroller of the Currency. 

19 (2) GOVERNMENT FUNDS; APPORTIONMENT.— 

20 Notwithstanding any other provision of law, 

21 amounts received by the Commissioner from any fee 

22 or assessment imposed under this section— 

23 (A) shall not be considered Government or 

24 public funds or appropriated money; and 


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1 (B) shall not be subject to apportionment 

2 for purpose of chapter 15 of title 31, United 

3 States Code, or under any other authority. 

4 (f) WORKING CAPITAL FUND.— 

5 (1) IN GENERAL.—The Commissioner may im6 pose fees and assessments pursuant to subsections 

7 (a), (b), and (c), in excess of actual expenses for any 

8 given year, to maintain an appropriate working cap9 ital fund. 

10 (2) REFUNDS.—The Commissioner shall remit 

11 to the payers of such fees and assessments any 

12 funds collected in excess of what the Commissioner 

13 determines to be necessary to maintain such working 

14 capital fund. 

15 (g) USE OF FUNDS.—The Commissioner may use the 

16 combined resources collected through fees and assess17 ments imposed pursuant to this section to pay all direct 

18 and indirect operating costs of the Office, including the 

19 salary and administrative expenses of the Office. 

20 (h) APPROPRIATIONS DURING START-UP PERIOD.— 

21 (1) AUTHORIZATION.—The Commissioner may 

22 borrow from the Secretary of the Treasury such 

23 funds as the Commissioner determines to be nec24 essary and appropriate to organize and begin oper25 ations of the Office. 


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1 (2) PAYMENT.—Any loan extended pursuant to 

2 paragraph (1) shall be repaid, in full (with interest 

3 at a rate set by the Secretary of the Treasury), 

4 within 30 years following the date of enactment of 

5 this Act, with individual payments on any loan to be 

6 made in such amounts and at such times as the 

7 Commissioner determines to be appropriate. 

8 (i) RULEMAKING.—The Commissioner shall promul9 gate regulations with respect to the computation, assess10 ment, and collection of the fees and assessments provided 

11 for in this section. 

12 SEC. 1123. DISCLOSURE OF INFORMATION. 

13 (a) REGULATIONS REQUIRED.—The Commissioner 

14 shall, by regulation, establish standards for the disclosure 

15 of examination reports, applications, filings, correspond16 ence, records, and other information prepared by, or sub17 mitted to, the Commissioner. 

18 (b) SUPERVISORY PRIVILEGE.—The regulation 

19 issued pursuant to subsection (a) shall prohibit the disclo20 sure of confidential supervisory information, as such infor21 mation is defined by the Commissioner in such regulation. 

22 (c) OTHER PRIVILEGES.—The submission of any in23 formation to the Commissioner shall not waive or other24 wise affect any privilege a person may claim with respect 


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1 to such information under Federal or State law as to a 

2 party other than the Commissioner. 

3 SEC. 1124. REPORTING REQUIREMENT. 

4 (a) GENERAL AUTHORITY.—The Commissioner is 

5 authorized to require National Insurers and National 

6 Agencies to make such reports, containing such informa7 tion and in such form, as the Commissioner may prescribe 

8 by regulation. 

9 (b) FINANCIAL STATEMENTS.—Each National In10 surer holding a Federal license shall submit annual and 

11 quarterly financial statements, in compliance with the ac12 counting principles and auditing standards specified under 

13 section 1211, to the Commissioner at such times and in 

14 such form as the Commissioner may require under regula15 tions promulgated pursuant to subsection (c). 

16 (c) REGULATIONS.—The Commissioner shall promul17 gate regulations that— 

18 (1) specify the information that shall be dis19 closed in the financial statements required under 

20 subsection (b); and 

21 (2) specify any additional financial schedules 

22 that National Insurers shall make available for ex23 amination by the Commissioner upon request. 


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1 SEC. 1125. RELATIONSHIP TO STATE LAW. 

2 (a) IN GENERAL.—Except as provided under sub3 section (b) or otherwise authorized under Federal law, Na4 tional Insurers, National Agencies, and federally licensed 

5 insurance producers shall not be subject to any form of 

6 State licensing, examination, reporting, regulation, or 

7 other supervision relating to— 

8 (1) the sale, solicitation, or negotiation of insur9 ance; 

10 (2) the underwriting of insurance; or 

11 (3) any other insurance operations, including all 

12 products, marketing and sales practices, claims ad13 justment and settlement, financial condition and sol14 vency, and holding company transactions. 

15 (b) APPLICABLE STATE LAWS.—Notwithstanding 

16 subsection (a), National Insurers, National Agencies, and 

17 federally licensed insurance producers shall be subject 

18 to— 

19 (1) applicable State unclaimed property and es20 cheat laws; 

21 (2) applicable tax laws of a State in accordance 

22 with sections 1251 and 1252; 

23 (3) applicable State law relating to participa24 tion in an assigned risk plan, mandatory joint un25 derwriting association, or any other mandatory re26 sidual market mechanism designed to make insurVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00052 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 ance available to those unable to obtain insurance in 

2 the voluntary market, except to the extent that such 

3 State law— 

4 (A) relates to participation in any vol5 untary joint underwriting association or similar 

6 arrangement; 

7 (B) results in rates in effect for an as8 signed risk plan, mandatory joint underwriting 

9 association, or any other mandatory residual 

10 market mechanism that fail to cover the ex11 pected value of all future costs associated with 

12 insurance policies written by such residual mar13 ket mechanism; 

14 (C) requires a National Insurer to use any 

15 particular rate, rating element, price or form; 

16 or 

17 (D) is inconsistent with any provision of 

18 this Act; 

19 (4) applicable State insurance law that pre20 scribes the compulsory coverage requirements for 

21 workers’ compensation or motor vehicle insurance, 

22 or both, that every insurer must provide if the in23 surer issues insurance policies in such State, except 

24 to the extent that such State law requires a National 


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1 Insurer to use any particular rate, rating element, or 

2 price; 

3 (5) applicable State insurance law mandating 

4 the participation of insurers in an advisory or statis5 tical organization, except to the extent that such 

6 State law requires a National Insurer to use any 

7 particular rate, rating element, price, or form; and 

8 (6) applicable State law relating to participa9 tion in a workers’ compensation administration 

10 mechanism, except to the extent that such State law 

11 is inconsistent with any provision of this Act. 

12 Subtitle C—Enforcement of 

13 Federal Insurance Laws 

14 SEC. 1141. NATIONAL INSURER LICENSE SUSPENSION, RE15 STRICTION, OR REVOCATION. 

16 (a) IN GENERAL.—In accordance with the conditions 

17 under this section, the Commissioner may revoke or re18 strict the Federal license of a National Insurer if the Com19 missioner determines that the National Insurer— 

20 (1) has engaged in conduct that is hazardous to 

21 the National Insurer and that involves an undue risk 

22 to the National Insurer’s policyholders; 

23 (2) is in a financial or other condition that is 

24 not consistent with the continuation of existing oper25 ations; or 


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1 (3) has violated any— 

2 (A) applicable law or regulation; 

3 (B) order or condition imposed in writing 

4 by the Commissioner in connection with the ap5 proval of an application, filing, statement, no6 tice, or other request by the National Insurer; 

7 or 

8 (C) written agreement entered into be9 tween the National Insurer and the Commis10 sioner. 

11 (b) NOTICE TO NATIONAL INSURER.— 

12 (1) IN GENERAL.—If the Commissioner deter13 mines under subsection (a) that the Federal license 

14 of a National Insurer should be revoked or re15 stricted, the Commissioner shall— 

16 (A) serve the National Insurer with written 

17 notice of the intent of the Commissioner to re18 voke or restrict such Federal license; 

19 (B) provide the National Insurer with a 

20 statement of the basis for the determination to 

21 revoke or restrict such Federal license; and 

22 (C) notify, not less than 30 days before a 

23 hearing under subsection (c), of the date and 

24 place of the hearing. 


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1 (2) NOTICE OF SERVICE.—Any service required 

2 or authorized to be made by the Commissioner 

3 under this section may be made by registered mail, 

4 or in such other manner reasonably calculated to 

5 give actual notice as the Commissioner may by regu6 lation or otherwise provide. 

7 (c) REVOCATION OR RESTRICTION HEARING.— 

8 (1) IN GENERAL.—Before revoking or restrict9 ing a Federal license, the Commissioner shall con10 duct a hearing in accordance with section 554 of 

11 title 5, United States Code, to determine if the con12 ditions described in subsection (a) exist. 

13 (2) AUTHORITY TO REVOKE OR RESTRICT FED14 ERAL LICENSE.—If, on the basis of the evidence pre15 sented at the hearing under paragraph (1) and the 

16 written findings of the Commissioner with respect to 

17 such evidence, the Commissioner establishes the ex18 istence of any conduct, condition, or violation speci19 fied in the notice sent to a National Insurer under 

20 subsection (b), the Commissioner may issue an order 

21 revoking or restricting the Federal license of the Na22 tional Insurer, which shall be effective as of a date 

23 subsequent to such finding. 

24 (3) CONSENT TO REVOCATION OR RESTRIC25 TION.—If a duly authorized representative of the 


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1 National Insurer fails to appear at the hearing 

2 under this subsection, the National Insurer shall be 

3 deemed to have consented to the revocation or re4 striction of its Federal license, and the Commis5 sioner may immediately revoke or restrict such Fed6 eral license. 

7 (d) PUBLICATION OF NOTICE OF REVOCATION OR

8 RESTRICTION.— 

9 (1) NOTICE BY NATIONAL INSURER.— 

10 (A) IN GENERAL.—The National Insurer 

11 shall give notice of a revocation or restriction of 

12 its Federal license under this section to each 

13 policyholder affected by the revocation or re14 striction. 

15 (B) TYPE OF NOTICE..—Notice under this 

16 paragraph shall be sent to the policyholder’s 

17 last address of record on the books of the Na18 tional Insurer, in such manner and at such time 

19 as the Commissioner determines to be necessary 

20 for the protection of policyholders. 

21 (2) NOTICE BY COMMISSIONER.— 

22 (A) IN GENERAL.—The Commissioner 

23 shall publish notice of a revocation or restric24 tion under this section. If the Commissioner de25 termines that a National Insurer has not given 


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1 notice of an order under this subsection in ac2 cordance with the requirements of the Commis3 sioner, the Commissioner may provide such no4 tice in such manner as the Commissioner may 

5 find to be necessary and proper. 

6 (B) COSTS.—The cost of any notice pro7 vided under subparagraph (A) shall be paid by 

8 the National Insurer. 

9 (e) TEMPORARY SUSPENSION OR RESTRICTION.— 

10 (1) IN GENERAL.—If the Commissioner, in the 

11 course of a revocation proceeding under this section, 

12 finds that the National Insurer poses an immediate 

13 threat to the interests of its policyholders or to the 

14 public, the Commissioner shall issue an order tempo15 rarily suspending or restricting the Federal license 

16 of the National Insurer. 

17 (2) NOTICE OF TEMPORARY ORDER.—A Na18 tional Insurer whose Federal license is temporarily 

19 suspended or restricted under this subsection shall 

20 give notice of an order issued under this paragraph 

21 to each affected policyholder in such manner and at 

22 such times as the Commissioner may find to be nec23 essary and may order for the protection of policy24 holders and the public. 


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1 (3) EFFECTIVE PERIOD OF TEMPORARY

2 ORDER.—A temporary order issued under paragraph 

3 (1) shall— 

4 (A) become effective not earlier than 10 

5 days from the date of service upon the National 

6 Insurer; and 

7 (B) unless set aside, limited, or suspended 

8 by a court in proceedings authorized under 

9 paragraph (4), remain effective and enforceable 

10 until the earlier of— 

11 (i) the effective date of an order under 

12 subsection (c)(2); or 

13 (ii) the date on which the Commis14 sioner determines that there is insufficient 

15 evidence to revoke or restrict a Federal li16 cense under this subsection. 

17 (4) JUDICIAL REVIEW.— 

18 (A) IN GENERAL.—During the 10-day pe19 riod beginning on the date on which a tem20 porary order has been issued under paragraph 

21 (1), the National Insurer may apply to a court 

22 described in subparagraph (B) for an injunction 

23 setting aside, limiting, or suspending the en24 forcement, operation, or effectiveness of such 

25 order. 


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1 (B) JURISDICTION.—The United States 

2 District Court for the District of Columbia and 

3 the United States district court for the judicial 

4 district in which the main office of the National 

5 Insurer is located shall have jurisdiction to 

6 issue an injunction under this paragraph. 

7 (f) DECISION TO SUSPEND, RESTRICT, OR RE8 VOKE.— 

9 (1) IN GENERAL.—Except as provided under 

10 paragraph (2), any decision by the Commissioner to 

11 suspend, restrict, or revoke a Federal license under 

12 this section shall be made by the Commissioner and 

13 may not be delegated. 

14 (2) EXCEPTION.—The Commissioner may, by 

15 order, designate an employee of the Office who may 

16 make a decision described in paragraph (1) if the 

17 Commissioner is not able to act by reason of recusal 

18 or is otherwise disqualified from acting. 

19 (g) JUDICIAL REVIEW.—Any National Insurer whose 

20 Federal license has been revoked or restricted by order 

21 of the Commissioner under this section shall have the 

22 right of judicial review of such order only to the same ex23 tent as provided for the review of orders under section 

24 1148. 


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1 SEC. 1142. SUSPENSION, RESTRICTION, OR REVOCATION OF 

2 FEDERAL LICENSE OF NATIONAL AGENCIES 

3 AND FEDERALLY LICENSED INSURANCE PRO4 DUCERS. 

5 (a) IN GENERAL.—In accordance with the provisions 

6 of this section, the Commissioner may revoke or restrict 

7 the Federal producer license, including lines of insurance 

8 covered by such license, of a National Agency or other fed9 erally licensed insurance producer if the Commissioner de10 termines that the Agency or producer has— 

11 (1) violated any applicable law, regulation, 

12 order, condition imposed in writing by the Commis13 sioner in connection with the approval of an applica14 tion, filing, statement, notice or other request by the 

15 producer, or written agreement entered into between 

16 the producer and the Commissioner; 

17 (2) provided incorrect, misleading, incomplete 

18 or materially untrue information in an application 

19 for a Federal charter or a Federal producer license; 

20 (3) used fraudulent, coercive, or dishonest prac21 tices; or 

22 (4) demonstrated incompetence, 

23 untrustworthiness, or financial irresponsibility as an 

24 insurance producer. 

25 (b) NOTICE TO FEDERALLY LICENSED INSURANCE

26 PRODUCER.—If the Commissioner determines that any 


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1 conduct, breach, or violation specified in subsection (a) re2 quires revocation or restriction of the Federal producer li3 cense of a National Agency or other federally licensed in4 surance producer, the Commissioner shall— 

5 (1) serve written notice on the National Agency 

6 or other federally licensed insurance producer of the 

7 Commissioner’s intention to revoke or restrict the 

8 Federal producer license; 

9 (2) provide the National Agency or other feder10 ally licensed insurance producer with a statement of 

11 the basis for the determination to revoke or restrict 

12 the Federal producer license; and 

13 (3) notify the National Agency or other feder14 ally licensed insurance producer, not less than 30 

15 days before a hearing under subsection (c), of the 

16 date and place of the hearing. 

17 (c) REVOCATION OR RESTRICTION HEARING.— 

18 (1) IN GENERAL.—Before revoking or restrict19 ing a Federal producer license, the Commissioner 

20 shall conduct a hearing in accordance with section 

21 554 of title 5, United States Code, to determine if 

22 the conditions described in subsection (a) exist. 

23 (2) AUTHORITY TO REVOKE OR RESTRICT FED24 ERAL LICENSE.—If, on the basis of the evidence pre25 sented at the hearing under paragraph (1) and the 


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1 written findings of the Commissioner with respect to 

2 such evidence, the Commissioner finds any conduct, 

3 condition, or violation specified in the notice sent to 

4 a National Agency or other federally licensed insur5 ance producer under subsection (b), the Commis6 sioner may issue an order revoking or restricting the 

7 Federal producer license of the National Agency or 

8 other federally licensed insurance producer, which 

9 shall be effective as of a date subsequent to such 

10 finding. 

11 (3) CONSENT TO REVOCATION OR RESTRIC12 TION.—If a duly authorized representative of the 

13 National Agency or other federally licensed insur14 ance producer fails to appear at the hearing under 

15 this subsection, the National Agency or other feder16 ally licensed insurance producer shall be deemed to 

17 have consented to the revocation or restriction of its 

18 Federal producer license, and the Commissioner may 

19 immediately revoke or restrict such Federal producer 

20 license. 

21 (d) NOTICE OF REVOCATION OR RESTRICTION.— 

22 (1) NOTICE BY FEDERALLY LICENSED INSUR23 ANCE PRODUCER.—Each National Agency or other 

24 federally licensed insurance producer shall give writ25 ten notice of such revocation or restriction to each 


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1 National Insurer, State insurer, or United States 

2 branch of a non-United States insurer for which 

3 such producer acts as an insurance producer. 

4 (2) NOTICE BY COMMISSIONER.— 

5 (A) IN GENERAL.—The Commissioner 

6 shall publish notice of a revocation or restric7 tion under this section. If the Commissioner de8 termines that a National Agency or other feder9 ally licensed insurance producer has not given 

10 notice of an order under this subsection in ac11 cordance with the requirements of the Commis12 sioner, the Commissioner may provide such no13 tice in any manner the Commissioner deter14 mines to be necessary and proper. 

15 (B) COSTS.—The cost of any notice pro16 vided under subparagraph (A) shall be paid by 

17 the National Agency or other federally licensed 

18 insurance producer. 

19 (e) TEMPORARY SUSPENSION OR RESTRICTION.— 

20 (1) IN GENERAL.—If the Commissioner, in the 

21 course of a revocation or restriction proceeding 

22 under this section, finds that the National Agency or 

23 other federally licensed insurance producer poses an 

24 immediate threat to the interests of the policyholders 

25 of a National Insurer, a State insurer, or a United 


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•S 2509 IS

1 States branch of a non-United States insurer or to 

2 the public, the Commissioner may issue a temporary 

3 order suspending or restricting the Agency’s or other 

4 producer’s Federal producer license. 

5 (2) NOTICE OF TEMPORARY ORDER.—The Na6 tional Agency or other federally licensed insurance 

7 producer shall give notice of a temporary order 

8 issued under this paragraph in such manner and at 

9 such times as the Commissioner may find to be nec10 essary and may order for the protection of policy11 holders and the public. 

12 (3) EFFECTIVE PERIOD OF TEMPORARY

13 ORDER.—Any temporary order issued under para14 graph (1) shall— 

15 (A) become effective not earlier than 10 

16 days from the date of service upon the National 

17 Agency or other federally licensed insurance 

18 producer; and 

19 (B) unless set aside, limited, or suspended 

20 by a court under paragraph (4), remain effec21 tive and enforceable until an order of the Com22 missioner under subsection (c) becomes final or 

23 until the Commissioner dismisses the pro24 ceedings under paragraph (4). 

25 (4) JUDICIAL REVIEW.— 


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1 (A) IN GENERAL.—During the 10-day pe2 riod beginning on the date on which a tem3 porary order has been issued under paragraph 

4 (1), the National Agency or other federally li5 censed insurance producer may apply to a court 

6 described in subparagraph (B) for an injunction 

7 setting aside, limiting, or suspending the en8 forcement, operation, or effectiveness of such 

9 order. 

10 (B) JURISDICTION.—The United States 

11 District Court for the District of Columbia and 

12 the United States district court for the judicial 

13 district in which the federally licensed insurance 

14 producers (or the main office of the National 

15 Agency) is located shall have jurisdiction to 

16 issue an injunction under this paragraph. 

17 (f) JUDICIAL REVIEW.—Any National Agency or 

18 other federally licensed insurance producer whose Federal 

19 producer license has been revoked or restricted by order 

20 of the Commissioner under this subsection shall have the 

21 right of judicial review of such order only to the same ex22 tent as provided for the review of orders under section 

23 1148. 

24 SEC. 1143. CEASE-AND-DESIST PROCEEDINGS. 

25 (a) NOTICE.— 


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1 (1) ISSUANCE.—The Commissioner may issue 

2 and serve upon a National Insurer, National Agency, 

3 federally licensed insurance producer, or insurer-af4 filiated party a notice of charges if the Commis5 sioner determines that such Insurer, Agency, pro6 ducer, or party— 

7 (A) has engaged, or is about to engage, in 

8 conduct that is hazardous to a National In9 surer, a State insurer, or a United States 

10 branch of a non-United States insurer and in11 volves an undue risk to the policyholders, as a 

12 whole, of a National Insurer, a State insurer, or 

13 a United States branch of a non-United States 

14 insurer; or 

15 (B) has violated, or is about to violate— 

16 (i) a law, rule, or regulation; 

17 (ii) any condition imposed in writing 

18 by the Commissioner in connection with 

19 the granting of any application, filing, 

20 statement, notice, or other request by the 

21 National Insurer, National Agency or the 

22 federally licensed insurance producer; or 

23 (iii) any written agreement entered 

24 into with the Commissioner. 


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1 (2) CONTENTS.—The notice issued under para2 graph (1) shall— 

3 (A) contain a statement of the facts consti4 tuting the alleged violations; and 

5 (B) state the time and place at which a 

6 hearing will be held to determine whether an 

7 order to cease and desist should be issued 

8 against the National Insurer, National Agency, 

9 federally licensed insurance producer, or in10 surer-affiliated party. 

11 (b) HEARING.— 

12 (1) TIMING.—A hearing under this section shall 

13 be scheduled for a date which is not earlier than 30 

14 days nor later than 60 days after the service of no15 tice under subsection (a) unless another date is set 

16 by the Commissioner at the request of any party so 

17 served. 

18 (2) CONSENT.—If a duly authorized representa19 tive of a party served notice under subsection (a) 

20 fails to appear at a hearing under this section, the 

21 party shall be deemed to have consented to the 

22 issuance of the cease-and-desist order. 

23 (c) CEASE-AND-DESIST ORDER.— 

24 (1) IN GENERAL.—If the Commissioner finds, 

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1 tion, that any violation or conduct specified in the 

2 notice of charges has been established, or if the 

3 party consents, the Commissioner may issue and 

4 serve upon the National Insurer, National Agency, 

5 federally licensed insurance producer, or insurer-af6 filiated party, an order to cease and desist from any 

7 such violation or conduct. 

8 (2) CONTENTS.—A cease-and-desist order 

9 under this section may— 

10 (A) require the National Insurer, National 

11 Agency, federally licensed insurance producer, 

12 or insurer-affiliated party to cease and desist 

13 from the alleged violation or conduct; and 

14 (B) take affirmative action to correct the 

15 conditions resulting from any such violation or 

16 conduct. 

17 (3) EFFECTIVE DATE.—A cease-and-desist 

18 order shall— 

19 (A) take effect on the expiration of the 

20 date which is 30 days after the service of such 

21 order upon the party or on another date, if 

22 issued upon consent; and 

23 (B) remain in effect and enforceable as 

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1 nated, or set aside by action of the Commis2 sioner or a reviewing court. 

3 (4) AUTHORITY TO LIMIT ACTIVITIES.—The au4 thority to issue an order under this section includes 

5 the authority to place limitations on the activities or 

6 functions of a National Insurer, National Agency, a 

7 federally licensed insurance producer or an insurer8 affiliated party. 

9 (5) STANDARD FOR CERTAIN ORDERS.—No au10 thority under this section to prohibit any insurer-af11 filiated party from withdrawing, transferring, remov12 ing, dissipating, or disposing of any funds, assets, or 

13 other property may be exercised unless the Commis14 sioner meets the standards of Rule 65 of the Federal 

15 Rules of Civil Procedure, without regard to the re16 quirement of such rule that the applicant show that 

17 the injury, loss, or damage is irreparable and imme18 diate. 

19 (d) TEMPORARY CEASE-AND-DESIST ORDERS.— 

20 (1) IN GENERAL.—If the Commissioner deter21 mines that the violation, threatened violation, or 

22 conduct specified in the notice of charges served 

23 under subsection (c)(1) is likely to cause insolvency 

24 or significant dissipation of assets or earnings of a 

25 National Insurer, a State insurer, a United States 


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1 branch of a non-United States insurer or is likely to 

2 weaken the condition of a National Insurer, a State 

3 insurer, or a United States branch of a non-United 

4 States insurer or otherwise prejudice the interests of 

5 the policyholders of a National Insurer, a State in6 surer, or a United States branch of a non-United 

7 States insurer before the completion of the pro8 ceedings conducted under subsection (c)(1), the 

9 Commissioner may issue a temporary order requir10 ing the National Insurer, National Agency, pro11 ducer, or party to— 

12 (A) cease and desist from any such viola13 tion or conduct; and 

14 (B) take affirmative action to prevent or 

15 remedy such insolvency, dissipation, condition, 

16 or prejudice pending completion of such pro17 ceedings. 

18 (2) CONTENTS OF ORDER; EFFECTIVE DATE.— 

19 An order under paragraph (1)— 

20 (A) may include any action authorized 

21 under section 1144(2); 

22 (B) shall become effective upon service 

23 upon the National Insurer, National Agency, 

24 producer, or party; and 


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1 (C) unless set aside, limited, or suspended 

2 by a court under paragraph (3), shall remain in 

3 effect and enforceable until the date on which— 

4 (i) administrative proceedings pursu5 ant to such order are completed; 

6 (ii) the Commissioner dismisses the 

7 charges specified in such order; or 

8 (iii) if a cease-and-desist order is 

9 issued against such National Insurer, Na10 tional Agency, producer, or party, such 

11 order is effective. 

12 (3) INJUNCTION.— 

13 (A) IN GENERAL.—A National Insurer, 

14 National Agency, federally licensed insurance 

15 producer, or insurer-affiliated party that has 

16 been served with a temporary cease-and-desist 

17 order may, not later than 10 days after the 

18 date of such service, apply to a court described 

19 in subparagraph (B) for an injunction setting 

20 aside, limiting, or suspending the enforcement, 

21 operation, or effectiveness of such order until 

22 the completion of administrative proceedings 

23 under this section. 

24 (B) JURISDICTION.—The United States 

25 District Court for the District of Columbia and 


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1 the United States district court for the judicial 

2 district in which the producer, party, or main 

3 office of the National Insurer or National Agen4 cy is located shall have jurisdiction to issue an 

5 injunction under this paragraph. 

6 (4) INCOMPLETE OR INACCURATE RECORDS.— 

7 (A) TEMPORARY ORDER.—If a notice of 

8 charges served under subsection (a) specifies, 

9 on the basis of particular facts and cir10 cumstances, that the books and records of a 

11 National Insurer are so incomplete or inac12 curate that the Commissioner is unable, 

13 through the normal supervisory process, to de14 termine the financial condition of that National 

15 Insurer or the details or purpose of any trans16 action or transactions that may have a material 

17 effect on the financial condition of that Na18 tional Insurer, the Commissioner may issue a 

19 temporary order requiring— 

20 (i) the cessation of any activity or 

21 practice which gave rise to the incomplete 

22 or inaccurate state of the books or records; 

23 or 


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1 (ii) affirmative action to restore such 

2 books or records to a complete and accu3 rate state. 

4 (B) EFFECTIVE PERIOD.—Any temporary 

5 order issued under subparagraph (A)— 

6 (i) shall become effective upon service; 

7 and 

8 (ii) unless set aside, limited, or sus9 pended by a court in proceedings under 

10 paragraph (2), shall remain in effect and 

11 enforceable until the earlier of— 

12 (I) the completion of the pro13 ceeding initiated under subsection (a) 

14 in connection with the notice of 

15 charges; or 

16 (II) the date the Commissioner 

17 determines, by examination or other18 wise, that the books and records of 

19 the National Insurer accurately reflect 

20 the financial condition of the National 

21 Insurer. 

22 SEC. 1144. AFFIRMATIVE ACTION TO CORRECT CONDITIONS 

23 RESULTING FROM VIOLATIONS OR CONDUCT. 

24 The authority granted to the Commissioner under 

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1 surer, National Agency, a federally licensed insurance pro2 ducer, or an insurer-affiliated party to take affirmative ac3 tion to correct or remedy any condition resulting from any 

4 violation or conduct with respect to which such order is 

5 issued includes the authority to require such National In6 surer, National Agency, producer or party to— 

7 (1) restrict the growth of the National Insurer; 

8 (2) dispose of any asset or insurance contract, 

9 including any insurance policy; 

10 (3) rescind any other agreements or contracts, 

11 other than insurance contracts, to which the Na12 tional Insurer is the issuer; 

13 (4) employ qualified officers or employees, sub14 ject to approval by the Commissioner; and 

15 (5) take such other action as the Commissioner 

16 determines to be appropriate if— 

17 (A) such National Insurer, National Agen18 cy, producer, or party was unjustly enriched in 

19 connection with such violation or conduct; or 

20 (B) the violation or conduct involved a 

21 reckless disregard for the law or any applicable 

22 regulations or prior order of the Commissioner. 


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1 SEC. 1145. SUSPENSION, REMOVAL, AND PROHIBITION AU2 THORITY. 

3 (a) AUTHORITY TO ISSUE ORDER.—The Commis4 sioner may serve a written notice of the Commissioner’s 

5 intention to suspend or remove a party from office or to 

6 prohibit any further participation by such party in the 

7 conduct of the affairs of any National Insurer or National 

8 Agency, if the Commissioner determines that— 

9 (1) an insurer-affiliated party has— 

10 (A) violated— 

11 (i) any law or regulation; 

12 (ii) any final cease-and-desist order 

13 issued under section 1143; 

14 (iii) any condition imposed in writing 

15 by the Commissioner in connection with 

16 the grant of any application, filing, state17 ment, notice, or other request by such Na18 tional Insurer or National Agency; or 

19 (iv) any written agreement between 

20 such National Insurer or National Agency 

21 and the Commissioner; 

22 (B) engaged or participated in any conduct 

23 that— 

24 (i) is hazardous to the National In25 surer or National Agency; and 


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1 (ii) involves an undue risk to the pol2 icyholders of such National Insurer or the 

3 policyholders serviced by such National 

4 Agency; or 

5 (C) committed or engaged in any act, 

6 omission, or practice, which constitutes a 

7 breach of fiduciary duty; 

8 (2) through any violation, conduct, practice, or 

9 breach described in paragraph (1)— 

10 (A) such National Insurer or National 

11 Agency has suffered, or will probably suffer, fi12 nancial loss or other damage; 

13 (B) the interests of the policyholders of the 

14 National Insurer or the policyholders serviced 

15 by the National Agency have been, or could be, 

16 prejudiced; or 

17 (C) such party has received financial gain 

18 or other benefit by reason of such violation, 

19 practice, or breach; and 

20 (3) the violation, conduct, practice, or breach— 

21 (A) involves personal dishonesty on the 

22 part of such party; or 

23 (B) demonstrates willful or continuing dis24 regard by such party for the condition of such 

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1 terests of the National Insurer’s policyholders 

2 or the policyholders serviced by the National 

3 Agency. 

4 (b) TEMPORARY SUSPENSION ORDER.— 

5 (1) SUSPENSION OR PROHIBITION AUTHOR6 IZED.—If the Commissioner serves written notice 

7 under subsection (a) on any insurer-affiliated party 

8 of the Commissioner’s intention to issue an order 

9 under such subsection, the Commissioner may issue 

10 a temporary order suspending such party from office 

11 or prohibiting such party from further participation 

12 in any manner in the conduct of the affairs of the 

13 National Insurer or National Agency, if the Commis14 sioner— 

15 (A) determines that such action is nec16 essary for the protection of the National In17 surer or its policyholders or the National Agen18 cy or the policyholders serviced by such Agency; 

19 and 

20 (B) serves such party with the temporary 

21 order of suspension or prohibition. 

22 (2) EFFECTIVE PERIOD.—Any temporary order 

23 issued under paragraph (1)— 

24 (A) shall become effective upon service; 

25 and 


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1 (B) unless a court issues a stay of such 

2 order under subsection (e), shall remain in ef3 fect and enforceable until— 

4 (i) the date the Commissioner dis5 misses the charges contained in the notice 

6 served under subsection (a) with respect to 

7 such party; or 

8 (ii) the effective date of an order 

9 issued by the Commissioner to such party 

10 under subsection (a). 

11 (3) COPY OF ORDER.—If the Commissioner 

12 issues a temporary order under paragraph (1) to any 

13 insurer-affiliated party, the Commissioner shall serve 

14 a copy of such order on any National Insurer or Na15 tional Agency with which such party is affiliated at 

16 the time such order is issued. 

17 (c) PROCEDURES.— 

18 (1) CONTENTS OF NOTICE.—A notice served 

19 under subsection (a) shall include— 

20 (A) a statement of the grounds for facts 

21 underlying such notice; and 

22 (B) the time and place of a hearing to be 

23 held thereon. 

24 (2) HEARING.—The hearing referred to in 

25 paragraph (1)(B) shall take place not earlier than 


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1 30 days nor later than 60 days after the date of 

2 service of notice under subsection (a), unless another 

3 date is set by the Commissioner at the request of 

4 such party. 

5 (3) SUSPENSION OR REMOVAL.— 

6 (A) FAILURE TO APPEAR.—If a duly au7 thorized representative of the party receiving 

8 notice of a hearing under this subsection fails 

9 to appear at such hearing, such party shall be 

10 deemed to have consented to the issuance of an 

11 order of such removal or prohibition. 

12 (B) SUSPENSION OR REMOVAL.—In the 

13 event of such consent, or if upon the record 

14 made at any hearing under this subsection the 

15 Commissioner finds that any of the grounds 

16 specified in such notice have been established, 

17 the Commissioner may issue such orders of sus18 pension or removal from office, or prohibition 

19 from participation in the conduct of the affairs 

20 of the National Insurer or National Agency, as 

21 the Commissioner determines to be appropriate. 

22 (C) EFFECTIVE DATE.—Any order issued 

23 under subparagraph (B) shall become effective 

24 on the expiration of 30 days after service upon 

25 the National Insurer or National Agency and 


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1 such party (except in the case of an order 

2 issued upon consent, which shall become effec3 tive at the time specified in such order). Such 

4 order shall remain effective and enforceable as 

5 provided therein, except to such extent as it is 

6 stayed, modified, terminated, or set aside by ac7 tion of the Commissioner or a reviewing court. 

8 (d) INDUSTRYWIDE PROHIBITION.— 

9 (1) IN GENERAL.—Except as provided under 

10 paragraph (2), any person who, pursuant to any 

11 order issued under this section or section 1146, has 

12 been removed or suspended from office in a National 

13 Insurer or National Agency or prohibited from par14 ticipating in the conduct of the affairs of a National 

15 Insurer or National Agency may not, while such 

16 order is in effect— 

17 (A) continue or commence to hold any of18 fice in, or participate in any manner in the con19 duct of the affairs of any National Insurer or 

20 National Agency; 

21 (B) solicit, procure, transfer, attempt to 

22 transfer, vote, or attempt to vote any proxy, 

23 consent, or authorization with respect to any 

24 voting rights in any National Insurer or Na25 tional Agency; 


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1 (C) act as an insurer-affiliated party; or 

2 (D) act as a federally licensed insurance 

3 producer. 

4 (2) EXCEPTION.—If, on or after the date an 

5 order is issued under this subsection, which removes 

6 or suspends from office any insurer-affiliated party 

7 or prohibits such party from participating in the 

8 conduct of the affairs of a National Insurer or Na9 tional Agency, such party receives the written con10 sent of the Commissioner, paragraph (1) shall, to 

11 the extent of such consent, cease to apply to such 

12 party with respect to the National Insurer or Na13 tional Agency described in each written consent. 

14 (3) VIOLATION OF ORDER.—Any violation of 

15 paragraph (1) by any person who is subject to an 

16 order described in such subparagraph shall be treat17 ed as a violation of the order. 

18 (e) STAY OF SUSPENSION OR PROHIBITION.—Not 

19 later than 10 days after any insurer-affiliated party has 

20 been suspended from office or prohibited from participa21 tion in the conduct of the affairs of a National Insurer 

22 or National Agency by a temporary order issued under 

23 subsection (b), such party may apply to the United States 

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1 cated, or the United States District Court for the District 

2 of Columbia, for a stay of such suspension or prohibition 

3 pending the completion of the administrative proceedings 

4 pursuant to the notice served upon such party under sub5 section (a), and such court shall have jurisdiction to stay 

6 such suspension or prohibition. 

7 SEC. 1146. SUSPENSION OR PROHIBITION BASED ON CRIMI8 NAL ACTIVITY. 

9 (a) SUSPENSION OR PROHIBITION.— 

10 (1) IN GENERAL.—The Commissioner may sus11 pend an insurer-affiliated party from office or pro12 hibit such party from further participation in any 

13 manner in the conduct of the affairs of a National 

14 Insurer or National Agency, by written notice served 

15 upon such party and the National Insurer or Na16 tional Agency, if— 

17 (A) continued service or participation by 

18 such party may pose a threat to the National 

19 Insurer or National Agency or the interests of 

20 the National Insurer’s policyholders or the pol21 icyholders serviced by the National Agency; and 

22 (B) such party is charged in any informa23 tion, indictment, or complaint, of participation 

24 in— 


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1 (i) a crime involving dishonesty or 

2 breach of trust which is punishable by im3 prisonment for a term exceeding 1 year 

4 under Federal or State law; or 

5 (ii) a criminal violation of section 

6 1956, 1957, or 1960 of title 18, United 

7 States Code, or section 5322 or 5324 of 

8 title 31, United States Code. 

9 (2) EFFECTIVE PERIOD.—A suspension or pro10 hibition under paragraph (1) shall remain in effect 

11 until the information, indictment, or complaint re12 ferred to in paragraph (1)(B) is resolved or other13 wise terminated by the Commissioner. 

14 (b) REMOVAL OR PROHIBITION.— 

15 (1) IN GENERAL.—If a judgment of conviction 

16 or an agreement to enter a pretrial diversion or 

17 other similar program is entered against an insurer18 affiliated party in connection with a crime described 

19 in subsection (a)(1)(B)(i), the Commissioner may 

20 issue and serve upon such party and the National 

21 Insurer or National Agency an order removing such 

22 party from office or prohibiting such party from fur23 ther participation in any manner in the conduct of 

24 the affairs of the National Insurer or National 


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1 Agency without the prior written consent of the 

2 Commissioner if— 

3 (A) such judgment is not subject to further 

4 appellate review; and 

5 (B) continued service or participation by 

6 such party may pose a threat to the National 

7 Insurer or the interests of the policyholders of 

8 the National Insurer or a National Agency or 

9 the policyholders serviced by such Agency. 

10 (2) REQUIRED FOR CERTAIN OFFENSES.—In 

11 the case of a judgment of conviction or agreement 

12 against an insurer-affiliated party in connection with 

13 a violation described in subsection (a)(1)(B)(ii), the 

14 Commissioner shall issue and serve upon such party 

15 and the National Insurer or National Agency an 

16 order removing such party from office or prohibiting 

17 such party from further participation in any manner 

18 in the conduct of the affairs of the National Insurer 

19 or National Agency without the prior written con20 sent of the Commissioner. 

21 (3) EFFECT ON DIRECTOR OR OFFICER.—An 

22 insurer-affiliated party who is a director or officer 

23 and who is subject to an order under this subsection, 

24 shall cease to be a director or officer of a National 

25 Insurer or National Agency. 


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1 (4) EFFECT OF ACQUITTAL.—A finding of not 

2 guilty or other disposition of the charge shall not 

3 preclude the Commissioner from instituting pro4 ceedings after such finding or disposition to remove 

5 such party from office or to prohibit further partici6 pation in National Insurer or National Agency af7 fairs under subsection (a) or (b) of section 1145. 

8 (5) EFFECTIVE PERIOD.—A notice of suspen9 sion or order of removal issued under this subsection 

10 shall remain effective and outstanding until the com11 pletion of any hearing or appeal under subsection (c) 

12 or unless the suspension or order of removal is oth13 erwise terminated by the Commissioner. 

14 (c) ADMINISTRATIVE HEARING.— 

15 (1) REQUEST.—Not later than 30 days after 

16 the date on which a notice of suspension or order of 

17 removal is received by an insurer-affiliated party 

18 under this subsection, such party may submit a writ19 ten request to the Commissioner for an opportunity 

20 to appear before the Commissioner to show that the 

21 continued service to, or participation in, the conduct 

22 of the affairs of the National Insurer or National 

23 Agency by such party will not pose a threat to the 

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1 holders or to a National Agency or the policyholders 

2 serviced by such Agency. 

3 (2) TIME AND PLACE.—Upon receipt of a re4 quest under paragraph (1), the Commissioner shall 

5 set a time and place at which the requesting party 

6 may appear, personally or through counsel, before 1 

7 or more designated employees of the Commissioner 

8 to submit written materials or, at the discretion of 

9 the Commissioner, oral testimony, and oral argu10 ment. A hearing under this subsection shall take 

11 place not later than 30 days after the receipt of a 

12 request under paragraph (1), unless extended at the 

13 request of the party. 

14 (3) NOTIFICATION OF DECISION.—Not later 

15 than 60 days after a hearing under this subsection, 

16 the Commissioner shall provide written notification 

17 to the insurer-affiliated party that indicates— 

18 (A) whether the suspension or prohibition 

19 from participation in any manner in the con20 duct of the affairs of the National Insurer or 

21 National Agency will be continued, terminated, 

22 or otherwise modified; 

23 (B) whether the order removing such party 

24 from office or prohibiting such party from fur25 ther participation in any manner in the conduct 


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1 of the affairs of the National Insurer or Na2 tional Agency will be rescinded or otherwise 

3 modified; and 

4 (C) the basis for any decision by the Com5 missioner that is adverse to such party. 

6 SEC. 1147. ANCILLARY PROVISIONS. 

7 (a) POWERS RELATED TO HEARINGS.—In the course 

8 of or in connection with any proceeding or other action 

9 under this subtitle, the Commissioner, and any person des10 ignated to conduct any hearing under this section, may— 

11 (1) administer oaths and affirmations; 

12 (2) take depositions or cause depositions to be 

13 taken; and 

14 (3) issue, revoke, quash, or modify subpoenas 

15 and subpoenas duces tecum. 

16 (b) SUBPOENA POWER.— 

17 (1) IN GENERAL.—The Commissioner, or des18 ignee of the Commissioner, may require the attend19 ance of witnesses and the production of documents 

20 provided for in this section from any place in any 

21 State or other place subject to the jurisdiction of the 

22 United States at any designated place where such 

23 proceeding or other action is being conducted. 

24 (2) ENFORCEMENT.—The Commissioner or any 

25 party to proceedings under this section may apply 


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1 for the enforcement of any subpoena or subpoena 

2 duces tecum issued under this section to— 

3 (A) the United States District Court for 

4 the District of Columbia; or 

5 (B) the United States district court for the 

6 judicial district in which— 

7 (i) such proceeding or other action is 

8 being conducted; or 

9 (ii) the witness resides or carries on 

10 business. 

11 (3) JURISDICTION.—The courts described under 

12 paragraph (2) shall have jurisdiction and power to 

13 order and require compliance with any subpoena or 

14 subpoena duces tecum issued under this section. 

15 (4) FEES AND MILEAGE.—Any witness subpoe16 naed under this subsection shall be paid the same 

17 fees and mileage that are paid witnesses in the dis18 trict courts of the United States. 

19 (5) PENALTY FOR NONCOMPLIANCE.—Any per20 son who willfully fails or refuses to attend and tes21 tify or to answer any lawful inquiry or to produce 

22 books, papers, correspondence, memoranda, con23 tracts, agreements, or other records, if in such per24 son’s power so to do, in obedience to the subpoena 

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1 demeanor and, upon conviction, shall be subject to 

2 a fine of not more than $1,000 or to imprisonment 

3 for a term of not more than 1 year or both. 

4 (c) EXPENSES AND ATTORNEY FEES.— 

5 (1) IN GENERAL.—Any court having jurisdic6 tion of any proceeding or other action instituted 

7 under this section by a National Insurer or National 

8 Agency, a federally licensed insurance producer, or 

9 an insurer-affiliated party may allow any such party 

10 to receive such reasonable expenses and attorneys’ 

11 fees as it determines to be just and proper. 

12 (2) PAYMENT OF EXPENSES AND FEES.—Ex13 penses and fees awarded under paragraph (1) shall 

14 be paid by the National Insurer or National Agency, 

15 the federally licensed insurance producer, or the in16 surer-affiliated party from the assets of such in17 surer, agency, producer, or party. 

18 (d) RULEMAKING.—The Commissioner may promul19 gate such regulations as may be necessary with respect 

20 to any proceedings, claims, examinations, investigations, 

21 or other actions authorized by this subtitle. 

22 (e) EFFECT ON BOARD OF DIRECTORS.— 

23 (1) LACK OF QUORUM.—If the suspension of 1 

24 or more directors under this subtitle reduces the 

25 board of directors of a National Insurer or National 


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1 Agency below a quorum, all powers and functions 

2 vested in or exercisable by such board shall vest in, 

3 and be exercisable by, the director or directors on 

4 the board not so suspended, until a quorum is rees5 tablished. 

6 (2) TEMPORARY APPOINTMENTS.—If all of the 

7 directors of a National Insurer or National Agency 

8 are suspended under this subtitle, the Commissioner 

9 shall appoint persons to serve temporarily as direc10 tors in their place until the earlier of the date on 

11 which— 

12 (A) the suspensions are terminated; or 

13 (B) the suspended directors are replaced 

14 on the board of directors of the National In15 surer or National Agency. 

16 (f) NOTICE AFTER SEPARATION FROM SERVICE.— 

17 The resignation, termination of employment or participa18 tion, or separation of an insurer-affiliated party (including 

19 a separation caused by the closing of a National Insurer 

20 or National Agency) shall not affect the jurisdiction and 

21 authority of the Commissioner to issue any notice against 

22 any such party under this subtitle if such notice is served 

23 before the end of the 6-year period beginning on the date 

24 on which such party ceased to be an insurer-affiliated 


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1 party with respect to such National Insurer or National 

2 Agency. 

3 SEC. 1148. HEARINGS AND JUDICIAL REVIEW OF REMOVAL, 

4 SUSPENSION, OR PROHIBITION ORDER. 

5 (a) JUDICIAL HEARING.— 

6 (1) IN GENERAL.—A hearing under this subtitle 

7 (except for a hearing under section 1146(c))— 

8 (A) shall be conducted in accordance with 

9 the provisions of chapter 5 of title 5, United 

10 States Code; and 

11 (B) shall be held in the Federal judicial 

12 district in which the main office of the National 

13 Insurer or National Agency is located or in 

14 which the federally licensed insurance producer 

15 or the insurer-affiliated party is located, unless 

16 the party afforded the hearing consents to an17 other place. 

18 (2) JUDGMENT.—After a hearing under this 

19 subsection and not later than 90 days after the 

20 Commissioner has notified the parties that the case 

21 has been submitted to the Commissioner for final 

22 decision, the Commissioner shall— 

23 (A) render a decision; 


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1 (B) issue and serve upon each party to the 

2 proceeding an order or orders consistent with 

3 the provisions of this subtitle; and 

4 (C) include findings of fact upon which the 

5 Commissioner’s decision is predicated. 

6 (b) JUDICIAL REVIEW.— 

7 (1) IN GENERAL.—Judicial review of any order 

8 under this subtitle shall be limited to the provisions 

9 under this section. 

10 (2) MODIFICATION OR TERMINATION OF ORDER

11 BY COMMISSIONER.— 

12 (A) BEFORE APPEAL.—Until a petition for 

13 review is timely filed in a court of appeals of 

14 the United States, in accordance with para15 graph (3), the Commissioner may modify, ter16 minate, or set aside any order under this sec17 tion. 

18 (B) AFTER APPEAL.—After an appeal de19 scribed under subparagraph (A) is filed, the 

20 Commissioner may not modify, terminate, or 

21 set aside any order under this section without 

22 the permission of the court. 

23 (3) FILING OF PETITION.— 

24 (A) IN GENERAL.—Except as provided 

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1 ceeding under this section may obtain judicial 

2 review of any order served under subsection (a) 

3 by filing a written petition in a court of appeals 

4 described in subparagraph (C) not later than 

5 30 days after the date of service of such order, 

6 requesting that the order of the Commissioner 

7 be modified, terminated, or set aside. 

8 (B) EXCEPTION.—Judicial review shall not 

9 be available for an order issued under sub10 section (d) with the consent of the National In11 surer or National Agency, the federally licensed 

12 insurance producer, or the insurer-affiliated 

13 party. 

14 (C) JURISDICTION.—After a petition is 

15 filed under this paragraph, the following courts 

16 shall have exclusive jurisdiction to modify, ter17 minate, or set aside, in whole or in part, the 

18 order of the Commissioner: 

19 (i) The court of appeals of the United 

20 States for the circuit in which— 

21 (I) the main office of the Na22 tional Insurer or National Agency is 

23 located; or 


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1 (II) the federally licensed insur2 ance producer or the insurer-affiliated 

3 party is located. 

4 (ii) The United States Court of Ap5 peals for the District of Columbia. 

6 (4) FILING OF RECORD.—The clerk of the court 

7 shall transmit a copy of the petition filed under 

8 paragraph (3) to the Commissioner, who shall file in 

9 the court the record in the proceeding, in accordance 

10 with section 2112 of title 28, United States Code. 

11 (5) EFFECT OF REVIEW PROCEEDINGS.—The 

12 commencement of proceedings for judicial review 

13 under this subsection shall not, unless specifically 

14 ordered by the court, operate as a stay of any order 

15 issued by the Commissioner. 

16 (6) FINAL JUDGMENT.—Judicial review under 

17 this section shall be subject to chapter 7 of title 5, 

18 United States Code. The judgment and decree of the 

19 court shall be final, except that the same shall be 

20 subject to review by the Supreme Court upon certio21 rari, as provided in section 1254 of title 28, United 

22 States Code. 

23 (c) ENFORCEMENT OF COMMISSIONER ORDER.— 

24 (1) APPLICATION.—The Commissioner may 

25 submit an application, to enforce any effective and 


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1 outstanding notice or order issued under this sec2 tion, to the United States district court for the judi3 cial district in which— 

4 (A) the main office of the National Insurer 

5 or National Agency is located; 

6 (B) the federally licensed insurance pro7 ducer is located; or 

8 (C) the insurer-affiliated party is located. 

9 (2) JURISDICTION.—The courts described in 

10 paragraph (1)— 

11 (A) shall have jurisdiction and power to 

12 order and require compliance with an order of 

13 the Commissioner under this subtitle; and 

14 (B) except as otherwise provided in this 

15 subtitle, shall not have jurisdiction to affect, by 

16 injunction or otherwise, the issuance or enforce17 ment of any notice or order under this subtitle, 

18 or to review, modify, suspend, terminate, or set 

19 aside any such notice or order. 

20 SEC. 1149. CIVIL AND CRIMINAL PENALTIES. 

21 (a) CIVIL MONEY PENALTY.— 

22 (1) FIRST TIER.—A National Insurer or Na23 tional Agency, federally licensed insurance producer, 

24 or insurer-affiliated party shall pay a civil penalty of 


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1 not more than $5,000 for each day during which 

2 such entity— 

3 (A) violates any law or regulation; 

4 (B) violates any final order or temporary 

5 order issued pursuant to section 1143, 1144, 

6 1145, or 1146; 

7 (C) violates any condition imposed in writ8 ing by the Commissioner in connection with the 

9 grant of any application or other request by 

10 such National Insurer or National Agency, pro11 ducer or party; or 

12 (D) violates any written agreement be13 tween such National Insurer or National Agen14 cy, producer, or party and the Commissioner. 

15 (2) SECOND TIER.—Notwithstanding paragraph 

16 (1), a National Insurer, National Agency, federally 

17 licensed insurance producer, or insurer-affiliated 

18 party shall pay a civil penalty of not more than 

19 $25,000 for each day— 

20 (A) during which such entity— 

21 (i) commits any violation described in 

22 any clause of paragraph (1); 

23 (ii) recklessly engages in any conduct 

24 that is hazardous to a National Insurer, 

25 State insurer, United States branch of a 


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1 non-United States insurer, or National 

2 Agency and that involves an undue risk to 

3 the policyholders, as a whole, of such Na4 tional Insurer, State insurer, or United 

5 States branch of a non-United States in6 surer or the policyholders, as a whole, serv7 iced by such National Agency; or 

8 (iii) breaches any fiduciary duty; and 

9 (B) for which such violation, conduct, or 

10 breach— 

11 (i) is part of a pattern of misconduct; 

12 (ii) causes or is likely to cause more 

13 than a minimal loss to such National In14 surer, State insurer, or United States 

15 branch of a non-United States insurer; or 

16 (iii) results in pecuniary gain or other 

17 benefit to such National Agency, producer 

18 or affiliated party. 

19 (3) THIRD TIER.—Notwithstanding paragraphs 

20 (1) and (2), a National Insurer, National Agency, 

21 federally licensed insurance producer, or any in22 surer-affiliated party shall pay a civil penalty in an 

23 amount not to exceed the applicable maximum 

24 amount determined under paragraph (4) for each 

25 day during which such entity— 


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1 (A) knowingly— 

2 (i)(I) commits any violation described 

3 in any clause of paragraph (1); or 

4 (II) engages in any conduct that is 

5 hazardous to a National Insurer, State in6 surer, United States branch of a non7 United States insurer, or National Agency 

8 and that involves an undue risk to the pol9 icyholders, as a whole, of such National In10 surer, State insurer, or United States 

11 branch of a non-United States insurer or 

12 the policyholders, as a whole, serviced by 

13 such National Agency; and 

14 (ii) breaches any fiduciary duty; and 

15 (B) knowingly or recklessly causes a sub16 stantial loss to such National Insurer, State in17 surer, United States branch of a non-United 

18 States insurer, or National Agency or a sub19 stantial pecuniary gain or other benefit to such 

20 producer or affiliated party by reason of such 

21 violation, conduct, or breach. 

22 (4) MAXIMUM AMOUNTS OF PENALTIES FOR

23 ANY VIOLATION DESCRIBED IN PARAGRAPH (3).— 

24 The maximum daily amount of any civil penalty 

25 which may be assessed under paragraph (3) for any 


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1 violation, practice, or breach described in such para2 graph is $1,000,000. 

3 (5) ASSESSMENT.— 

4 (A) WRITTEN NOTICE.—Any penalty im5 posed under paragraph (1), (2), or (3) may be 

6 assessed and collected by the Commissioner by 

7 written notice, which shall contain a statement 

8 of the facts constituting the basis for the as9 sessment of any penalty imposed under para10 graph (1), (2), or (3). 

11 (B) FINALITY OF ASSESSMENT.—If, with 

12 respect to any assessment under subparagraph 

13 (A), a hearing is not requested under para14 graph (8) within the period of time allowed 

15 under such paragraph, the assessment shall 

16 constitute a final and unappealable order. 

17 (6) AUTHORITY TO MODIFY OR REMIT PEN18 ALTY.—The Commissioner may compromise, modify, 

19 or remit any penalty which the Commissioner may 

20 assess or had already assessed under paragraph (1), 

21 (2), or (3). 

22 (7) MITIGATING FACTORS.—In determining the 

23 amount of any penalty imposed under paragraph 

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1 count the appropriateness of the penalty in relation 

2 to— 

3 (A) the size of financial resources and good 

4 faith of the National Insurer, National Agency, 

5 or other person charged; 

6 (B) the gravity of the violation; 

7 (C) the history of previous violations; and 

8 (D) such other matters as justice may re9 quire. 

10 (8) HEARING.—The National Insurer, National 

11 Agency, or other person against whom any penalty 

12 is assessed under this paragraph shall be afforded a 

13 hearing by the Commissioner if such National In14 surer, National Agency, or person submits a request 

15 for such hearing within 20 days after the issuance 

16 of the notice of assessment. 

17 (9) COLLECTION.— 

18 (A) REFERRAL.—If any National Insurer, 

19 National Agency, or other person fails to pay 

20 an assessment after any penalty assessed under 

21 this paragraph has become final, the Commis22 sioner shall recover the amount assessed by ac23 tion in the appropriate United States district 

24 court. 


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1 (B) APPROPRIATENESS OF PENALTY NOT

2 REVIEWABLE.—In any civil action under sub3 paragraph (A), the validity and appropriateness 

4 of the penalty shall not be subject to review. 

5 (10) DISBURSEMENT AND USE.—All penalties 

6 collected under authority of this paragraph shall be 

7 deposited into the Treasury, and shall not be used 

8 to fund the compensation of the Commissioner or 

9 employees of the Office or the expenses of the Of10 fice. 

11 (b) PREJUDGMENT ATTACHMENT.— 

12 (1) IN GENERAL.—In any action brought by the 

13 Commissioner under this section, or in actions 

14 brought in aid of, or to enforce an order in, any ad15 ministrative or other civil action for money damages, 

16 restitution, or civil money penalties brought by the 

17 Commissioner, the court may, upon application of 

18 the Commissioner, issue a restraining order that— 

19 (A) prohibits any person subject to the 

20 proceeding from withdrawing, transferring, re21 moving, dissipating, or disposing of any funds, 

22 assets, or other property; and 

23 (B) appoints a temporary receiver to ad24 minister the restraining order. 

25 (2) STANDARD.— 


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1 (A) SHOWING.—Rule 65 of the Federal 

2 Rules of Civil Procedure shall apply with re3 spect to any proceeding under paragraph (1), 

4 without regard to the requirement of such rule 

5 that the applicant show that the injury, loss, or 

6 damage is irreparable and immediate. 

7 (B) STATE PROCEEDING.—If, in the case 

8 of any proceeding in a State court, the court 

9 determines that rules of civil procedure avail10 able under the laws of such State provide sub11 stantially similar protections to a party’s right 

12 to due process as Rule 65, the relief sought 

13 under paragraph (1) may be requested under 

14 the laws of such State. 

15 (c) CRIMINAL PENALTY.— 

16 (1) IN GENERAL.—Chapter 21 of title 18, 

17 United States Code, is amended by adding at the 

18 end the following: 

19 ‘‘§ 404. Violation of order by Commissioner of Na20 tional Insurance 

21 ‘‘Any person who, being subject to an order under 

22 section 1145 or 1146 of the National Insurance Act of 

23 2006, without the prior written approval of the Commis24 sioner of National Insurance, knowingly participates, di25 rectly or indirectly, in any manner (including by engaging 


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1 in an activity specifically prohibited in such an order) in 

2 the conduct of the affairs of any National Insurer or Na3 tional Agency shall be fined not more than $1,000,000, 

4 imprisoned for not more than 5 years, or both.’’. 

5 (2) CLERICAL AMENDMENT.—The table of sec6 tions at the beginning of chapter 21 of title 18, 

7 United States Code, is amended by adding at the 

8 end the following: 

‘‘Sec. 404. Violation of order by Commissioner of National Insurance.’’. 

9 SEC. 1150. PUBLIC DISCLOSURES OF FINAL ORDERS AND 

10 AGREEMENTS. 

11 (a) IN GENERAL.—Unless the Commissioner deter12 mines that publication of any such agreement, statement, 

13 order, modification, or termination would be contrary to 

14 the public interest, the Commissioner shall, on a monthly 

15 basis, publish and make publicly available— 

16 (1) any written agreement or other written 

17 statement for which a violation may be enforced by 

18 the Commissioner; 

19 (2) any final order issued with respect to any 

20 administrative enforcement proceeding initiated by 

21 the Commissioner under this section or any other 

22 law; and 

23 (3) any modification to or termination of any 

24 order or agreement made public pursuant to this 

25 paragraph. 


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1 (b) HEARINGS.—All hearings on the record with re2 spect to any notice of charges issued by the Commissioner 

3 shall be open to the public, unless the Commissioner deter4 mines that holding an open hearing would be contrary to 

5 the public interest. 

6 (c) TRANSCRIPT OF HEARING.—A transcript con7 taining all testimony and other documentary evidence shall 

8 be prepared for all hearings commenced pursuant to sec9 tion 1148. A transcript of public hearings shall be made 

10 available to the public pursuant to section 552 of title 5, 

11 United States Code. 

12 (d) DOCUMENTS FILED UNDER SEAL.— 

13 (1) IN GENERAL.—The Commissioner may file 

14 any document or part of a document under seal in 

15 any administrative hearing commenced by the Com16 missioner if the Commissioner determines that dis17 closure of all or part of the document would be con18 trary to the public interest. 

19 (2) WRITTEN REPORT.—A written report shall 

20 be made part of any determination to withhold any 

21 part of a document from the transcript of the hear22 ing required under subsection (b). 

23 (e) RETENTION OF DOCUMENTS.—The Commis24 sioner shall maintain a record for not less than 6 years 

25 of— 


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1 (1) all the documents described in subsection 

2 (a); and 

3 (2) all informal enforcement agreements and 

4 other supervisory actions and supporting documents 

5 issued in connection with any administrative enforce6 ment proceeding initiated by the Commissioner. 

7 (f) DISCLOSURES TO CONGRESS.—No provision of 

8 this section may be construed to authorize the with9 holding, or to prohibit the disclosure, of any information 

10 to Congress. 

11 SEC. 1151. FOREIGN INVESTIGATIONS. 

12 (a) REQUESTING ASSISTANCE FROM FOREIGN GOV13 ERNMENTS.—In conducting any investigation, examina14 tion, or enforcement action under this subtitle, the Com15 missioner may request the assistance of any foreign gov16 ernment. 

17 (b) PROVIDING ASSISTANCE TO FOREIGN GOVERN18 MENTS.— 

19 (1) IN GENERAL.—The Commissioner may as20 sist any foreign government that is conducting an 

21 investigation to determine whether any person has 

22 violated, is violating, or is about to violate any law 

23 or regulation relating to insurance matters or cur24 rency transactions administered or enforced by such 

25 foreign government. 


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1 (2) INVESTIGATION BY COMMISSIONER.—The 

2 Commissioner may investigate and collect informa3 tion and evidence pertinent to a request for assist4 ance under paragraph (1). Any such investigation 

5 shall comply with the laws of the United States and 

6 the policies and procedures of the Commissioner. 

7 (3) FACTORS TO CONSIDER.—In deciding 

8 whether to provide assistance under this section, the 

9 Commissioner shall consider— 

10 (A) whether the requesting authority has 

11 agreed to provide reciprocal assistance with re12 spect to insurance matters within the jurisdic13 tion of the Commissioner; and 

14 (B) whether compliance with the request 

15 would prejudice the public interest of the 

16 United States. 

17 (c) RULE OF CONSTRUCTION.—Nothing in this sec18 tion shall be construed to limit the authority of the Com19 missioner or any other Federal agency to provide or re20 ceive assistance or information to or from any foreign gov21 ernmental authority with respect to any matter. 

22 SEC. 1152. ACTION OR PROCEEDING AGAINST NON-UNITED 

23 STATES INSURERS. 

24 (a) IN GENERAL.—The Commissioner may not take 

25 any action under this subtitle against a non-United States 


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1 insurer or any officer, director, employee, or agent of such 

2 insurer unless the Commissioner believes that conduct or 

3 practice of such insurer or individual has been, is, or is 

4 likely to be, carried on in connection with an act or prac5 tice within 1 or more States, which constitutes an appro6 priate basis for action by the Commissioner under this 

7 subtitle. 

8 (b) REMOVAL OF OFFICER OR DIRECTOR.—If an of9 ficer, director, or other person associated with a non10 United States insurer fails to appear promptly as a party 

11 in any case in which an action or proceeding is brought, 

12 pursuant to an allegation under subsection (a), for the 

13 suspension or removal of such officer, director, or other 

14 person, or fails to comply with any effective order or judg15 ment therein, any failure by the non-United States insurer 

16 to secure the removal of the officer, director, or other per17 son from any office such person holds in such insurer and 

18 from any further participation in its affairs shall con19 stitute grounds for ordering the non-United States Insurer 

20 to terminate all sale, solicitation, negotiation, and under21 writing of insurance and all other insurance operations in 

22 the United States. 

23 (c) VENUE.— 

24 (1) IN GENERAL.—Except as provided under 

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1 istrative proceeding under this section is to be deter2 mined by reference to the location of the main office 

3 of a National Insurer, the venue of such a pro4 ceeding shall be within the judicial district or other 

5 relevant jurisdiction in which the non-United States 

6 insurer has 1 or more offices. 

7 (2) MULTIPLE JURISDICTIONS.—If a National 

8 Insurer has offices in more than 1 jurisdiction, the 

9 venue of a proceeding under this section— 

10 (A) shall be in the jurisdiction within 

11 which the office or offices involved in the pro12 ceeding are located; and 

13 (B) if there is more than 1 jurisdiction 

14 under subparagraph (A), shall be proper in any 

15 such jurisdiction in which the proceeding is 

16 brought or to which it may appropriately be 

17 transferred. 

18 (d) SERVICE OF PROCESS.— 

19 (1) IN GENERAL.—Any service required or au20 thorized to be made on a non-United States insurer 

21 may be made on any office located within any State. 

22 (2) EXCEPTION.—If any service of process 

23 under paragraph (1) is in connection with an action 

24 or proceeding involving 1 or more offices located in 


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1 any State, service shall be made on at least 1 office 

2 so involved. 

3 SEC. 1153. COOPERATION BETWEEN COMMISSIONER AND 

4 STATE COMMISSIONERS. 

5 (a) NOTICE TO STATE COMMISSIONERS.—The Com6 missioner shall notify the State commissioner in each 

7 State in which a National Insurer or National Agency is 

8 doing business not later than 30 days after the date of 

9 taking any of the following actions: 

10 (1) Revocation, suspension, or restriction of the 

11 National Insurer’s or National Agency’s authority to 

12 transact insurance. 

13 (2) The entry of a formal order that the Na14 tional Insurer restrict its premium writing, obtain 

15 additional contributions to surplus, reinsure all or 

16 any part of its business, or increase capital, surplus, 

17 or any other account for the security of policyowners 

18 or creditors. 

19 (3) The placement of a National Insurer into 

20 receivership. 

21 Subtitle D—Insurance Fraud 

22 SEC. 1161. INVESTIGATION OF INSURANCE FRAUD. 

23 (a) INVESTIGATIVE AUTHORITY OF COMMIS24 SIONER.—The Commissioner may investigate suspected 


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1 fraudulent insurance acts by insurance persons engaged 

2 in the business of insurance or by other persons. 

3 (b) FRAUD WARNING REQUIRED.—The Commis4 sioner, by regulation, shall require each National Insurer 

5 to place a fraud warning on claim forms and applications 

6 for policies of insurance written, or to be written, by a 

7 National Insurer, regardless of the form of transmission. 

8 (c) MANDATORY REPORTING OF FRAUDULENT IN9 SURANCE ACTS.—A National Insurer, or an insurance 

10 person engaged in the business of insurance, that knows 

11 or reasonably believes that a fraudulent insurance act is 

12 being, will be, or has been committed, shall submit such 

13 information to the Commissioner in a form and manner 

14 prescribed by the Commissioner. 

15 (d) IMMUNITY FROM LIABILITY.— 

16 (1) IN GENERAL.—Except as provided under 

17 paragraphs (2) and (3), any person who furnishes 

18 information concerning suspected, anticipated, or 

19 completed fraudulent insurance acts shall not be lia20 ble to any person under any law or regulation of the 

21 United States, any constitution, law, or regulation of 

22 any State or political subdivision of any State, or 

23 under any contract or other legally enforceable 

24 agreement (including any arbitration agreement), for 


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1 such act, if the information is provided to or re2 ceived from— 

3 (A) the Commissioner or any employee, 

4 agent, or representative of the Commissioner; 

5 (B) Federal, State, or local enforcement or 

6 regulatory officials or their employees, agents, 

7 or representatives; 

8 (C) a self-regulatory organization or its 

9 employees, agents, or representatives; 

10 (D) a person involved in the prevention 

11 and detection of fraudulent insurance acts or 

12 that person’s agents, employees, or representa13 tives; or 

14 (E) the NAIC or its employees, agents, or 

15 representatives. 

16 (2) MALICE.— 

17 (A) IN GENERAL.—Paragraph (1) shall not 

18 apply to false statements made with actual mal19 ice. 

20 (B) CONTENTS OF COMPLAINT.—In an ac21 tion brought against a person for filing a report 

22 or furnishing other information concerning a 

23 fraudulent insurance act, the party bringing the 

24 action shall plead specifically any allegation 

25 that paragraph (1) does not apply because the 


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1 person filed the report or furnished the infor2 mation with actual malice. 

3 (3) PRESERVATION OF PRIVILEGE AND IMMUNI4 TIES.—This subsection does not abrogate or modify 

5 common law or statutory privileges or immunities 

6 enjoyed by a person described in paragraph (1). 

7 SEC. 1162. PENALTIES. 

8 If a person committing an offense under subsection 

9 (a) or (c) of section 1037A of title 18, United States Code, 

10 is a National Insurer, a National Agency, or other feder11 ally licensed insurance producer, or an insurer-affiliated 

12 party, the Commissioner may, in addition to the punish13 ment set forth in such section 1037A— 

14 (1) revoke, suspend, or restrict the Federal li15 cense of such National Insurer, National Agency, or 

16 other federally licensed insurance producer, or in17 surer-affiliated party pursuant to subtitle C; and 

18 (2) order such National Insurer, National 

19 Agency, or other federally licensed insurance pro20 ducer, or insurer-affiliated party to make restitution 

21 to persons aggrieved by such offenses. 


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1 TITLE II—NATIONAL INSURANCE 

2 COMPANIES AND NATIONAL 

3 INSURANCE AGENCIES 

4 Subtitle A—Organization, 

5 Licensing, and Operations 

6 SEC. 1201. ORGANIZATION, OPERATION, AND REGULATION 

7 OF NATIONAL INSURANCE COMPANIES AND 

8 NATIONAL INSURANCE AGENCIES. 

9 (a) AUTHORIZATION.— 

10 (1) IN GENERAL.—The Commissioner may, in 

11 accordance with the provisions of this Act, and 

12 under regulations prescribed by the Commissioner 

13 pursuant to paragraph (2)— 

14 (A) provide for the organization, incorpora15 tion, operation, and regulation of National In16 surance Companies and National Insurance 

17 Agencies; and 

18 (B) issue charters therefore. 

19 (2) RULEMAKING.—The Commissioner shall 

20 issue regulations that permit the organization of Na21 tional Insurers in stock, mutual, reciprocal, or fra22 ternal form, and address such other matters related 

23 to the chartering and licensing of National Insurers 

24 and National Agencies, as the Commissioner deter25 mines appropriate. 


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1 (3) ORGANIZATION.—The Commissioner shall 

2 require National Agencies to be organized in stock 

3 form. 

4 (b) CHARTERING CRITERIA.— 

5 (1) FACTORS.—In determining whether to issue 

6 a charter for a National Insurer or National Agency, 

7 the Commissioner shall consider— 

8 (A) the character and competency of the 

9 parties seeking the charter; and 

10 (B) the financial resources and future 

11 prospects of the proposed National Insurer or 

12 proposed National Agency. 

13 (2) INFORMATION.—The Commissioner shall re14 quest such information from the applicant as the 

15 Commissioner determines necessary to make the 

16 evaluation required under paragraph (1). 

17 (3) CORPORATE NAME.— 

18 (A) NATIONAL INSURERS.—The corporate 

19 name of each National Insurer shall include at 

20 the end the words ‘‘National Insurer’’ or the 

21 initials ‘‘N.I.’’. 

22 (B) NATIONAL AGENCIES.—The corporate 

23 name of each National Agency shall include at 

24 the end the words ‘‘National Insurance Agency’’ 

25 or the initials ‘‘NIA’’. 


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1 (C) SAVINGS PROVISION.—Nothing in this 

2 Act shall preclude a State insurer or State in3 surance agency from using the word ‘‘national’’ 

4 or ‘‘Federal’’ in its corporate name if such word 

5 was included in the State insurer’s or agency’s 

6 corporate name on or before the date of enact7 ment of this Act. 

8 (c) ISSUANCE OR DENIAL OF CHARTER.— 

9 (1) DETERMINATION.—Not later than 60 days 

10 after the receipt of the articles of incorporation or 

11 other organization document from a proposed Na12 tional Insurer or National Agency, and such other 

13 information required under subsection (b)(2), the 

14 Commissioner shall— 

15 (A) issue a charter certificate to the appli16 cant; or 

17 (B) provide the applicant with a written 

18 explanation of the grounds for denying a char19 ter. 

20 (2) FEDERAL PRODUCER LICENSE.—If the 

21 Commissioner issues a charter certificate to a Na22 tional Agency, the Commissioner shall concurrently 

23 issue a Federal producer license to the applicant 

24 pursuant to section 1301. A National Agency may 


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1 not sell, solicit, or negotiate any line of insurance for 

2 which it does not hold a Federal producer license. 

3 (3) GROUNDS FOR DENIAL.—The Commissioner 

4 shall not grant a charter to an applicant if— 

5 (A) the applicant fails to— 

6 (i) comply with all applicable forma7 tion requirements; and 

8 (ii) provide any information requested 

9 by the Commissioner under subsection 

10 (b)(2); 

11 (B) the applicant lacks— 

12 (i) the financial resources necessary to 

13 comply with the standards under this Act; 

14 or 

15 (ii) the character or competence to op16 erate the National Insurer or National 

17 Agency in accordance with the standards 

18 under this Act; or 

19 (C) the Commissioner determines that the 

20 National Insurer or National Agency is being 

21 formed for an illegitimate purpose. 

22 (d) AMENDMENT OF CHARTER.—The Commissioner 

23 may, under such regulations as the Commissioner may 

24 prescribe, provide for the amendment of charters issued 

25 to National Insurers and National Agencies. 


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1 (e) NO DELEGATION PERMITTED.—The Commis2 sioner may not delegate to any insurance self-regulatory 

3 organization any authority conferred under this section 

4 with respect to— 

5 (1) the organization, incorporation, and powers 

6 of National Insurers or National Agencies; or 

7 (2) the issuance and amendment of charters to 

8 a National Insurer or National Agency. 

9 (f) MAIN OFFICE.— 

10 (1) DESIGNATION.—Subject to the approval of 

11 the Commissioner, a National Insurer or National 

12 Agency may designate any office at which it con13 ducts insurance operations as its main office. 

14 (2) CHARTER TO SPECIFY MAIN OFFICE.—A 

15 National Insurer or National Agency shall specify 

16 the State in which its main office is located. 

17 (3) CHANGE IN MAIN OFFICE.—With the ap18 proval of the Commissioner, a National Insurer or 

19 National Agency may change the designation of its 

20 main office, including to another existing office of 

21 the National Insurer or National Agency. 

22 (4) CITIZENSHIP.—For purposes of jurisdiction, 

23 a National Insurer or National Agency shall be 

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1 fice is located and of the State in which it has its 

2 principal place of business. 

3 SEC. 1202. UNITED STATES BRANCHES OF NON-UNITED 

4 STATES INSURERS. 

5 (a) AUTHORIZATION OF NON-UNITED STATES IN6 SURER.—A non-United States insurer may transact insur7 ance in the United States through a United States branch 

8 by qualifying and licensing the United States branch to 

9 do business as a National Insurer under this Act, under 

10 such regulations as the Commissioner may prescribe. 

11 (b) TRUST ACCOUNT.— 

12 (1) IN GENERAL.—The Commissioner shall not 

13 license a United States branch until the non-United 

14 States insurer establishes a trust account, pursuant 

15 to a deed of trust that meets the requirements of 

16 this subsection. 

17 (2) ASSETS.—The trusteed assets of a United 

18 States branch shall be held pursuant to a deed of 

19 trust with a United States bank that meets such re20 quirements as the Commissioner may prescribe, in 

21 trust for the exclusive benefit, security, and protec22 tion of the policyholders, or policyholders and credi23 tors, of the United States branch in the United 

24 States maintained as long as there is outstanding 


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1 any liability of the United States branch arising out 

2 of its insurance transactions in the United States. 

3 (3) SURPLUS.—The trusteed surplus of a 

4 United States branch shall be subject to the same 

5 solvency standards required of National Insurers, in6 cluding the risk-based capital standards described in 

7 section 1211. 

8 (4) FILING.—The Commissioner may require a 

9 United States branch to file a statement, in such 

10 form as the Commissioner may prescribe, that has 

11 been certified by the trustee. 

12 (c) SUBJECT TO APPLICABLE LAWS.—Except as oth13 erwise provided under this section, a United States branch 

14 established under this section— 

15 (1) shall be subject to all laws applicable to a 

16 National Insurer; and 

17 (2) shall be treated as a National Insurer for 

18 all purposes of this Act. 

19 SEC. 1203. FEDERAL LICENSING OF NATIONAL INSURERS. 

20 (a) IN GENERAL.—A National Insurer may not sell, 

21 solicit, negotiate, or underwrite any line of insurance for 

22 which it does not hold a Federal license. 

23 (b) ISSUANCE OF FEDERAL LICENSES.— 


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1 (1) IN GENERAL.—The Commissioner may, 

2 under such regulations as the Commissioner may 

3 prescribe, issue Federal licenses that— 

4 (A) permit National Insurers to sell, so5 licit, negotiate, and underwrite lines of insur6 ance; and 

7 (B) specify the lines of insurance that each 

8 National Insurer may sell, solicit, negotiate, 

9 and underwrite. 

10 (2) RULEMAKING.—The regulations prescribed 

11 by the Commissioner pursuant to paragraph (1) 

12 shall provide that— 

13 (A) a National Insurer may hold a license 

14 to sell, solicit, negotiate, and underwrite prop15 erty/casualty insurance; 

16 (B) a National Insurer that holds a license 

17 to sell, solicit, negotiate, and underwrite life in18 surance may also sell, solicit, negotiate, and un19 derwrite disability income insurance, long-term 

20 care insurance, annuities, and funding agree21 ments; and 

22 (C) no National Insurer may obtain— 

23 (i) a Federal license to engage in the 

24 sale, solicitation, negotiation, and under25 writing of property/casualty insurance; and 


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1 (ii) a Federal license to engage in the 

2 sale, solicitation, negotiation, and under3 writing of life insurance, annuities, or 

4 funding agreements. 

5 (3) AUTHORITY TO LIMIT SCOPE OF INSUR6 ANCE.—Subject to paragraph (2), the regulations 

7 prescribed by the Commissioner pursuant to para8 graph (1) may provide that a National Insurer that 

9 holds a license to sell, solicit, negotiate, and under10 write specified lines of insurance may not hold a li11 cense to sell, solicit, negotiate, and underwrite other 

12 specified lines of insurance. 

13 (4) DURATION.—A Federal license issued by 

14 the Commissioner pursuant to this subsection shall 

15 remain in effect until the license is— 

16 (A) surrendered by the National Insurer; 

17 or 

18 (B) revoked or suspended by the Commis19 sioner in accordance with the provisions of this 

20 Act. 

21 (c) REINSURANCE.—A National Insurer may— 

22 (1) only reinsure the lines of insurance that the 

23 National Insurer is— 

24 (A) licensed to sell, solicit, negotiate, and 

25 underwrite under its Federal license; or 


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1 (B) otherwise permitted to reinsure by the 

2 terms of its Federal license; and 

3 (2) confine its business to reinsurance. 

4 (d) NONDISCRIMINATION.— 

5 (1) IN GENERAL.—Except as provided in para6 graph (2) and section 1202, the Commissioner may 

7 not impose any condition for the granting of a Fed8 eral license to a National Insurer under this section 

9 solely because the National Insurer is— 

10 (A) a subsidiary of a non-United States 

11 person; 

12 (B) partially owned by a non-United States 

13 person; or 

14 (C) a United States branch of a non15 United States insurer. 

16 (2) EXCEPTION.—Notwithstanding paragraph 

17 (1), the Commissioner may impose conditions for the 

18 granting of a Federal license that are different from 

19 those imposed on other National Insurers— 

20 (A) if the conditions attached are imposed 

21 on the legal form in which the National Insurer 

22 chooses to operate; or 

23 (B) if the Commissioner makes a written 

24 finding that the conditions are related to the 

25 protection of policyholders and are the minVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00123 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 imum conditions necessary to achieve the pur2 poses of this Act. 

3 SEC. 1204. CORPORATE GOVERNANCE. 

4 (a) COMPLIANCE WITH THIS ACT AND APPLICABLE

5 REGULATIONS.—The corporate governance procedures of 

6 a National Insurer and a National Agency shall be con7 sistent with the provisions of this Act and all regulations 

8 issued by the Commissioner under this Act. 

9 (b) ADHERENCE TO STATE LAW.— 

10 (1) IN GENERAL.—Except as provided under 

11 paragraph (3), each National Insurer and National 

12 Agency shall adhere to corporate governance proce13 dures of the relevant State law of the State in which 

14 its main office is located or the State in which 1 of 

15 its United States holding companies is organized or 

16 incorporated. 

17 (2) DESIGNATION.—Each National Insurer and 

18 National Agency shall designate in its bylaws the 

19 body of relevant State law selected for its corporate 

20 governance procedures. 

21 (3) DISCRIMINATORY PROVISION.—If the Com22 missioner determines that any provision of a State 

23 corporate governance law is discriminatory as ap24 plied to National Insurers or National Agencies, 

25 such Insurer or Agency— 


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1 (A) shall not be obligated to follow such a 

2 provision of the relevant State law; and 

3 (B) may follow such other provision of law 

4 as the Commissioner determines to be appro5 priate. 

6 (c) INDEPENDENT AUDIT COMMITTEE FOR NA7 TIONAL INSURERS.— 

8 (1) ESTABLISHMENT.—Each National Insurer 

9 shall establish an audit committee of its board of di10 rectors, which shall be composed entirely of outside 

11 directors who are independent of management of the 

12 National Insurer. 

13 (2) SATISFACTION.—The requirement described 

14 in paragraph (1) will be satisfied if— 

15 (A) any person that controls the National 

16 Insurer has established an audit committee of 

17 its board of directors entirely composed of out18 side directors who are independent of manage19 ment of such controlling person; and 

20 (B) the role of the audit committee of the 

21 controlling person in subparagraph (A) includes 

22 review of financial statements of the National 

23 Insurer. 


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1 SEC. 1205. CONVERSION OF STATE INSURER TO NATIONAL 

2 INSURER OR STATE INSURANCE AGENCY TO 

3 NATIONAL AGENCY. 

4 (a) AUTHORIZATION TO CONVERT.— 

5 (1) IN GENERAL.—Notwithstanding any other 

6 provision of law and subject to the approval of the 

7 Commissioner, a State insurer may convert to a Na8 tional Insurer and a State insurance agency may 

9 convert to a National Agency. 

10 (2) ORGANIZATIONAL FORM.—A State insurer 

11 that converts to a National Insurer under paragraph 

12 (1) may— 

13 (A) retain an organizational form per14 mitted under section 1201(a)(2); or 

15 (B) change directly to another organiza16 tional form that is permitted under section 

17 1201(a)(2). 

18 (b) CONVERSION PROCEDURES.— 

19 (1) IN GENERAL.—The Commissioner may, 

20 under such regulations as the Commissioner may 

21 prescribe, provide for— 

22 (A) the conversion of State insurers into 

23 National Insurers; 

24 (B) the conversion of State insurance 

25 agencies to National Agencies; and 


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1 (C) the issuance of charters to such con2 verted insurers and agencies. 

3 (2) RULEMAKING.—The regulations issued by 

4 the Commissioner under this section shall be con5 sistent with— 

6 (A) the regulations issued by the Commis7 sioner under section 1201; and 

8 (B) the provisions of section 1242 or 1243, 

9 in the case of a change of form effected at the 

10 time of a conversion of a State insurer into a 

11 National Insurer. 

12 (c) EFFECT OF CONVERSION.— 

13 (1) IN GENERAL.—Except as provided under 

14 paragraph (2), a State insurer or State insurance 

15 agency that converts under this section— 

16 (A) shall be subject to the provisions of 

17 this Act and to examination and regulation as 

18 provided under this Act to the same extent as 

19 other National Insurers and National Agencies 

20 organized under this Act; 

21 (B) shall be deemed to be a continuation 

22 of the corporate existence of the State insurer 

23 or State insurance agency, as applicable; and 

24 (C) shall, by operation of law and without 

25 further action, hold and be subject to all rights, 


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1 privileges, liabilities, property interests, and 

2 other interests and obligations that the State 

3 insurer or State insurance agency held, or was 

4 subject to, immediately before the conversion. 

5 (2) EXCEPTIONS.—Notwithstanding paragraph 

6 (1), a State insurer or State insurance agency that 

7 converts under this section— 

8 (A) shall not be subject to any requirement 

9 to maintain deposits with State insurance regu10 latory authorities; 

11 (B) shall not hold any State license to sell, 

12 solicit, negotiate, and underwrite insurance that 

13 was held by the State insurer or State insur14 ance agency; and 

15 (C) shall obtain, in accordance with section 

16 1203 or 1301, as applicable, a Federal license 

17 for all lines of insurance that it sells, solicits, 

18 negotiates, or underwrites. 

19 (d) SPECIAL AUTHORITY.—The Commissioner may, 

20 subject to such conditions as the Commissioner may pre21 scribe by regulation, permit a National Insurer or Na22 tional Agency resulting from the conversion of a State in23 surer or State insurance agency, as applicable, to retain, 

24 hold, or exercise assets, liabilities, powers, and authorities 

25 that do not conform to the legal requirements otherwise 


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1 applicable to National Insurers or National Agencies to 

2 the extent the Commissioner determines is appropriate. 

3 (e) MUTUAL HOLDING COMPANY CONTROLLING

4 STATE INSURERS IN STOCK FORM.— 

5 (1) IN GENERAL.—If a State insurer converting 

6 under this section is an insurer in stock form that 

7 is controlled by a mutual holding company as a re8 sult of a previous conversion under State law from 

9 an insurer in mutual form to an insurer in stock 

10 form, and, after the conversion under this section, 

11 the mutual holding company would not control any 

12 other State insurers having policies in force that give 

13 rise to membership in the mutual holding company, 

14 then, notwithstanding any other provision of law, in 

15 accordance with this section and regulations issued 

16 by the Commissioner— 

17 (A) upon the conversion under this section, 

18 the mutual holding company may remain a cor19 poration organized under the law of the State 

20 under which it was incorporated or may merge 

21 into a mutual holding company incorporated 

22 under the law of another State; and 

23 (B) upon and after the conversion under 

24 this section, the mutual holding company— 


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1 (i) shall, to the extent provided in reg2 ulations issued by the Commissioner, be 

3 subject to— 

4 (I) title V; and 

5 (II) examination, reporting, regu6 lation, and other supervision under 

7 this Act; and 

8 (ii) shall not be subject to any form of 

9 licensing, examination, reporting, regula10 tion, or other supervision by reason of 

11 being a mutual holding company or relat12 ing to the rights of members, the sale, so13 licitation, negotiation, or underwriting of 

14 insurance (including all products of Na15 tional Insurers) or any other insurance op16 erations except as authorized under Fed17 eral law and except as provided in section 

18 1125(b), as if the mutual holding company 

19 were a National Insurer under this Act. 

20 (2) CONVERSION TO A CORPORATION IN STOCK

21 FORM.—Notwithstanding any other provision of law 

22 and in accordance with this subsection and regula23 tions issued by the Commissioner, a mutual holding 

24 company described in paragraph (1) may convert to 

25 a corporation in stock form in a manner that— 


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•S 2509 IS

1 (A) is found by the Commissioner to be 

2 fair and equitable to the mutual holding com3 pany and its members; and 

4 (B) is generally similar to conversion of an 

5 insurer in mutual form to a National Insurer in 

6 stock form pursuant to section 1243. 

7 (f) NO DELEGATION PERMITTED.—The Commis8 sioner may not delegate any authority under this section 

9 involving the conversion of a State insurer into a National 

10 Insurer or a State insurance agency into a National Agen11 cy to any insurance self-regulatory organization. 

12 SEC. 1206. CONVERSION OF NATIONAL INSURER TO STATE 

13 INSURER OR NATIONAL AGENCY TO STATE 

14 AGENCY. 

15 (a) IN GENERAL.—Subject to such notification proce16 dures as the Commissioner may prescribe by regulation, 

17 a National Insurer may convert into a State insurer and 

18 a National Agency may convert into a State insurance 

19 agency, in accordance with applicable State law. 

20 (b) SAVINGS PROVISION.—Nothing in this section or 

21 in the conversion of a National Insurer into a State in22 surer or a National Agency into a State insurance Agency 

23 shall operate to abrogate any rights, privileges, liabilities, 

24 property interests, or other interests or obligations that 


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1 a National Insurer or National Agency held or was subject 

2 to immediately before the conversion. 

3 SEC. 1207. POWERS. 

4 (a) IN GENERAL.—Upon issuance of its charter, a 

5 National Insurer or National Agency shall have the power, 

6 subject to such regulations as the Commissioner may pre7 scribe, to— 

8 (1) have, alter, use, and reproduce a corporate 

9 seal, or a facsimile of it; 

10 (2) have perpetual succession until such time as 

11 it is liquidated, dissolved, merged, or otherwise 

12 wound up in accordance with applicable law; 

13 (3) adopt, amend, and repeal by-laws; 

14 (4) sue or be sued, complain and defend, and 

15 otherwise litigate in any court and participate, as a 

16 party or otherwise, in any judicial, administrative, 

17 arbitral, or other proceeding, in its corporate name; 

18 (5) make contracts and guarantees, incur liabil19 ities, borrow money, issue notes, bonds, and other 

20 obligations (which may be convertible into or include 

21 the option to purchase other securities of the Na22 tional Insurer or National Agency), and secure any 

23 of its obligations by mortgage or pledge of any of its 

24 property, franchises, or income; 


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1 (6) purchase, receive, subscribe for, or other2 wise acquire, own, hold, vote, improve, employ, use, 

3 and otherwise deal in and with real and personal 

4 property or other assets, or any interest therein, and 

5 sell, convey, mortgage, lease, exchange, transfer, or 

6 otherwise dispose of, or mortgage or pledge, all or 

7 any of its property and assets, or any interest there8 in; 

9 (7) lend money, invest, and reinvest its funds 

10 and receive and hold real and personal property as 

11 security for repayment; 

12 (8) participate with others in any corporation, 

13 partnership, limited partnership, joint venture, or 

14 other association, or in any transaction, under15 taking, or arrangement, which the National Insurer 

16 or National Agency would have power to conduct by 

17 itself, whether or not such participation involves 

18 sharing or delegating control with or to others; 

19 (9) elect or appoint directors, officers, employ20 ees, and agents of the National Insurer or National 

21 Agency, define their duties, fix their compensation, 

22 and lend them money and credit; 

23 (10) pay pensions and establish pension plans, 

24 pension trusts, profit-sharing plans, share bonus 

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1 tive plans for any or all current or former directors, 

2 officers, employees, and agents of the National In3 surer or National Agency, its subsidiaries or its af4 filiates; 

5 (11) provide insurance for its benefit on the life 

6 of any of its directors, officers, or employees, or on 

7 the life of any shareholder for the purpose of acquir8 ing at such shareholder’s death shares of its stock 

9 owned by such shareholder; 

10 (12) in the case of a National Life Insurer— 

11 (A) establish and maintain 1 or more sepa12 rate accounts and allocate amounts to such ac13 counts (including any proceeds applied under 

14 optional modes of settlement or under dividend 

15 options); 

16 (B) provide life insurance, annuities, dis17 ability income insurance, long-term care insur18 ance, or funding agreements (and incidental 

19 benefits), payable in fixed or variable amounts 

20 from the accounts described in subparagraph 

21 (A) or from the general account; 

22 (C) hold and accumulate funds pursuant to 

23 funding agreements; and 

24 (D) provide investment advice and invest25 ment management services; 


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1 (13) in the case of a National Insurer— 

2 (A) engage in the sale, solicitation, nego3 tiation, and underwriting of insurance; 

4 (B) establish and maintain 1 or more pro5 tected cells in connection with an insurance 

6 securitization and attribute to such cells insur7 ance and reinsurance obligations with respect to 

8 its general account, obligations relating to the 

9 insurance securitization and assets to fund such 

10 obligations; and 

11 (C) engage in all other insurance oper12 ations and exercise all such incidental powers as 

13 shall be necessary to carry on insurance oper14 ations; 

15 (14) in the case of a National Agency, engage 

16 in the sale, solicitation, and negotiation of policies of 

17 insurance issued by any National Insurer, State in18 surer, or United States branch of a non-United 

19 States insurer, and exercise all such incidental pow20 ers as shall be necessary to carry out such activities, 

21 including claims adjustment and settlement, risk 

22 management, employee benefits advice, and retire23 ment planning; 

24 (15) provide benefits or payments to its direc25 tors, officers, and employees, subsidiaries or affiliVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00135 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 ates, and to their estates, families, dependents, or 

2 beneficiaries, in recognition of the past services of 

3 the directors, officers, and employees to the National 

4 Insurer or National Agency or its subsidiaries or af5 filiates; 

6 (16) make donations and otherwise devote its 

7 resources for the public welfare or for charitable, sci8 entific, educational, humanitarian, philanthropic, or 

9 religious purposes; 

10 (17) serve as a promoter, partner, member, as11 sociate, or manager of any business entity; 

12 (18) provide loss control, advice, exposure iden13 tification, and reduction strategies, and recommend 

14 and expedite risk financing alternatives; 

15 (19) engage in any other lawful activity that is 

16 necessary or convenient to further its activities and 

17 affairs; and 

18 (20) exercise the powers granted by this Act in 

19 any State and in any foreign jurisdiction. 

20 (b) EFFECT ON STATE LAW.—No State may, by stat21 ute, regulation, order, interpretation, or other action, pre22 vent or restrict a National Insurer or National Agency 

23 from exercising any power conferred by this section or by 

24 any regulation authorized by this section. 

25 (c) SUBSIDIARIES.— 


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1 (1) NATIONAL INSURERS.— 

2 (A) AUTHORIZATION.— 

3 (i) IN GENERAL.—A National Insurer 

4 may establish, invest in, or otherwise ac5 quire 1 or more subsidiaries engaged or or6 ganized to engage in any business lawful 

7 under the laws of the jurisdictions in which 

8 the subsidiaries are organized. 

9 (ii) RESTRICTION.—Without the prior 

10 written approval of the Commissioner, not 

11 more than 20 percent of the National In12 surer’s assets may be invested in any 1 

13 subsidiary described in clause (i) and not 

14 more than 40 percent of a National Insur15 er’s assets may be invested in 2 or more 

16 subsidiaries engaged in such other activi17 ties. 

18 (B) CALCULATION.—In calculating the 

19 amount invested by a National Insurer in a 

20 subsidiary under subparagraph (A), there shall 

21 be included only the following: 

22 (i) Total net monies or other consider23 ation expended and obligations assumed by 

24 the National Insurer in the acquisition or 

25 formation of the subsidiary, including all 


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1 organizational expenses and contributions 

2 to capital and surplus of the subsidiary 

3 whether or not represented by the pur4 chase of capital stock or issuance of other 

5 securities. 

6 (ii) All amounts expended by the Na7 tional Insurer in acquiring additional com8 mon stock, preferred stock, debt obliga9 tions, and other securities of the sub10 sidiary. 

11 (iii) All contributions by the National 

12 Insurer to the capital or surplus of the 

13 subsidiary subsequent to its acquisition or 

14 formation. 

15 (C) QUALIFICATION OF INVESTMENT; 

16 WHEN DETERMINED.—Whether any investment 

17 made pursuant to subparagraph (A) meets the 

18 applicable requirements of such subparagraph 

19 shall be determined before the investment is 

20 made by calculating the applicable investment 

21 limitations as though the investment had al22 ready been made, taking into account the then 

23 outstanding principal balance on all previous in24 vestments in debt obligations, and the value of 

25 all previous investments in equity securities as 


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•S 2509 IS

1 of the day they were made, net of any return 

2 of capital invested, not including dividends. 

3 (D) EXCEPTION.—The limitations provided 

4 for in subparagraph (A) shall not apply to in5 vestments by a National Insurer in— 

6 (i) any subsidiary engaged primarily 

7 in the sale, solicitation, negotiation, and 

8 underwriting of any line of insurance that 

9 the National Insurer is authorized to sell, 

10 solicit, negotiate, and underwrite; or 

11 (ii) any subsidiary whose sole business 

12 function is to own assets (including other 

13 subsidiaries) that the National Insurer 

14 itself is authorized to own. 

15 (E) NOTICE.—A National Insurer shall no16 tify the Commissioner, in writing, not later 

17 than 20 calendar days after establishing, invest18 ing in, or acquiring a subsidiary, unless the 

19 transaction requires the prior written approval 

20 of the Commissioner under subparagraph (A). 

21 (2) NATIONAL AGENCIES.— 

22 (A) AUTHORIZATION.—A National Agency 

23 may establish, invest in, or otherwise acquire 1 

24 or more subsidiaries engaged or organized to 


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1 engage in any business activity that is lawful 

2 for a National Agency under this Act. 

3 (B) NOTICE.—A National Agency shall no4 tify the Commissioner, in writing, not later 

5 than 30 calendar days after establishing, invest6 ing in, or acquiring a subsidiary. 

7 (d) DIVIDENDS AND DISTRIBUTIONS TO SHARE8 HOLDERS.— 

9 (1) SHAREHOLDER DIVIDENDS AND DISTRIBU10 TIONS PERMITTED.—A National Insurer may de11 clare and pay dividends or make other distributions 

12 in cash, bonds, or property on its outstanding 

13 shares, unless— 

14 (A) the National Insurer is insolvent or 

15 would be made insolvent by such payment; or 

16 (B) the declaration, payment, or distribu17 tion would be contrary to any restrictions con18 tained in the charter of the National Insurer. 

19 (2) SOURCE OF SHAREHOLDER DIVIDENDS AND

20 DISTRIBUTIONS.—A National Insurer may only de21 clare and pay dividends or make other distributions 

22 out of surplus if the assets of the National Insurer 

23 after such declaration, payment, or distribution is 

24 not less than the amount of its capital. 


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1 (3) OTHER PROVISIONS.—Shareholder divi2 dends and distributions made pursuant to this sub3 section shall be subject to— 

4 (A) the standards set forth in section 

5 1403(a)(1)(E); and 

6 (B) the notice requirements of section 

7 1403(b). 

8 SEC. 1208. SEPARATE ACCOUNTS OF NATIONAL LIFE IN9 SURER. 

10 (a) OWNERSHIP.—Any amount allocated by a Na11 tional Life Insurer to a separate account shall be owned 

12 and controlled by the National Life Insurer and no Na13 tional Life Insurer by reason of such account shall be or 

14 hold itself out to be a trustee. 

15 (b) LIABILITIES.—Assets allocated by a National 

16 Life Insurer to a separate account shall not be chargeable 

17 with liabilities arising out of any other business of the Na18 tional Life Insurer to the extent so provided in the applica19 ble agreements. 

20 (c) SECURITY INTERESTS PERMITTED.—A National 

21 Life Insurer may allow for a security interest to attach 

22 to assets allocated to a separate account if the security 

23 interest is in favor of a creditor of the separate account 

24 and otherwise allowed under applicable law. 


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1 SEC. 1209. PROTECTED CELLS. 

2 (a) ESTABLISHMENT.—A National Insurer may es3 tablish 1 or more protected cells with the approval of the 

4 Commissioner. 

5 (b) PROTECTED CELL ASSETS.— 

6 (1) OWNERSHIP.—All amounts attributed to a 

7 protected cell established under this section, includ8 ing assets transferred to a protected cell account, 

9 shall be owned by the National Insurer. 

10 (2) TRUSTEE.—The National Insurer may not 

11 be, nor hold itself out to be, a trustee with respect 

12 to the protected cell assets of the protected cell ac13 count described in paragraph (1). 

14 (3) LIABILITIES.—The assets of a protected cell 

15 established under this section shall not be chargeable 

16 with liabilities arising out of any other business of 

17 the National Insurer. 

18 (c) SECURITY INTERESTS PERMITTED.—A National 

19 Insurer may allow for a security interest to attach to pro20 tected cell assets or a protected cell account if the security 

21 interest is in favor of a creditor of the protected cell and 

22 otherwise allowed under applicable law. 

23 (d) REACH OF CREDITORS AND OTHER CLAIM24 ANTS.— 

25 (1) AVAILABILITY.—Protected cell assets shall 

26 only be available to the creditors of a National InVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00142 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 surer that are creditors in respect to that protected 

2 cell. 

3 (2) RECOURSE.—Creditors with respect to a 

4 protected cell shall have no recourse against the pro5 tected cell assets of other protected cells or the gen6 eral account assets of the National Insurer. 

7 (3) FRAUD.—The establishment of a protected 

8 cell shall not, in and of itself, constitute a fraudulent 

9 conveyance, an intent by a National Insurer to de10 fraud creditors, or the carrying out of business by 

11 a National Insurer for any other fraudulent purpose. 

12 (e) RULEMAKING.—The Commissioner shall promul13 gate regulations that establish standards for protected 

14 cells established by National Insurers. 

15 (f) EFFECT ON STATE LAW.—No State may, by stat16 ute, regulation, order, interpretation, or otherwise, require 

17 licensing or otherwise regulate in any manner— 

18 (1) an investor in an insurance securitization, 

19 solely by reason of its investment, as an insurer, re20 insurer, or other person transacting insurance; or 

21 (2) an underwriter or selling agent (or its part22 ners, directors, officers, members, managers, em23 ployees, agents, representatives, or advisors) in an 

24 insurance securitization as an insurance or reinsur25 ance agent, broker, producer, intermediary, advisor, 


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•S 2509 IS

1 consultant, or similar insurance professional by vir2 tue of its activities in connection with the insurance 

3 securitization. 

4 SEC. 1210. CHARTERING AND LICENSING COMMENCEMENT 

5 DATE. 

6 (a) NATIONAL INSURER.—The Commissioner may 

7 charter or license a National Insurer when the following 

8 regulations have been published in interim final form: 

9 (1) The fee and assessment regulations author10 ized by section 1122. 

11 (2) The reporting regulations authorized by sec12 tion 1124. 

13 (3) The organizational regulations authorized 

14 by section 1201. 

15 (4) The licensing regulations authorized by sec16 tion 1203. 

17 (5) The charter conversion regulations author18 ized by section 1205. 

19 (6) The transitional financial regulations au20 thorized by section 1211. 

21 (7) The product regulations authorized by sec22 tion 1213. 

23 (8) The market conduct regulations authorized 

24 by section 1215. 


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1 (9) The control regulations authorized by sec2 tion 1231. 

3 (10) The merger, consolidation, and acquisition 

4 regulations authorized by section 1232. 

5 (11) The bulk transfer regulations authorized 

6 by section 1233. 

7 (12) The conversion regulations authorized by 

8 sections 1242 and 1243. 

9 (13) The holding company regulations author10 ized by sections 1402 and 1403. 

11 (14) The receivership regulations authorized by 

12 section 1504. 

13 (15) The insolvency protection regulations au14 thorized by section 1609. 

15 (b) NATIONAL AGENCIES.—The Commissioner may 

16 charter or license a National Agency when the following 

17 regulations have been published in interim final form: 

18 (1) The fee and assessment regulations author19 ized by section 1122. 

20 (2) The reporting regulations authorized by sec21 tion 1124. 

22 (3) The organizational regulations authorized 

23 by section 1201. 

24 (4) The charter conversion regulations author25 ized by section 1205. 


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1 (5) The market conduct regulations authorized 

2 by section 1215. 

3 (6) The control regulations authorized by sec4 tion 1231. 

5 (7) The merger, consolidation, and acquisition 

6 regulations authorized by section 1232. 

7 (8) The producer licensing regulations author8 ized by section 1301. 

9 (9) The holding company regulations authorized 

10 by sections 1402 and 1403. 

11 (c) TIMING AND NOTICE.— 

12 (1) TIMING.—The regulations described in sub13 sections (a) and (b) shall be published in interim 

14 final form not later than 2 years after the initial ap15 pointment and confirmation of the Commissioner. 

16 (2) NOTICE.—At such time as the regulations 

17 described in subsections (a) or (b) have been issued 

18 in interim final form, the Commissioner shall publish 

19 a notice in the Federal Register announcing that the 

20 Office is prepared to act on chartering and licensing 

21 applications. 

22 (3) CONSIDERING AND ACTING UPON APPLICA23 TIONS.—Notwithstanding any challenge to the regu24 lations described in subsections (a) and (b), the 

25 Commissioner shall have the authority to consider, 


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1 and act upon, chartering and licensing applications 

2 immediately upon publication of the notice described 

3 in paragraph (2). 

4 Subtitle B—Financial, Product, and 

5 Market Regulation 

6 SEC. 1211. TRANSITIONAL FINANCIAL REGULATIONS. 

7 (a) PROMULGATION OF INITIAL FINANCIAL REGULA8 TIONS THAT ARE CONSISTENT WITH NAIC STANDARDS

9 AND MODELS.—The Commissioner shall establish, by reg10 ulation, the following: 

11 (1) Accounting principles for a National In12 surer, which are consistent with the statutory ac13 counting practices promulgated by the NAIC in its 

14 ‘‘Accounting Practices and Procedures Manual’’. 

15 (2) Auditing standards for a National Insurer, 

16 which are consistent with the guidance prescribed by 

17 the NAIC in its ‘‘Model Regulation Requiring An18 nual Audited Financial Reports’’. 

19 (3) Investment standards for a National In20 surer, which are consistent with the NAIC’s ‘‘Invest21 ment of Insurers Model Act (Defined Standards 

22 Version)’’. 

23 (4) Risk-based capital standards for a National 

24 Insurer, which are consistent with NAIC’s ‘‘RiskVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00147 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 Based Capital (RBC) for Insurers Model Act’’ and 

2 the related ‘‘RBC Instructions’’. 

3 (5) Valuation standards for the obligations and 

4 liabilities of a National Life Insurer, which are con5 sistent with the NAIC’s ‘‘Standard Valuation Law, 

6 Valuation of Life Insurance Policies Regulation, 

7 Universal Life Insurance Model Regulation, and 

8 Variable Life Insurance Model Regulation’’. 

9 (6) Continuing and alternative (nonforfeiture) 

10 benefits standards applicable to National Life Insur11 ers, which are consistent with the NAIC’s ‘‘Standard 

12 Nonforfeiture Law for Life Insurance, Variable Life 

13 Insurance Model Regulation, Standard Nonforfeiture 

14 Law for Individual Deferred Annuities, Long-Term 

15 Care Insurance Model Act, and Long-Term Care In16 surance Model Regulation’’. 

17 (7) Standards for the preparation and filing of 

18 an annual actuarial opinion on the adequacy of a 

19 National Life Insurer’s assets to meet its reasonably 

20 expected obligations and liabilities, which are con21 sistent with the NAIC’s ‘‘Actuarial Opinion and 

22 Memorandum Regulation’’. 

23 (8) Standards for the preparation and filing of 

24 an annual actuarial opinion on the loss and loss ad25 justment expense reserves of a National Property/ 


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1 Casualty Insurer, which are consistent with the 

2 NAIC’s ‘‘Property and Casualty Actuarial Opinion 

3 Model Law’’ and applicable ‘‘NAIC Property and 

4 Casualty Annual Statement Instructions’’. 

5 (b) NAIC STANDARDS AND MODELS.—The NAIC 

6 standards and models cited in subsection (a) shall be the 

7 standards and models adopted by the NAIC as of the date 

8 of introduction of the National Insurance Act of 2006 as 

9 a bill in Congress. 

10 (c) EFFECTIVE DATE AND FIVE-YEAR TRANSI11 TIONAL PERIOD FOR INITIAL FINANCIAL REGULA12 TIONS.—The financial regulations specified in subsection 

13 (a) shall be issued in final form no later than 2 years fol14 lowing the initial appointment and confirmation of the 

15 Commissioner, and each regulation shall remain in effect 

16 for 5 years following the date upon which it becomes effec17 tive. 

18 (d) NAIC AMENDMENTS.—If, after the date of intro19 duction of the National Insurance Act of 2006 as a bill 

20 in Congress, the NAIC amends any standard or model 

21 upon which the initial financial regulations are based, the 

22 Commissioner shall determine, by regulation, whether 

23 such amendment shall apply to a National Insurer. If the 

24 Commissioner determines that an NAIC amendment to a 

25 standard or model should apply to a National Insurer, the 


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1 Commissioner may specify, by regulation, whether the 

2 amendment applies in whole or in part. 

3 (e) REVISIONS OR MODIFICATIONS TO INITIAL REGU4 LATIONS BY COMMISSIONER.— 

5 (1) IN GENERAL.—Subject to paragraph (2), 

6 after an initial financial regulation specified in sub7 section (a) has been in effect for 5 years, the Com8 missioner may, by regulation, revise or modify the 

9 regulation. 

10 (2) SPECIAL CIRCUMSTANCE.—The Commis11 sioner may, by regulation, revise or modify an initial 

12 financial regulation at any time if the Commissioner 

13 determines that any such revision or modification is 

14 necessary to protect policyholders or prevent haz15 ardous conduct by a National Insurer. 

16 SEC. 1212. OTHER FINANCIAL REGULATIONS. 

17 In addition to the financial regulations specified in 

18 section 1211, the Commissioner may issue other financial 

19 regulations as the Commissioner determines necessary. 

20 SEC. 1213. PRODUCT REGULATION FOR NATIONAL LIFE IN21 SURERS. 

22 (a) APPLICABILITY.—This section shall apply to the 

23 insurance business of National Life Insurers. 

24 (b) UNDERWRITING STANDARDS.—A National In25 surer may classify or underwrite risks if any decision to 


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1 refuse to insure, to continue to insure, to limit the amount, 

2 extent, or kind of coverage, or to charge a different rate 

3 for the same coverage is— 

4 (1) based on sound actuarial principles; or 

5 (2) related to actual or reasonably anticipated 

6 experience. 

7 (c) LAW APPLICABLE TO INSURANCE POLICIES OR

8 OTHER PRODUCTS OF NATIONAL INSURERS.— 

9 (1) LAW SPECIFIED BY PARTIES.—Subject to 

10 any applicable Federal law, the provisions of any in11 surance policy or other product of a National In12 surer shall be interpreted in accordance with the law 

13 of the jurisdiction specified by the parties to the in14 surance policy or other product if the parties have 

15 specified the law of— 

16 (A) the jurisdiction in which the main of17 fice of the National Insurer is located; 

18 (B) the jurisdiction in which the principal 

19 place of business of the National Insurer is lo20 cated; or 

21 (C) the jurisdiction in which the insurance 

22 policy or other product is delivered. 

23 (2) DEFAULT LAW.—If the parties to an insur24 ance policy or other product of a National Insurer 

25 have not specified the jurisdiction whose law shall 


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1 govern the provisions of the insurance policy or 

2 other product, such provisions shall be interpreted in 

3 accordance with the law of the jurisdiction in which 

4 the insurance policy or other product is delivered. 

5 (3) RULEMAKING.—The Commissioner shall es6 tablish, by regulation, choice of law rules and stand7 ards under this subsection. 

8 (d) STANDARDS FOR POLICIES.— 

9 (1) POLICY.—In this subsection, the term ‘‘pol10 icy’’— 

11 (A) means— 

12 (i) a policy, contract, certificate, or 

13 other evidence of life insurance, disability 

14 income insurance, or long-term care insur15 ance; or 

16 (ii) an annuity contract or a rider or 

17 endorsement to such contract; and 

18 (B) does not include— 

19 (i) a funding agreement; 

20 (ii) a reinsurance contract; or 

21 (iii) an agreement, special rider, or 

22 endorsement relating only to the manner of 

23 distributing benefits or to the reservation 

24 of rights and benefits used at the request 

25 of the individual policyholder. 


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1 (2) RULEMAKING.—The Commissioner shall es2 tablish, by regulation, standards for policies issued 

3 by a National Insurer. 

4 (3) TYPES OF POLICY REQUIREMENTS.—The 

5 standards established under paragraph (1) may in6 clude general policy requirements and requirements 

7 regarding particular classes of policies. 

8 (e) PRODUCT FILINGS.— 

9 (1) FORM APPROVAL.—A National Insurer shall 

10 not issue a policy until the form of the policy has 

11 been received by the Commissioner. 

12 (2) EXEMPTIONS.—The Commissioner may, by 

13 regulation, exempt particular categories of policies 

14 from the filing requirement. 

15 (3) COMPLIANCE CERTIFICATE.—In accordance 

16 with regulations promulgated by the Commissioner, 

17 any filing of a policy form shall be accompanied by 

18 written certification by an officer of the National In19 surer that the policy form complies with the stand20 ards applicable to such form. 

21 (f) INTERPRETIVE RULINGS.— 

22 (1) PROCEDURES.—The Commissioner shall es23 tablish procedures by which National Insurers may 

24 obtain interpretive rulings from the Office regarding 


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1 the interpretation and application of the standards 

2 established under this section. 

3 (2) PUBLIC AVAILABILITY.—Except as provided 

4 under paragraph (3), requests by National Insurers 

5 for interpretive rulings from the Office and the com6 plete text of such interpretive rulings shall not be 

7 made available to the public. 

8 (3) PUBLICATION OF SUMMARIES.—Notwith9 standing paragraph (2), the Commissioner shall pub10 lish a summary of each interpretive opinion, exclud11 ing the name of the National Insurer and any other 

12 identifying information, either promptly after the 

13 issuance of such opinion or, upon the request of the 

14 National Insurer, after such delay as the Commis15 sioner determines appropriate. 

16 (g) GROUP, BLANKET, AND FRANCHISE INSUR17 ANCE.— 

18 (1) AUTHORIZATION.—A National Insurer 

19 may— 

20 (A) sell, solicit, negotiate, and underwrite 

21 group, blanket, and franchise insurance policies; 

22 and 

23 (B) extend group, blanket, or franchise in24 surance policies to insure the dependents of emVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00154 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 ployees or members, or any class of employees 

2 or members. 

3 (2) RULEMAKING.—The Commissioner shall, by 

4 regulation, establish standards for kinds and quali5 fications of permissible groups for group, blanket, 

6 and franchise insurance policies. 

7 (h) INSURABLE INTEREST.—The Commissioner shall 

8 define, by regulation, the term ‘‘insurable interest.’’ 

9 (i) CRITERIA UNDER WHICH NEW LIFE INSURANCE

10 MAY EXCEED THE INSURANCE BEING REPLACED.—Any 

11 new life insurance may exceed the insurance being re12 placed— 

13 (1) if a business entity or a trust entity has an 

14 insurable interest and the authority to purchase life 

15 insurance; 

16 (2) to the extent the application of the cash 

17 surrender value of the insurance being replaced as a 

18 premium under the new life insurance policy re19 quires a larger amount of insurance— 

20 (A) to qualify as life insurance; or 

21 (B) to not be treated as a modified endow22 ment contract for Federal income tax purposes; 

23 (3) to otherwise comply with applicable Federal 

24 law; and 


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1 (4) if, upon cessation of premium payments, a 

2 former employee or trustee elects under the insur3 ance policy to use the cash value available under the 

4 insurance policy to restructure the term, face 

5 amount, or investment options under the insurance 

6 policy. 

7 (j) EFFECT OF STATE LAW.—No State may impose 

8 any standard, relating to any matter addressed in this sec9 tion, on National Insurers or persons who purchase insur10 ance from National Insurers. 

11 SEC. 1214. PRODUCT REGULATION FOR NATIONAL PROP12 ERTY/CASUALTY INSURERS. 

13 (a) APPLICATION.—This section shall apply to the 

14 business of National Property/Casualty Insurers. 

15 (b) MAINTENANCE OF COPIES OF POLICIES.—A Na16 tional Insurer shall maintain for inspection a copy of every 

17 insurance policy form that it uses to insure risks. 

18 (c) ANNUAL POLICY FORM LISTING.—A National In19 surer shall annually provide the Commissioner with a list 

20 of all standard policy forms it uses to insure risks. 

21 (d) RATES, RATING ELEMENTS, PRICE, AND

22 FORMS.—The Act does not authorize the Commissioner 

23 to require a National Insurer to use any particular rate, 

24 rating element, price, or form. 


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1 SEC. 1215. REGULATION OF SALES AND MARKETING. 

2 (a) PURPOSE.—The purpose of this section is to en3 sure appropriate Federal regulation of the sales and mar4 keting practices of National Insurers, National Agencies, 

5 and federally licensed insurance producers to prevent un6 fair methods of competition and unfair and deceptive acts 

7 and practices in the advertising, sale, issuance, distribu8 tion, and administration of insurance policies and other 

9 products of National Insurers and claims under insurance 

10 policies and other products of National Insurers. 

11 (b) RULEMAKING.—The Commissioner shall promul12 gate such regulations, applicable to National Insurers, Na13 tional Agencies, and federally licensed insurance pro14 ducers, as the Commissioner determines to be necessary 

15 to carry out the purpose of this section, including rules 

16 governing the advertising, sale, issuance, distribution, and 

17 administration of insurance policies and other products of 

18 National Insurers and claims under insurance policies and 

19 other products of National Insurers. 

20 Subtitle C—Reinsurance 

21 SEC. 1221. FEDERAL LICENSING OF REINSURERS. 

22 (a) AUTHORITY TO LICENSE.— 

23 (1) IN GENERAL.—The Commissioner may— 

24 (A) license insurers that are not National 

25 Insurers to provide reinsurance; and 


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1 (B) prescribe, by regulation, the standards 

2 and procedures for granting such licenses. 

3 (2) CRITERIA.—The standards prescribed under 

4 paragraph (1)(B) shall give due consideration to— 

5 (A) the public interest in providing secure 

6 and sufficient reinsurance capacity in the 

7 United States; and 

8 (B) the need for promoting fair and effec9 tive competition. 

10 (b) DETERMINATION AND FINDING; ISSUANCE OF LI11 CENSE.— 

12 (1) EXAMINATION AND INVESTIGATION.—Upon 

13 the receipt of an application for a license under this 

14 section, the Commissioner shall examine the infor15 mation submitted by the applicant and may conduct 

16 further examinations and investigations, as nec17 essary, to determine whether the applicant satisfies 

18 the standards for a license under this section. 

19 (2) PUBLICATION OF FINDINGS.—The Commis20 sioner shall publish the Commissioner’s findings and 

21 determination under paragraph (1). 

22 (3) ISSUANCE OF FEDERAL LICENSE.— 

23 (A) IN GENERAL.—Except as provided in 

24 subparagraph (B), if the Commissioner deter25 mines that the applicant has satisfied the appliVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00158 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 cable requirements of this section, the Commis2 sioner shall issue a Federal license to provide 

3 reinsurance. 

4 (B) RESTRICTION.—The Commissioner 

5 shall not issue a Federal license for reinsurance 

6 until after the Commissioner is authorized to 

7 charter and license a National Insurer pursuant 

8 to section 1210. 

9 (c) MINIMUM STANDARDS FOR LICENSING OF NON10 UNITED STATES INSURERS.—The Commissioner shall not 

11 issue a license under this section to any insurer that is 

12 not a State insurer or a United States branch of a non13 United States insurer unless the insurer agrees to— 

14 (1) report its financial statements to the Com15 missioner on a basis that the Commissioner deter16 mines to be substantially similar to that required of 

17 National Insurers under section 1124; 

18 (2) submit to the jurisdiction of Federal, State, 

19 and local courts in the United States; and 

20 (3) demonstrate that all judgments of all 

21 United States courts would be enforceable and col22 lectible by— 

23 (A) being organized or incorporated in a 

24 jurisdiction with which the United States has 

25 entered into a treaty on the recognition and enVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00159 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 forcement of judgments rendered by Federal, 

2 State, and local courts in the United States; or 

3 (B) agreeing to post prejudgment security 

4 in the United States upon the commencement 

5 of any litigation or arbitration in the United 

6 States, subject to such regulations as the Com7 missioner may prescribe. 

8 (d) REVOCATION OF LICENSE.— 

9 (1) IN GENERAL.—The Commissioner may re10 voke, suspend, or restrict a Federal reinsurer’s li11 cense in accordance with subtitle C of title I. 

12 (2) STATUS OF FEDERALLY LICENSED REIN13 SURER.—For purposes of this subsection, a federally 

14 licensed reinsurer shall be deemed to be a National 

15 Insurer under subtitle C of title I. 

16 (e) ANNUAL REPORTS.—The Commissioner shall re17 quire each reinsurer licensed under this section to submit 

18 an annual report of its financial condition and an annual 

19 report on the condition of any trust fund regulated under 

20 this subtitle in such form as may be prescribed by the 

21 Commissioner. 

22 SEC. 1222. CREDIT FOR REINSURANCE. 

23 (a) CREDIT FOR REINSURANCE CEDED TO A NA24 TIONAL INSURER OR A FEDERALLY LICENSED REIN25 SURER.—A National Insurer may establish an asset or reVerDate Aug 31 2005 00:15 Apr 12, 2006 Jkt 049200 PO 00000 Frm 00160 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 duce its liabilities, to the extent of such liabilities, for rein2 surance ceded to another National Insurer or a federally 

3 licensed reinsurer. 

4 (b) OTHER ASSET OR REDUCTION FROM LIABILITY

5 FOR REINSURANCE CEDED.—A National Insurer may es6 tablish an asset or reduce its liabilities, to the extent of 

7 such liabilities, for reinsurance— 

8 (1) that is ceded to— 

9 (A) a State insurer; 

10 (B) a United States branch entered 

11 through a State; or 

12 (C) a non-United States insurer; and 

13 (2) if such reinsurance is secured consistent 

14 with the regulation issued by the Commissioner pur15 suant to subsection (c). 

16 (c) REGULATION.—The Commissioner shall establish, 

17 by regulation, security standards governing the ceding of 

18 insurance by a National Insurer to any of the entities list19 ed in subsection (b)(1) in order to protect the policy20 holders of a National Insurer. 

21 SEC. 1223. RELATIONSHIP TO STATE LAW. 

22 No State may prevent a State insurer from— 

23 (1) ceding insurance to a National Insurer or a 

24 federally licensed reinsurer; or 


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1 (2) establishing an asset or reducing its liabil2 ities as a result of such reinsurance to the same ex3 tent as the State would allow such insurer if the in4 surance were ceded to another State insurer. 

5 Subtitle D—Acquisitions of Con6 trol; Mergers; Bulk Transfers; 

7 Domestication 

8 SEC. 1231. ACQUISITION OF CONTROL OF NATIONAL INSUR9 ERS AND NATIONAL AGENCIES. 

10 (a) DEFINITIONS.—For purposes of this section— 

11 (1) the terms ‘‘National Insurer’’ and ‘‘Na12 tional Agency’’ include any person controlling a Na13 tional Insurer or National Agency; and 

14 (2) the term ‘‘person’’ does not include any se15 curities broker holding, in the usual and customary 

16 broker’s function, less than 20 percent of the voting 

17 securities of a National Insurer or National Agency 

18 or of any person which controls a National Insurer 

19 or National Agency. 

20 (b) COMMISSIONER APPROVAL REQUIRED.— 

21 (1) IN GENERAL.—No person other than the 

22 issuer shall make a tender offer for, make a request 

23 or invitation for tenders of, or enter into any agree24 ment to exchange securities for, or acquire, in the 

25 open market or otherwise, any voting security of a 


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1 National Insurer or National Agency if, after the 

2 consummation of such transaction, such person 

3 would, directly or indirectly (or by conversion or by 

4 exercise of any right to acquire) be in control of the 

5 National Insurer or National Agency. No person 

6 shall enter into an agreement to merge with or oth7 erwise acquire control of a National Insurer or Na8 tional Agency or any person controlling a National 

9 Insurer or National Agency unless, at the time the 

10 offer, request, or invitation is made or the agree11 ment is entered into, or before the acquisition of the 

12 securities if no offer or agreement is involved— 

13 (A) such person has filed with the Com14 missioner and has sent to the National Insurer 

15 or National Agency, a statement that complies 

16 with the regulations prescribed under para17 graph (3); and 

18 (B) the offer, request, invitation, agree19 ment, or acquisition has been approved by the 

20 Commissioner. 

21 (2) SAVINGS PROVISION.—Nothing in this sub22 section shall be construed to prohibit a person from 

23 making an offer, request, or invitation or entering 

24 into an agreement to acquire control of a National 

25 Insurer or National Agency, if such transaction is 


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1 conditioned upon obtaining the approval of the Com2 missioner in accordance with paragraph (1). 

3 (3) FORM AND CONTENT OF STATEMENT.—The 

4 Commissioner shall, by regulation, prescribe the 

5 form and content of the statement to be filed under 

6 paragraph (1)(A). 

7 (4) APPROVAL BY COMMISSIONER.—The Com8 missioner shall approve any merger or other acquisi9 tion of control referred to in this subsection unless 

10 the Commissioner finds that— 

11 (A) after the acquisition of control, the 

12 National Insurer or National Agency would not 

13 be able to satisfy the requirements for the 

14 issuance of a Federal license to write the line 

15 or lines of insurance for which the National In16 surer or National Agency was previously li17 censed; 

18 (B) the financial condition of any acquir19 ing person may jeopardize the financial stability 

20 of the National Insurer or National Agency or 

21 be hazardous to the policyholders of the Na22 tional Insurer; 

23 (C) the plans or proposals of the acquiring 

24 person to liquidate the National Insurer or Na25 tional Agency, sell its assets, consolidate or 


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1 merge it with any person, or make any other 

2 material change in its business or corporate 

3 structure or management, are unfair and un4 reasonable to policyholders of the National In5 surer and not in the public interest; 

6 (D) those persons who would control the 

7 operation of the National Insurer or National 

8 Agency lack the competence, experience, or in9 tegrity required to protect the interests of pol10 icyholders of the National Insurer or National 

11 Agency; or 

12 (E) the acquisition is likely to be haz13 ardous to the insurance-buying public. 

14 (c) HEARING.— 

15 (1) IN GENERAL.—The Commissioner may, in 

16 his sole discretion, hold a hearing on a merger or 

17 other acquisition of control that is subject to this 

18 section and for which a statement has been filed 

19 under subsection (b)(1)(A). 

20 (2) PROCEDURES.—A hearing under this sub21 section shall be subject to the procedures under sec22 tion 1148, except that the Commissioner may deter23 mine the location of such hearing. 

24 (d) EXEMPTIONS.—The provisions of this section 

25 shall not apply to— 


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1 (1) any offer, request, invitation, agreement, or 

2 acquisition exempted by the Commissioner for not 

3 having been made or entered into for the purpose, 

4 and not having the effect, of changing or influencing 

5 the control of a National Insurer or National Agen6 cy, or as otherwise not comprehended within the 

7 purposes of this section; or 

8 (2) a merger, consolidation, or acquisition sub9 ject to section 1232. 

10 (e) VOTING OF SECURITIES.— 

11 (1) PROHIBITION.—No security which is the 

12 subject of any agreement or arrangement regarding 

13 acquisition, or which is acquired or to be acquired, 

14 in contravention of the provisions of this section may 

15 be voted at any shareholder’s meeting, or may be 

16 counted for quorum purposes. 

17 (2) EFFECT ON SHARES.—Any action of share18 holders requiring the affirmative vote of a percent19 age of shares may be taken as though the securities 

20 described under paragraph (1) were not issued and 

21 outstanding. 

22 (3) INVALIDATION OF ACTION.—No action 

23 taken at any meeting described under paragraph (1) 

24 shall be invalidated by the voting of the securities, 

25 unless— 


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1 (A) the action would affect control of the 

2 National Insurer or National Agency; or 

3 (B) such invalidation is ordered by a court. 

4 (4) ACQUISITION IN CONTRAVENTION OF THIS

5 ACT.—If a National Insurer or the Commissioner 

6 has reason to believe that any security of the Na7 tional Insurer or National Agency has been or is 

8 about to be acquired in contravention of the provi9 sions of this section, the National Insurer or Na10 tional Agency or the Commissioner may apply to the 

11 United States district court for the judicial district 

12 in which the main office of the National Insurer or 

13 National Agency is located or the United States Dis14 trict Court for the District of Columbia— 

15 (A) to enjoin any offer, request, invitation, 

16 agreement, or acquisition made in contravention 

17 of this section; 

18 (B) to enjoin the voting of any security so 

19 acquired; 

20 (C) to void any vote of the security already 

21 cast at any meeting of shareholders; and 

22 (D) for such other equitable relief as the 

23 nature of the case and the interest of the Na24 tional Insurer’s policyholders, the creditors and 


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1 shareholders of the National Insurer or Na2 tional Agency or the public may require. 

3 (f) SEQUESTRATION OF VOTING SECURITIES.— 

4 (1) IN GENERAL.—If a person has acquired or 

5 is proposing to acquire any voting securities in viola6 tion of this section, the National Insurer ,National 

7 Agency or the Commissioner may request the United 

8 States district court for the judicial district in which 

9 the main office of the National Insurer is located or 

10 the United States District Court for the District of 

11 Columbia to— 

12 (A) seize or sequester any voting securities 

13 of the National Insurer or National Agency 

14 owned directly or indirectly by the person; and 

15 (B) issue such order as may be appropriate 

16 to carry out the provisions of this section. 

17 (2) SITUS OF OWNERSHIP.—Notwithstanding 

18 any other provision of law, for the purposes of this 

19 section, the situs of ownership of the securities of 

20 National Insurers and National Agencies shall be 

21 deemed to be the State in which the main office of 

22 the National Insurer or National Agency is located. 

23 (g) CONFLICT WITH OTHER FEDERAL LAWS.—This 

24 section shall be interpreted and applied so as not to con25 flict with or supersede the provisions of any other Federal 


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1 law or regulation governing the regulation of holding com2 panies, including financial holding companies (as defined 

3 in section 2(p) of the Bank Holding Company Act of 1956 

4 (12 U.S.C. 1841(p)). 

5 (h) NO DELEGATION PERMITTED.—The Commis6 sioner may not delegate to any insurance self-regulatory 

7 organization any authority conferred under this section 

8 with respect to any merger or other acquisition of control 

9 of a National Insurer. 

10 SEC. 1232. MERGERS, CONSOLIDATIONS, AND ACQUISI11 TIONS OF NATIONAL INSURERS. 

12 (a) NATIONAL INSURER AS RESULTING INSURER.— 

13 (1) IN GENERAL.—Except as provided under 

14 subsection (e), a National Insurer may, with the ap15 proval of the Commissioner, merge, consolidate with, 

16 acquire all or substantially all the assets of, or as17 sume all or substantially all the liabilities of, another 

18 National Insurer or a State insurer in a transaction 

19 in which a National Insurer is the resulting insurer, 

20 the acquiring insurer, or the assuming insurer, re21 gardless of whether the insurers involved in the 

22 transaction are in stock form, mutual form, or fra23 ternal form. 


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1 (2) MERGER, CONSOLIDATION, AND ACQUISI2 TION PROCEDURES.—The Commissioner shall estab3 lish, by regulation, procedures for— 

4 (A) the merger or consolidation of a Na5 tional Insurer with another National Insurer or 

6 a State insurer in a transaction in which a Na7 tional Insurer is the resulting insurer; and 

8 (B) the acquisition or assumption by a Na9 tional Insurer of all or substantially all the as10 sets or liabilities of another National Insurer or 

11 a State insurer in a transaction in which the 

12 National Insurer is the acquiring insurer or as13 suming insurer. 

14 (3) EFFECT OF MERGER OR CONSOLIDATION.— 

15 Upon the merger or consolidation of a National In16 surer with another National Insurer or a State in17 surer under this section— 

18 (A) the corporate existence of each of the 

19 merging or consolidating insurers shall be 

20 merged or consolidated into the resulting in21 surer, and the resulting insurer shall be deemed 

22 to be the same corporation as each insurer par23 ticipating in the merger or consolidation; 

24 (B) except as provided under subpara25 graph (D), the resulting insurer shall hold and 


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1 be subject to all rights, privileges, liabilities, 

2 property interests, and other interests and obli3 gations that each insurer participating in the 

4 merger or consolidation held or was subject to 

5 immediately prior to the merger or consolida6 tion; 

7 (C) the resulting insurer shall obtain, in 

8 accordance with section 1203, a Federal license 

9 for all lines of insurance that it sells, solicits, 

10 negotiates, or underwrites, except for those 

11 lines of insurance for which a National Insurer 

12 participating in the merger or consolidation 

13 held a Federal license immediately before the 

14 merger or consolidation; and 

15 (D) the resulting insurer shall not hold any 

16 State license to sell, solicit, negotiate, or under17 write insurance that was held by a State in18 surer participating in the merger or consolida19 tion. 

20 (4) SPECIAL AUTHORITY.—The Commissioner 

21 may, subject to such conditions as the Commissioner 

22 may prescribe, permit a National Insurer resulting 

23 from a merger or consolidation under this section to 

24 retain, hold, or exercise such assets, liabilities, pow25 ers, and authorities that do not conform to the legal 


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1 requirements applicable to National Insurers as the 

2 Commissioner determines appropriate. 

3 (b) STATE INSURER AS RESULTING INSURER.— 

4 (1) IN GENERAL.—Subject to applicable State 

5 law and such notification procedures as the Commis6 sioner may prescribe by regulation, a State insurer 

7 may merge with, consolidate with, acquire assets of, 

8 or assume liabilities of, a National Insurer in a 

9 transaction in which a State insurer is the resulting 

10 insurer. 

11 (2) SAVINGS PROVISION.—Nothing in this sub12 section or in a transaction under this subsection 

13 shall abrogate any rights, privileges, liabilities, prop14 erty interests, or other interests or obligations that 

15 the National Insurer held or was subject to imme16 diately before the transaction. 

17 (c) EFFECT OF ASSUMPTION OF LIABILITIES.—If the 

18 liabilities of a National Insurer are assumed by another 

19 National Insurer or a State insurer in accordance with 

20 this Act, the National Insurer shall be released from all 

21 such liabilities upon their assumption by the other Na22 tional Insurer or a State insurer. 

23 (d) NO DELEGATION PERMITTED.—The Commis24 sioner may not delegate to any insurance self-regulatory 

25 organization any authority conferred under this section 


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1 with respect to any merger, consolidation, acquisition of 

2 assets, or assumption of liabilities involving a National In3 surer. 

4 (e) COORDINATION.—This section shall not apply to 

5 any bulk transfer (as defined in section 1233(a)(2)) that 

6 is subject to approval of the Commissioner in accordance 

7 with section 1233(b). 

8 SEC. 1233. BULK TRANSFERS. 

9 (a) DEFINITIONS.—In this section: 

10 (1) BLOCK OF BUSINESS.—The term ‘‘block of 

11 business’’ means all those insurance policies of an 

12 insurer under a particular policy form. 

13 (2) BULK TRANSFER.—The term ‘‘bulk trans14 fer’’— 

15 (A) means the transfer by an insurer to 

16 another insurer of existing insurance policies 

17 constituting all or substantially all of 1 or more 

18 of its lines of business or blocks of business; 

19 and 

20 (B) does not include— 

21 (i) any sale in which the transferring 

22 insurer retains direct or indirect control of 

23 the assets supporting the transferred in24 surance policies; 


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1 (ii) any transaction effected by an 

2 agreement under which the transferring in3 surer continues to remain directly liable to 

4 the policyholders under the insurance poli5 cies; 

6 (iii) the substitution of 1 insurer for 

7 another upon the expiration of insurance 

8 coverage pursuant to statutory or contrac9 tual requirements and the issuance of a 

10 new policy of insurance by that insurer; 

11 (iv) the transfer of policies of insur12 ance pursuant to merger or consolidation 

13 of 2 or more insurers to the extent that 

14 those transactions are regulated by statute; 

15 (v) any transaction effected by an in16 surer subject to a judicial order of receiver17 ship, liquidation, or rehabilitation; or 

18 (vi) any transfer of liabilities from 1 

19 insurer to another under a single group in20 surance policy upon the request of the 

21 group policyholder. 

22 (3) PERMITTED NATIONAL INSURER.—The 

23 term ‘‘permitted National Insurer’’ means— 

24 (A) a State insurer that is converting to a 

25 National Insurer under section 1205; or 


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1 (B) a National Insurer that is being newly 

2 chartered under section 1201 and licensed 

3 under section 1203. 

4 (4) TRANSFERRED INSURANCE POLICIES.—The 

5 term ‘‘transferred insurance policies’’ means the in6 surance policies that are subject to the bulk transfer. 

7 (5) TRANSFERRING INSURER.—The term 

8 ‘‘transferring insurer’’ means the insurer in privity 

9 of contract with the policyholders under the existing 

10 insurance policies that are subject to the bulk trans11 fer. 

12 (b) BULK TRANSFERS AUTHORIZED.—The following 

13 bulk transfers are authorized: 

14 (1) A State insurer as the transferring insurer 

15 and a permitted National Insurer as the assuming 

16 insurer. 

17 (2) A permitted National Insurer as the trans18 ferring insurer and a State insurer as the assuming 

19 insurer. 

20 (3) A National Insurer as the transferring in21 surer and a National Insurer as the assuming in22 surer. 

23 (4) A State insurer as the transferring insurer 

24 and a National Insurer that is not a permitted Na25 tional Insurer as the assuming insurer. 


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1 (5) A National Insurer that is not a permitted 

2 National Insurer as the transferring insurer and a 

3 State insurer as the assuming insurer. 

4 (c) COMMISSIONER APPROVAL.— 

5 (1) IN GENERAL.—A National Insurer shall not 

6 effect a bulk transfer as either the transferring in7 surer or the assuming insurer as authorized under 

8 paragraph (1), (2), (3), or (5) of subsection (b) 

9 without the prior approval of the Commissioner in 

10 accordance with such regulations as the Commis11 sioner may prescribe. 

12 (2) STANDARD OF APPROVAL.—The Commis13 sioner shall approve a bulk transfer under paragraph 

14 (1), after notice and a hearing, unless the Commis15 sioner determines that the bulk transfer is likely to 

16 be hazardous to policyholders of transferred insur17 ance policies, policyholders of the transferring in18 surer, or policyholders of the assuming insurer. 

19 (d) POLICYHOLDER CONSENT.— 

20 (1) NO CONSENT REQUIRED.—Notwithstanding 

21 any other provision of law, a National Insurer may, 

22 upon the approval of the Commissioner, effect a bulk 

23 transfer under paragraph (1) or (2) of subsection 

24 (b) as either the transferring insurer or the assum25 ing insurer without obtaining policyholder consent. 


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1 (2) BETWEEN NATIONAL INSURERS.—Notwith2 standing any other provision of law, a National In3 surer may, upon the approval of the Commissioner, 

4 effect a bulk transfer under subsection (b)(3) as ei5 ther the transferring insurer or the assuming in6 surer in accordance with the requirements prescribed 

7 by the Commissioner. Such requirements shall speci8 fy whether policyholder consent to such a bulk trans9 fer is required and, if policyholder consent is re10 quired, the form in which such consent is required 

11 to be given. 

12 (3) ADDITIONAL PROVISIONS.—In addition to 

13 any policyholder consent required by any other appli14 cable provision of law, the Commissioner may by 

15 regulation prescribe whether policyholder consent is 

16 required for a bulk transfer authorized under sub17 section (b)(5) and, if policyholder consent is re18 quired, the form in which such consent is required 

19 to be given. 

20 (e) RELEASE FROM LIABILITY.—Upon the comple21 tion of a bulk transfer under this section, the transferring 

22 insurer shall be released from its obligations under the 

23 transferred insurance policies. 

24 (f) STATE LAW.— 


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1 (1) PROHIBITION.—Except as provided in para2 graph (2), a State may not— 

3 (A) require a National Insurer, a per4 mitted National Insurer, or a State insurer 

5 to— 

6 (i) obtain policyholder consent to a 

7 bulk transfer; or 

8 (ii) submit the bulk transfer to State 

9 review or action (including approval and 

10 disapproval); or 

11 (B) prevent or significantly interfere with 

12 a bulk transfer effected pursuant to this sec13 tion. 

14 (2) CONSTRUCTION.—Paragraph (1) shall not 

15 be construed to prohibit any State from— 

16 (A) collecting, reviewing, and taking action 

17 (including approval or disapproval) on applica18 tions and other documents or reports con19 cerning a proposed bulk transfer permitted 

20 under— 

21 (i) paragraph (2), (4), or (5) of sub22 section (b) to which a State insurer (other 

23 than a permitted National Insurer) domi24 ciled in that State is a party; or 


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1 (ii) paragraph (4) or (5) of subsection 

2 (b) to which a State insurer (other than a 

3 permitted National Insurer), other than a 

4 State insurer domiciled in that State, is a 

5 party, if the review or action meets the 

6 standards set forth in paragraph (3); or 

7 (B) requiring policyholder consent of a 

8 proposed bulk transfer permitted under para9 graph (4) or (5) of subsection (b). 

10 (3) STANDARDS.—A review or action meets the 

11 standards under this paragraph if it— 

12 (A) is based on standards that are not 

13 more onerous than those imposed by the Com14 missioner; 

15 (B) occurs within a reasonable timeframe 

16 that advances the purposes of this section; 

17 (C) is made in close consultation and co18 operation with the Commissioner; 

19 (D) is without bias or discrimination to20 ward either the transferring insurer or the as21 suming insurer; 

22 (E) serves a legitimate State interest; and 

23 (F) does not frustrate the proposed bulk 

24 transfer. 


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1 (4) NOTICE OF FAILURE.—If the Commissioner 

2 finds that any State review or action under para3 graph (2)(A) fails to meet any of the standards set 

4 forth in paragraph (3), the Commissioner may pro5 vide the applicable State with notice of such failure 

6 and the reasons for such failure. 

7 (g) DIFFERENTIAL TREATMENT PROHIBITED.—A 

8 State may not treat a National Insurer, a permitted Na9 tional Insurer, or a State insurer entering into a bulk 

10 transfer agreement with a National Insurer, a permitted 

11 National Insurer, a State insurer, or any affiliate or sub12 sidiary of such insurer, differently than any other insurer 

13 operating in that State. 

14 (h) NO DELEGATION PERMITTED.—The Commis15 sioner may not delegate to any insurance self-regulatory 

16 organization any authority conferred under this section 

17 with respect to any bulk transfer involving a National In18 surer. 

19 SEC. 1234. DOMESTICATION OF UNITED STATES BRANCH 

20 OF A NON-UNITED STATES INSURER. 

21 (a) DOMESTICATION PERMITTED.—Any non-United 

22 States insurer having its United States branch entered 

23 through a State or established pursuant to section 1202 

24 and owning beneficially, directly or indirectly, all out25 standing shares of a National Insurer may, upon the writVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00180 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 ten approval by the Commissioner, domesticate its United 

2 States branch by agreeing in writing with such National 

3 Insurer to the acquisition of the business and assets, and 

4 the assumption of all liabilities, of the United States 

5 branch, by the National Insurer for no consideration ex6 cept such assumption. 

7 (b) APPROVAL BY COMMISSIONER.—If the Commis8 sioner determines that the domestication of a United 

9 States branch of a non-United States insurer complies 

10 with the provisions of this section and that the interests 

11 of policyholders and creditors of the United States branch 

12 are not materially affected in an adverse manner by such 

13 domestication, the Commissioner may approve the domes14 tication in accordance with this section. 

15 (c) EFFECTIVE DATE OF DOMESTICATION.— 

16 (1) IN GENERAL.—The domestication of the 

17 United States branch shall be effective on the date 

18 on which a certified copy of the instrument of trans19 fer and assumption is filed with the Commissioner. 

20 (2) EFFECT OF DOMESTICATION.—On the date 

21 described in paragraph (1)— 

22 (A) all rights, franchises, and interests of 

23 such United States branch in and to every spe24 cies of property, real, personal, and mixed, and 

25 things in action belonging to such branch, shall 


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1 be deemed transferred to and vested in the ac2 quiring National Insurer; 

3 (B) the acquiring National Insurer shall be 

4 deemed to have assumed all liabilities of the 

5 United States branch; 

6 (C) all deposits of the United States 

7 branch held by State officers or other State 

8 regulatory agencies under State law shall be re9 leased; and 

10 (D) the non-United States insurer and the 

11 United States branch shall be released from all 

12 liabilities so assumed. 

13 (d) RELEASE OF DEPOSITS.—At the time of the do14 mestication of a United States branch under this section, 

15 the Commissioner shall— 

16 (1) transfer to the account of the acquiring Na17 tional Insurer the securities deposited by such 

18 United States branch in compliance with the provi19 sions of this Act; and 

20 (2) consent that the trustee of the trusteed as21 sets deposited by such United States branch in com22 pliance with the provisions of this Act shall with23 draw from the trust and transfer and deliver to the 

24 acquiring National Insurer all assets held by such 

25 trustee. 


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1 (e) WITHDRAWAL AND TRANSFER OF TRUSTEED AS2 SETS.— 

3 (1) IN GENERAL.—At the time of the domes4 tication of a United States branch established under 

5 State law, the trustee of any trusteed assets depos6 ited by such United States branch in compliance 

7 with applicable State law shall, with the consent of 

8 the Commissioner— 

9 (A) withdraw the trusteed assets from the 

10 trust; and 

11 (B) transfer and deliver to the acquiring 

12 National Insurer all assets held by such trustee. 

13 (2) LIMITATION.—No State may prevent, sig14 nificantly interfere with, review, approve, or dis15 approve the withdrawal of trusteed assets or other 

16 deposits of a United States branch established under 

17 State law that is domesticating pursuant to this sec18 tion, if such withdrawal is made contemporaneously 

19 with or subsequent to the consummation of a domes20 tication of the United States branch under this sec21 tion. 

22 (f) NO DELEGATION PERMITTED.—The Commis23 sioner may not delegate to any insurance self-regulatory 

24 organization any authority under this section with respect 


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1 to the domestication of a United States branch of a non2 United States insurer. 

3 SEC. 1235. MERGERS, CONSOLIDATIONS, AND ACQUISI4 TIONS OF NATIONAL AGENCIES. 

5 (a) NATIONAL AGENCY RESULTING.— 

6 (1) IN GENERAL.—Notwithstanding any other 

7 provision of law, a National Agency may, with the 

8 approval of the Commissioner, merge, consolidate 

9 with, acquire all or substantially all the assets of, or 

10 assume all or substantially all the liabilities of, an11 other National Agency or a State insurance agency 

12 in a transaction in which a National Agency is the 

13 resulting agency, the acquiring agency, or the as14 suming agency. 

15 (2) MERGER, CONSOLIDATION, AND ACQUISI16 TION PROCEDURES.—The Commissioner is author17 ized, under such regulations as the Commissioner 

18 may prescribe, to provide for— 

19 (A) the merger or consolidation of a Na20 tional Agency with another National Agency or 

21 a State insurance agency in a transaction in 

22 which a National Agency is the resulting agen23 cy; and 

24 (B) the acquisition or assumption by a Na25 tional Agency of all or substantially all the asVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00184 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 sets or all or substantially all the liabilities of 

2 another National Agency or a State insurance 

3 agency in a transaction in which the National 

4 Agency is the acquiring or assuming agency. 

5 (3) EFFECT OF MERGER OR CONSOLIDATION.— 

6 Upon the merger or consolidation of a National 

7 Agency with another National Agency or a State in8 surance agency under this section— 

9 (A) the corporate existence of each of the 

10 merging or consolidating agencies shall be 

11 merged or consolidated into the resulting agen12 cy, and the resulting agency shall be deemed to 

13 be the same corporation as each agency partici14 pating in the merger or consolidation; and 

15 (B) except as provided under paragraph 

16 (4), the resulting agency shall have all the 

17 rights, privileges, liabilities, property interests, 

18 and other interests and obligations that each 

19 agency participating in the merger or consolida20 tion had immediately before the merger or con21 solidation. 

22 (4) LIMITATION.—Upon a merger or consolida23 tion under this subsection, the resulting agency— 

24 (A) shall not hold any State license to sell, 

25 solicit, or negotiate insurance that was held by 


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1 a State agency participating in the merger or 

2 consolidation; and 

3 (B) shall obtain, in accordance with section 

4 1301, appropriate licenses for all lines of insur5 ance that it sells, solicits, or negotiates except 

6 for those lines of insurance for which a Na7 tional Agency participating in the merger or 

8 consolidation held a Federal producer’s license 

9 immediately before the merger or consolidation. 

10 (5) SPECIAL AUTHORITY.—The Commissioner 

11 may, subject to such regulations as the Commis12 sioner may prescribe, permit a National Agency re13 sulting from a merger or consolidation under this 

14 subsection to retain, hold, or exercise such assets, li15 abilities, powers, and authorities that do not con16 form to the legal requirements applicable to National 

17 Agencies as the Commissioner determines to be ap18 propriate. 

19 (b) STATE INSURANCE AGENCY RESULTING.— 

20 (1) IN GENERAL.—Subject to such notification 

21 procedures as the Commissioner may prescribe by 

22 regulation, a State insurance agency may merge, 

23 consolidate with, acquire assets of, or assume liabil24 ities of, a National Agency in a transaction in which 


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1 a State insurance agency is the resulting agency, in 

2 accordance with applicable State law. 

3 (2) SAVINGS PROVISION.—Nothing in this sub4 section or in a transaction pursuant to this sub5 section shall abrogate any rights, privileges, liabil6 ities, property interests, other interests, or obliga7 tions that the National Agency had immediately be8 fore the transaction. 

9 (c) EFFECT OF ASSUMPTION OF LIABILITIES.—If the 

10 liabilities of a National Agency are assumed by another 

11 National Agency or a State insurance agency in accord12 ance with the provisions of this Act, such National Agency 

13 from whom the liabilities are assumed shall be released 

14 from all liabilities so assumed upon their assumption by 

15 the other National Agency or a State insurance agency. 

16 (d) NO DELEGATION PERMITTED.—The Commis17 sioner may not delegate to any insurance self-regulatory 

18 organization any authority conferred under this section 

19 with respect to any merger, consolidation, or acquisition 

20 of assets or assumption of liabilities involving a National 

21 Agency. 

22 Subtitle E—Conversions 

23 SEC. 1241. DEFINITIONS. 

24 In this subtitle: 


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1 (1) ADOPTION DATE.—The term ‘‘adoption 

2 date’’ means the date on which the board of direc3 tors of the converting mutual insurer or converting 

4 stock insurer adopts the plan of conversion. 

5 (2) CONVERTED MUTUAL INSURER.—The term 

6 ‘‘converted mutual insurer’’ means the National Life 

7 Insurer in mutual form into which a stock life in8 surer has been converted in accordance with the pro9 visions of section 1242. 

10 (3) CONVERTED STOCK INSURER.—The term 

11 ‘‘converted stock insurer’’ means the National In12 surer in stock form into which a mutual insurer has 

13 been converted in accordance with the provisions of 

14 section 1243. 

15 (4) CONVERTING MUTUAL INSURER.—The term 

16 ‘‘converting mutual insurer’’ means the mutual in17 surer that is converting under a plan of conversion 

18 under section 1243. 

19 (5) CONVERTING STOCK INSURER.—The term 

20 ‘‘converting stock insurer’’ means the stock life in21 surer that is converting under a plan of conversion 

22 under section 1242. 

23 (6) MEMBERSHIP INTERESTS.—The term 

24 ‘‘membership interests’’— 


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1 (A) means the interests of members and 

2 policyholders of the mutual insurer arising 

3 under the charter and bylaws of the mutual in4 surer or otherwise by applicable law; 

5 (B) includes the right to vote for directors 

6 of the mutual insurer and the right to vote on 

7 any plan of merger or consolidation of the mu8 tual insurer; and 

9 (C) does not include rights in surplus, if 

10 any. 

11 (7) MUTUAL INSURER.—The term ‘‘mutual in12 surer’’ means the State insurer in mutual form or 

13 National Insurer in mutual form that is converting 

14 to a National Insurer in stock form pursuant to a 

15 plan of conversion adopted in accordance with sec16 tion 1243. 

17 (8) PLAN OF CONVERSION OR PLAN.—The 

18 terms ‘‘plan of conversion’’ and ‘‘plan’’ mean a plan 

19 of conversion adopted by a stock life insurer or a 

20 mutual insurer in accordance with this subtitle. 

21 (9) RIGHTS IN SURPLUS.—The term ‘‘rights in 

22 surplus’’— 

23 (A) means rights, if any, of members or 

24 policyholders of the mutual insurer to a return 

25 of that portion of the surplus that has not been 


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1 apportioned or declared by the board of direc2 tors for policyholder dividends; 

3 (B) includes rights of members or policy4 holders of the mutual insurer to a distribution 

5 of surplus in liquidation or conservation of the 

6 insurer under applicable law, or in a dissolution 

7 or winding up; and 

8 (C) does not include any right expressly 

9 conferred solely by the terms of an insurance 

10 policy. 

11 (10) STOCK LIFE INSURER.—The term ‘‘stock 

12 life insurer’’ means the State life insurer in stock 

13 form or National Life Insurer in stock form that is 

14 converting to a National Life Insurer in mutual 

15 form pursuant to a plan of conversion adopted in ac16 cordance with section 1242. 

17 SEC. 1242. CONVERSION OF STOCK LIFE INSURER TO NA18 TIONAL LIFE INSURER IN MUTUAL FORM. 

19 (a) AUTHORITY TO CONVERT.—Notwithstanding any 

20 other provision of law, a stock life insurer may convert 

21 to a National Insurer in mutual form by complying with 

22 the requirements of this section and such regulations as 

23 the Commissioner may promulgate pursuant to this Act. 

24 (b) PLAN OF CONVERSION.— 

25 (1) IN GENERAL.—The plan of conversion— 


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1 (A) shall be adopted by the board of direc2 tors of the converting stock insurer; and 

3 (B) shall provide for the conversion of the 

4 converting stock insurer into a National Life 

5 Insurer in mutual form. 

6 (2) ISSUANCE OF STOCK AFTER ADOPTION

7 DATE.—No additional shares of capital stock shall 

8 be issued after the adoption date, except that— 

9 (A) stock options to purchase capital stock 

10 may continue to be issued under existing con11 tracts; and 

12 (B) outstanding options may continue to 

13 be exercised until the effective date of the plan 

14 of conversion. 

15 (3) CONTENTS.—The plan of conversion shall 

16 provide for— 

17 (A) the purchase by the converting stock 

18 insurer of all of its outstanding capital stock, at 

19 a price either specified in the plan or to be de20 termined under a formula specified in the plan, 

21 for cash or other consideration as set forth in 

22 the plan; and 

23 (B) the termination, upon terms specified 

24 in the plan, of any contractual obligation incon25 sistent with the nature of a mutual insurer, inVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00191 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 cluding any obligation to issue stock options or 

2 issue capital stock upon exercise of options. 

3 (c) APPROVAL OF PLAN BY COMMISSIONER.—The 

4 Commissioner shall approve the plan of conversion if the 

5 Commissioner finds, after a hearing, that— 

6 (1) the plan is fair and equitable to the policy7 holders, shareholders, and holders of options to ac8 quire capital stock of the converting stock insurer; 

9 (2) the plan does not violate the law; and 

10 (3) the converted mutual insurer will, after the 

11 conversion, satisfy the requirements for the issuance 

12 of a license to write the lines of insurance for which 

13 it is licensed. 

14 (d) VOTE ON APPROVAL OF PLAN.— 

15 (1) STOCKHOLDERS.—The plan of conversion 

16 shall be submitted to the holders of record on the 

17 adoption date of the converting stock insurer’s 

18 shares entitled to vote thereon and shall be subject 

19 to approval of the holders of a majority of such 

20 shares. 

21 (2) POLICYHOLDERS.— 

22 (A) SUBMISSION.—The plan shall be sub23 mitted to policyholders of the converting stock 

24 insurer— 


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•S 2509 IS

1 (i) who are insured for at least 

2 $1,000; and 

3 (ii) whose policy of insurance is in 

4 force— 

5 (I) for a period of at least 1 year 

6 before the adoption date; 

7 (II) on the adoption date; and 

8 (III) on the date of the meeting 

9 of policyholders called for the purpose 

10 of approving the plan. 

11 (B) APPROVAL.—The plan shall be subject 

12 to the approval of a majority of the votes cast 

13 by the policyholders described in subparagraph 

14 (A). 

15 (e) EFFECT OF CONVERSION ON CONVERTED MU16 TUAL INSURERS.— 

17 (1) IN GENERAL.—On the effective date of the 

18 plan of conversion, the stock insurer shall become a 

19 National Life Insurer in mutual form and share20 holders eligible to receive consideration under the 

21 plan of conversion are entitled to receive the consid22 eration specified in the plan in exchange for their 

23 shares of capital stock of the converting stock in24 surer. 


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1 (2) NO EFFECT ON EXISTING RIGHTS AND LI2 ABILITIES.—The converted mutual insurer is a con3 tinuation of the original stock life insurer, and the 

4 conversion shall not annul, modify, or change any of 

5 the original stock life insurer’s existing suits, rights, 

6 contracts, or liabilities, except as provided in the 

7 plan of conversion. 

8 (3) RIGHTS AFTER CONVERSION.—After con9 version, the converted mutual insurer shall— 

10 (A) exercise all the rights and powers and 

11 perform all the duties conferred or imposed by 

12 law upon insurers writing the classes of insur13 ance written by the converted mutual insurer; 

14 and 

15 (B) retain the rights and contracts existing 

16 prior to conversion, subject to the effect of the 

17 plan. 

18 (f) TIME LIMITS FOR PLAN ACTIONS.— 

19 (1) IN GENERAL.—Notwithstanding any other 

20 provision of law, actions concerning any plan of con21 version or proposed plan of conversion under this 

22 section or any acts taken or proposed to be taken 

23 under this section shall be commenced not later than 

24 30 days after the date on which the plan of converVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00194 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 sion is approved by the Commissioner under sub2 section (c). 

3 (2) PLAN WITHDRAWN.—If the plan of conver4 sion is withdrawn, the actions described in para5 graph (1) shall be commenced not later than 30 

6 days after the date on which the board of directors 

7 approves a resolution to withdraw the plan. 

8 (g) EFFECT ON STATE LAW.—No State may prevent 

9 or interfere with a conversion under this section or impede 

10 the activities of, take any action against, or apply any pro11 vision of law or regulation to, any such stock life insurer 

12 because the stock life insurer plans to convert, or has con13 verted, to a National Life Insurer in mutual form under 

14 this section. 

15 (h) NO DELEGATION PERMITTED.—The Commis16 sioner may not delegate to any insurance self-regulatory 

17 organization any authority under this section with respect 

18 to the conversion of a stock life insurer. 

19 SEC. 1243. CONVERSION OF MUTUAL INSURER TO NA20 TIONAL INSURER IN STOCK FORM. 

21 (a) AUTHORITY TO CONVERT.—Notwithstanding any 

22 other provision of law, a mutual insurer may convert to 

23 a National Insurer in stock form by complying with the 

24 requirements of this section and such regulations as the 

25 Commissioner may promulgate pursuant to this Act. 


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1 (b) PLAN OF CONVERSION.— 

2 (1) IN GENERAL.—The plan of conversion— 

3 (A) shall be adopted by the board of direc4 tors of the converting mutual insurer; 

5 (B) shall provide for the conversion of the 

6 converting mutual insurer into a National In7 surer in stock form; and 

8 (C) may provide for effecting the conver9 sion by merger of the mutual insurer with an10 other company. 

11 (2) CONTENTS.—The plan of conversion shall 

12 provide that— 

13 (A) all membership interests and rights in 

14 surplus are extinguished; 

15 (B) each eligible person will receive, with16 out payment by the person, consideration that 

17 is allocated among the eligible persons using a 

18 fair and equitable formula; and 

19 (C) eligible persons may receive 1 or more 

20 kinds of consideration, including— 

21 (i) cash; 

22 (ii) shares of capital stock of the con23 verting mutual insurer; 

24 (iii) shares of capital stock (or inter25 ests in shares of capital stock) of a corVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00196 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 poration that, after the conversion, directly 

2 or indirectly, controls the converted stock 

3 insurer; 

4 (iv) premium credits; 

5 (v) enhanced insurance benefits; or 

6 (vi) in the case of a converting mutual 

7 insurer that is a life insurer, credits to in8 surance policy account values, as set forth 

9 in the plan. 

10 (c) APPROVAL OF PLAN BY COMMISSIONER.—The 

11 Commissioner shall approve the plan of conversion if the 

12 Commissioner finds, after a hearing, that— 

13 (1) the plan is fair and equitable to the insurer 

14 and its policyholders; 

15 (2) the plan does not violate the law; and 

16 (3) the converted stock insurer will, after the 

17 conversion, satisfy the requirements for the issuance 

18 of a license to write the line or lines of insurance for 

19 which it is licensed. 

20 (d) VOTE ON APPROVAL OF PLAN.—The plan of con21 version shall be submitted to those persons who are eligible 

22 to vote on the plan and shall be subject to approval of 

23 a majority of the votes cast by such persons. 

24 (e) EMPLOYEE STOCK PURCHASES; STOCK OP25 TIONS.—Subject to regulations prescribed by the CommisVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00197 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 sioner, the converted insurer or a corporation that, after 

2 the conversion, directly or indirectly, controls the con3 verted insurer, may establish stock option, incentive, and 

4 share ownership plans customary for publicly traded com5 panies in the same and similar industries. 

6 (f) EFFECT OF CONVERSION ON CONVERTED STOCK

7 INSURERS.— 

8 (1) IN GENERAL.—On the effective date of the 

9 plan of conversion— 

10 (A) the mutual insurer shall become a Na11 tional Insurer in stock form; 

12 (B) all membership interests and rights in 

13 surplus shall be extinguished; and 

14 (C) persons eligible to receive consideration 

15 under the plan of conversion shall be entitled to 

16 receive the consideration specified in the plan in 

17 exchange for membership interests and liquida18 tion of rights in surplus. 

19 (2) NO EFFECT ON EXISTING RIGHTS AND LI20 ABILITIES.—The converted stock insurer is a con21 tinuation of the original mutual insurer, and the 

22 conversion shall not annul, modify, or change any of 

23 the original mutual insurer’s existing suits, rights, 

24 contracts, or liabilities, except as provided in the 

25 plan of conversion. 


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1 (3) RIGHTS AFTER CONVERSION.—After con2 version, the converted stock insurer shall— 

3 (A) exercise all the rights and powers and 

4 perform all the duties conferred or imposed by 

5 law upon insurers writing the classes of insur6 ance written by the converted stock insurer; 

7 and 

8 (B) retain the rights and contracts existing 

9 prior to conversion, subject to the effect of the 

10 plan. 

11 (g) LIMITATIONS ON ACQUIRING CONVERTED STOCK

12 INSURER.— 

13 (1) IN GENERAL.—Beginning on the date of en14 actment of this Act and continuing for a period of 

15 5 years following the effective date of the plan of 

16 conversion, no person or group of persons acting in 

17 concert shall directly or indirectly offer to acquire, 

18 or acquire in any manner the beneficial ownership 

19 of, 5 percent or more of any class of voting securi20 ties of a converted insurer or of a person that con21 trols the converted insurer, without the prior consent 

22 of the Commissioner. 

23 (2) EFFECT OF VIOLATION.—Upon the viola24 tion of paragraph (1), or any action that, if con25 summated, would constitute such a violation, all votVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00199 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 ing securities of the converted insurer or of the per2 son acquired by any person in excess of the max3 imum amount permitted to be acquired by the per4 son under paragraph (1) shall be deemed to be non5 voting securities of the converted stock insurer or of 

6 that person. 

7 (3) ENFORCEMENT.— 

8 (A) COMMENCEMENT.—A violation or ac9 tion described in paragraph (1) may be en10 forced or enjoined by appropriate proceeding 

11 commenced by the converted stock insurer or 

12 the Commissioner in— 

13 (i) the United States district court for 

14 the judicial district in which the main of15 fice of the converted stock insurer is lo16 cated; 

17 (ii) the United States District Court 

18 for the District of Columbia; or 

19 (iii) any other court having jurisdic20 tion. 

21 (B) ORDER.—The court may issue any 

22 order it finds necessary to cure the violation or 

23 to prevent the proposed action. 

24 (h) TIME LIMITS FOR PLAN ACTIONS.— 


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1 (1) IN GENERAL.—Notwithstanding any other 

2 provision of law, actions concerning any plan of con3 version or proposed plan of conversion under this 

4 section or any acts taken or proposed to be taken 

5 under this section shall be commenced not later than 

6 30 days after the date on which the plan of conver7 sion is approved by the Commissioner under sub8 section (c). 

9 (2) PLAN WITHDRAWN.—If the plan of conver10 sion is withdrawn, the actions shall be commenced 

11 not later than 30 days after the date on which the 

12 board of directors approves a resolution to withdraw 

13 the plan. 

14 (i) EFFECT ON STATE LAW.—No State may prevent 

15 or interfere with a conversion under this section or impede 

16 the activities of, take any action against, or apply any pro17 vision of law or regulation to, any such mutual insurer 

18 because that mutual insurer plans to convert, or has con19 verted, to a National Insurer in stock form under this sec20 tion. 

21 (j) NO DELEGATION PERMITTED.—The Commis22 sioner may not delegate to any insurance self-regulatory 

23 organization any authority under this section with respect 

24 to the conversion of a mutual insurer. 


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1 Subtitle F—State Taxation 

2 SEC. 1251. STATE TAXATION OF NATIONAL INSURERS. 

3 (a) STATE TAXATION RULE.—Except as provided in 

4 subsection (b), a National Insurer doing business in any 

5 State shall be subject to all State and local taxes, includ6 ing insurance retaliatory taxes or other similar taxes, and 

7 shall be entitled to all tax credits, deductions, and offsets 

8 provided under State law to the same extent and in the 

9 same manner as an insurer licensed to do business in such 

10 State and chartered in the State where the National In11 surer is considered domiciled under subsection (c) or (d), 

12 but shall not be subject to any additional taxes imposed 

13 by such State by reason of the National Insurer’s failure 

14 to be licensed or otherwise authorized to conduct business 

15 or write or sell insurance policies, by such State. 

16 (b) EXCEPTION.—No State shall have power to im17 pose an insurance retaliatory tax on any National Insurer 

18 unless— 

19 (1) for any tax purpose for which State of 

20 domicile is relevant, every National Insurer is treat21 ed by such State as domiciled in the State des22 ignated by each National Insurer under subsection 

23 (c); and 

24 (2) the insurance retaliatory tax is imposed by 

25 such State on every National Insurer to the same 


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1 extent and in the same manner as it is imposed on 

2 every insurer chartered in the State where the Na3 tional Insurer is considered domiciled under sub4 section (c). 

5 (c) DESIGNATION OF DOMICILE.— 

6 (1) IN GENERAL.—A National Insurer may des7 ignate, as its State of domicile, by filing such des8 ignation in writing with the Commissioner— 

9 (A) the State in which the National Insur10 er’s principal place of business in the United 

11 States is located; or 

12 (B) in the case of an insurer that has con13 verted from a State insurer to a National In14 surer under this Act, the State in which such 

15 insurer was domiciled immediately before such 

16 conversion. 

17 (2) NO DESIGNATION BY NATIONAL INSURER.— 

18 If a National Insurer does not make a designation 

19 of a State of domicile under this subsection, the Na20 tional Insurer shall be deemed to have designated as 

21 its State of domicile the State in which its principal 

22 place of business in the United States is located. 

23 (d) CHANGE IN DOMICILE.—A National Insurer may 

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1 missioner, to any other State meeting the requirements 

2 under subsection (c). 

3 (e) STATUS OF NATIONAL INSURER.—For purposes 

4 of State taxation, a National Insurer— 

5 (1) shall not be considered a department, agen6 cy, or instrumentality of the Federal Government; 

7 and 

8 (2) except as provided in this section, a Na9 tional Insurer shall not be exempt from any State 

10 tax or subject to a lesser burden of any State tax, 

11 solely by reason of its status as a National Insurer 

12 under this Act. 

13 SEC. 1252. STATE TAXATION OF NATIONAL AGENCIES. 

14 (a) STATE TAXATION RULE.—A National Agency 

15 shall be subject to all taxes imposed under the authority 

16 of any State legislation to the same extent and in the same 

17 manner as an agency chartered in the State where the 

18 National Agency is considered domiciled pursuant to sub19 section (b). 

20 (b) STATE OF DOMICILE.—For purposes of this sec21 tion, the State of domicile of a National Agency shall be 

22 deemed to be the State in which the Agency’s principal 

23 place of business in the United States is located. 

24 (c) STATUS OF NATIONAL AGENCY.—For purposes 

25 of State taxation, a National Agency shall not— 


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1 (1) be considered to be a department, agency, 

2 or instrumentality of the Federal Government; and 

3 (2) except as provided in this section, be ex4 empt from any State tax or subject to a lesser bur5 den of any State tax, solely by reason of its status 

6 as a National Agency under this Act. 

7 TITLE III—INSURANCE PRO8 DUCERS AND OTHER INSUR9 ANCE SERVICING PERSONS 

10 SEC. 1301. FEDERAL LICENSING OF INSURANCE PRO11 DUCERS. 

12 (a) COMMISSIONER’S AUTHORITY.—The Commis13 sioner— 

14 (1) shall have authority to issue Federal pro15 ducer licenses; and 

16 (2) shall, by regulation— 

17 (A) define the line or lines of insurance 

18 (which shall include health insurance as a line 

19 of insurance) for which a person may obtain a 

20 Federal producer license; and 

21 (B) specify educational and examination 

22 requirements for persons seeking a Federal pro23 ducer license, other than National Agencies that 

24 are subject to chartering criteria under section 

25 1201. 


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1 (b) NATIONAL AGENCIES.—The Commissioner shall 

2 issue a Federal producer license to a National Agency 

3 upon the issuance of a charter certificate to such Agency 

4 pursuant to section 1201. 

5 (c) AUTHORITY OF PERSON HOLDING A FEDERAL

6 PRODUCER LICENSE.—A Federal producer license author7 izes the person to sell, solicit, or negotiate insurance in 

8 any State for any line or lines of insurance specified in 

9 such license. 

10 (d) EXAMINATIONS AND REPORTS.—In addition to 

11 the examination and reporting requirements applicable to 

12 National Agencies pursuant to sections 1124 and 1125, 

13 the Commissioner may— 

14 (1) provide for the examination of federally li15 censed insurance producers that are not National 

16 Agencies only in response to a complaint or any 

17 other evidence that the federally licensed insurance 

18 producer has violated or is about to violate— 

19 (A) a law, rule, or regulation; 

20 (B) any condition imposed in writing by 

21 the Commissioner in connection with issuing a 

22 Federal producer’s license; or 

23 (C) any written agreement entered into 

24 with the Commissioner; and 


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1 (2) require federally licensed insurance pro2 ducers that are not National Agencies to make such 

3 reports, containing such information and in such 

4 form, as the Commissioner may prescribe by regula5 tion to the extent necessary to require compliance 

6 with this Act. 

7 (e) INFORMATION PRACTICES.—The Commissioner 

8 may, by regulation, provide that there shall be no civil li9 ability imposed on and no cause of action shall arise from 

10 a National Insurer or National Agency, an insurer-affili11 ated party, or a federally licensed insurance producer sub12 mitting any statement or information required under this 

13 Act or any regulation thereunder or requested in writing 

14 by the Commissioner relating to the conduct of a federally 

15 licensed insurance producer, provided that— 

16 (1) this protection may not apply to false state17 ments made with actual malice; and 

18 (2) such regulation shall not abrogate or modify 

19 any existing common law or statutory privileges or 

20 immunities. 

21 SEC. 1302. PRODUCER DATABASE. 

22 (a) IN GENERAL.—The Commissioner shall adopt 

23 regulations for the development of an electronic database 

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1 work that links the Commissioner with State insurance 

2 regulators and insurers for an electronic exchange of such 

3 information. 

4 (b) MAINTENANCE.—The Commissioner, by rule or 

5 order, may delegate authority over the maintenance of 

6 each database described in subsection (a) to an insurance 

7 self-regulatory organization. In making any such rule or 

8 entering any such order, the Commissioner shall take into 

9 consideration the regulatory capabilities and procedures of 

10 the insurance self-regulatory organization, availability of 

11 staff, convenience of location, avoidance of unnecessary 

12 regulatory duplication, and any other factors the Commis13 sioner may consider appropriate to the protection of pol14 icyholders, the efficiency of the producer licensing system, 

15 and the cooperation and coordination among regulatory 

16 organizations. 

17 SEC. 1303. SUPERVISION AND OVERSIGHT OF FEDERALLY 

18 LICENSED INSURANCE PRODUCERS. 

19 (a) PURPOSE.—The purpose of this section is to es20 tablish when a National Insurer, National Agency, or fed21 erally licensed insurance producer has a duty to supervise 

22 a federally licensed insurance producer. The duty to super23 vise as required in this section shall be in addition to the 

24 authority of the Commissioner to supervise federally li25 censed insurance producers under section 1102(b). 


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1 (b) DUTY TO SUPERVISE.— 

2 (1) NATIONAL INSURERS.—A National Insurer 

3 shall have a duty to supervise the sales and mar4 keting practices of a federally licensed insurance 

5 producer with respect to the sale, solicitation, or ne6 gotiation of insurance policies of such National In7 surer, if such producer— 

8 (A) is an employee of the National Insurer; 

9 or 

10 (B) is an agent of the National Insurer— 

11 (i) who is an individual; and 

12 (ii) whose entire or principal business 

13 activity is devoted to the sale, solicitation, 

14 or negotiation of insurance policies for 

15 such Insurer, the recumbent, training, or 

16 supervision of the agents, or both. 

17 (2) NATIONAL AGENCIES.—A National Agency 

18 or other federally licensed insurance producer that is 

19 an entity has a duty to supervise the sales and mar20 keting practices of its employees and agents with re21 spect to the sale, solicitation, or negotiation of insur22 ance policies if— 

23 (A) in the case of an employee, the insur24 ance policy sold, solicited, or negotiated is with25 in the scope of such person’s employment; and 


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1 (B) in the case of an agent, the insurance 

2 policy is sold, solicited, or negotiated pursuant 

3 to the terms of the agreement between the 

4 agent and such National Agency or other entity 

5 that is a federally licensed insurance producer. 

6 (3) STANDARDS FOR SUPERVISION.—The Com7 missioner shall, by regulation, establish standards 

8 for the supervision of the sales and marketing prac9 tices of federally licensed insurance producers re10 quired in paragraphs (1) and (2). 

11 (4) NO DUTY.—A National Insurer, National 

12 Agency, or other federally licensed insurance pro13 ducer that is an entity shall not have a duty to su14 pervise the sales and marketing practices of persons 

15 not listed in paragraphs (1) and (2). 

16 (5) OVERSIGHT OF INDIVIDUAL INDEPENDENT

17 FEDERALLY LICENSED INSURANCE PRODUCERS.— 

18 (A) IN GENERAL.—The sales and mar19 keting practices of a federally licensed insur20 ance producer with respect to the sale, solicita21 tion, or negotiation of insurance policies shall 

22 be subject to the direct oversight of the Com23 missioner if such producer is not— 

24 (i) an individual who is an employee 

25 or agent of a National Insurer, National 


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1 Agency, or other federally licensed insur2 ance producer that is an entity; or 

3 (ii) an individual whose entire or prin4 cipal business activity is devoted to the 

5 sale, solicitation, or negotiation of insur6 ance policies for a National Insurer or re7 cumbent, training, or supervision of the 

8 agents. 

9 (B) STANDARDS AND PROCEDURES.—The 

10 Commissioner shall, by regulation, establish 

11 standards and procedures for the direct over12 sight of the sales and marketing practices of 

13 federally licensed insurance producers provided 

14 in subparagraph (A). 

15 SEC. 1304. RELATIONSHIP TO STATE LAW. 

16 (a) NO STATE RESTRICTIONS.—No State may, by 

17 statute, regulation, order, interpretation, or otherwise, 

18 prevent or restrict a National Insurer from engaging in 

19 the acts described in subsection (b) for any person, or 

20 from engaging the services of a person who engages in 

21 such acts for the National Insurer, nor shall any State 

22 require that a person be licensed by reason of engaging 

23 in such acts for a National Insurer. 


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1 (b) ACTS PROTECTED FROM STATE RESTRIC2 TIONS.—The acts referred to in subsection (a) are the fol3 lowing: 

4 (1) Investigating, evaluating, ascertaining, or 

5 determining the amount of or negotiating, settling, 

6 or adjusting or otherwise participating in the dis7 posal of claims, losses, or damages arising under in8 surance policies written by a National Insurer, 

9 whether the person performing the act is called an 

10 adjuster, independent adjuster, or another name. 

11 (2) Soliciting, negotiating, or placing reinsur12 ance cessions or retrocessions on behalf of a ceding 

13 National Insurer without the authority or power to 

14 bind reinsurance on behalf of such National Insurer, 

15 whether the person performing the act is called a re16 insurance intermediary or another name. 

17 (3) Having authority to bind or manage all or 

18 part of the assumed reinsurance business of a Na19 tional Insurer that is a reinsurer (including the 

20 management of a separate division, department, or 

21 underwriting office) and acting as an agent for such 

22 reinsurer whether the person performing the act is 

23 called a reinsurance intermediary-manager, man24 ager, or another name. 


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1 (4) Directly or indirectly underwriting, col2 lecting charges or premiums, or adjusting or settling 

3 claims, in connection with policies of insurance writ4 ten by a National Insurer. 

5 (c) ACTIVITIES OF FEDERALLY LICENSED INSUR6 ANCE PRODUCERS.—No State may— 

7 (1) by statute, regulation, order, interpretation, 

8 or otherwise, prevent or restrict a federally licensed 

9 insurance producer from selling, soliciting, or negoti10 ating insurance in such State on behalf of a Na11 tional Insurer, State insurer, or United States 

12 branch of a non-United States Insurer; or 

13 (2) require such producer to be licensed by rea14 son of engaging in such acts on behalf of a National 

15 Insurer, State insurer, or a United States branch of 

16 a non-United States Insurer. 

17 (d) ACTIVITIES OF STATE PRODUCERS.—No State 

18 may, by statute, regulation, order, interpretation, or other19 wise, prevent or restrict an insurance producer licensed 

20 by such State from selling, soliciting, or negotiating insur21 ance in such State on behalf of a National Insurer. 

22 SEC. 1305. LICENSING COMMENCEMENT DATE. 

23 (a) FEDERALLY LICENSED INSURANCE PRO24 DUCERS.—The Commissioner shall not license a Federal 


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•S 2509 IS

1 insurance producer until after the following regulations 

2 have been published in final form: 

3 (1) The fee and assessment regulations author4 ized by section 1122. 

5 (2) The reporting regulations authorized by sec6 tion 1124. 

7 (3) The market conduct regulations authorized 

8 by section 1215. 

9 (4) The producer licensing regulations author10 ized by section 1301. 

11 (5) Such other regulations that the Commis12 sioner determines, at the Commissioner’s discretion, 

13 to be necessary prior to the initial licensing of Fed14 eral insurance producers. 

15 (b) TIMING AND NOTICE.— 

16 (1) TIMING.—The regulations described in sub17 section (a) shall be published in final form not later 

18 than 2 years after the initial appointment and con19 firmation of the Commissioner. 

20 (2) NOTICE.—At such time as the regulations 

21 described in subsection (a) have been issued in final 

22 form, the Commissioner shall publish a notice in the 

23 Federal Register announcing that the Office is pre24 pared to act on licensing applications. 


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1 TITLE IV—HOLDING COMPANIES 

2 SEC. 1401. DEFINITIONS. 

3 In this title: 

4 (1) EXTRAORDINARY DIVIDEND OR DISTRIBU5 TION.—Except as may otherwise be specified by the 

6 Commissioner by regulation, the term ‘‘extraor7 dinary dividend or distribution’’ means a dividend or 

8 distribution of cash or other property on its out9 standing shares (excluding pro rata distributions of 

10 any class of the National Insurer’s own shares), 

11 whose fair market value together with that of other 

12 dividends or distributions made within the prior 12 

13 months exceeds the greater of— 

14 (A) 10 percent of the National Insurer’s 

15 policyholder surplus as of the prior December 

16 31; or 

17 (B) the net income of the National Insurer 

18 for the 12-month period ending the prior De19 cember 31. 

20 (2) INSURANCE HOLDING COMPANY SYSTEM.— 

21 The term ‘‘insurance holding company system’’ 

22 means 2 or more affiliated persons, 1 or more of 

23 which is a National Insurer. 


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1 SEC. 1402. REGISTRATION. 

2 (a) REGISTRATION.—Each National Insurer that is 

3 a member of an insurance holding company system shall 

4 register with the Commissioner. 

5 (b) REGISTRATION STATEMENT.—The Commissioner 

6 shall, by regulation, prescribe— 

7 (1) the form and content of the registration 

8 statement to be filed pursuant to subsection (a); and 

9 (2) the time and place where the registration 

10 statement is required to be filed with the Commis11 sioner. 

12 (c) TERMINATION OF REGISTRATION.—The Commis13 sioner shall terminate the registration of any National In14 surer which demonstrates that it no longer is a member 

15 of an insurance holding company system. 

16 (d) CONSOLIDATED REGISTRATION STATEMENT.— 

17 The Commissioner may require or allow 2 or more affili18 ated National Insurers to file a consolidated registration 

19 statement. 

20 (e) EXEMPTIONS.—The provisions of this section 

21 shall not apply to any National Insurer, information, or 

22 transaction if, and to the extent that, the Commissioner 

23 by regulation or order, exempts such Insurer, information, 

24 or transaction from the provisions of this section. 

25 (f) DISCLAIMER.—Any person may file with the Com26 missioner a disclaimer of affiliation with any National InVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00216 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 surer or a disclaimer may be filed by the National Insurer 

2 or any member of an insurance holding company system. 

3 The disclaimer shall fully disclose all material relation4 ships and bases for affiliation between the person and the 

5 National Insurer as well as the basis for disclaiming the 

6 affiliation. After a disclaimer has been filed, the National 

7 Insurer shall be relieved of any duty to register or report 

8 under this section which may arise out of the National 

9 Insurer’s relationship with the person unless and until the 

10 Commissioner disallows the disclaimer. The Commissioner 

11 shall disallow a disclaimer only after furnishing all parties 

12 in interest with notice and opportunity to be heard and 

13 after making specific findings of fact to support the dis14 allowance. 

15 SEC. 1403. STANDARDS AND MANAGEMENT OF A NATIONAL 

16 INSURER WITHIN AN INSURANCE HOLDING 

17 COMPANY SYSTEM. 

18 (a) TRANSACTIONS WITHIN AN INSURANCE HOLDING

19 COMPANY SYSTEM.— 

20 (1) STANDARDS.—Transactions within an in21 surance holding company system to which a Na22 tional Insurer subject to registration under section 

23 1402 is a party shall be subject to the following 

24 standards: 


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1 (A) The terms shall be fair, reasonable, 

2 and at least as favorable to the National In3 surer as those that would be offered to, or 

4 would apply to, a nonaffiliate. 

5 (B) Charges or fees for services performed 

6 shall be reasonable and at least as favorable to 

7 the National Insurer as those that would be of8 fered to, or would apply to, a nonaffiliate. 

9 (C) Expenses incurred and payment re10 ceived shall be allocated to the National Insurer 

11 in conformity with customary insurance ac12 counting practices consistently applied. 

13 (D) The books, accounts, and records of 

14 each party to all such transactions shall be so 

15 maintained as to clearly and accurately disclose 

16 the nature and details of the transactions in17 cluding such accounting information as is nec18 essary to support the reasonableness of the 

19 charges or fees to the respective parties. 

20 (E) The National Insurer’s surplus as re21 gards policyholders following any dividends or 

22 distributions to shareholders shall be reasonable 

23 in relation to the National Insurer’s out24 standing liabilities and adequate to meet its fi25 nancial needs. 


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1 (2) APPROVAL OF CERTAIN TRANSACTIONS.— 

2 The Commissioner may, by regulation, specify cer3 tain transactions involving a National Insurer and 

4 any person in its insurance holding company system 

5 that are not permissible for a National Insurer un6 less the National Insurer has notified the Commis7 sioner in writing of its intention to enter into the 

8 transaction and the Commissioner either has ap9 proved or not disapproved the transaction within a 

10 specified time period. 

11 (3) COMPLIANCE WITH STANDARDS.—The 

12 Commissioner, in reviewing any transaction for 

13 which notice is required pursuant to paragraph (2), 

14 shall consider whether the transaction complies with 

15 the standards set forth in paragraph (1) and wheth16 er the transaction may adversely affect the interests 

17 of policyholders. 

18 (b) EXTRAORDINARY DIVIDENDS.— 

19 (1) IN GENERAL.—No National Insurer that is 

20 a member of an insurance holding company system 

21 shall pay any extraordinary dividend or distribution 

22 to its shareholders until 30 days after the Commis23 sioner has received notice of the declaration in a 

24 form prescribed by the Commissioner. 


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1 (2) CONDITIONAL DIVIDEND OR DISTRIBU2 TION.—A National Insurer that is a member of an 

3 insurance holding company system may declare an 

4 extraordinary dividend or distribution which is con5 ditional upon the Commissioner’s approval, and the 

6 declaration shall confer no rights upon shareholders 

7 unless— 

8 (A) the Commissioner has approved the 

9 payment of the dividend or distribution; or 

10 (B) the Commissioner has not disapproved 

11 payment within the 30-day period referred to in 

12 paragraph (1). 

13 SEC. 1404. RELATIONSHIP TO STATE LAW. 

14 (a) PERMITTED AFFILIATION.—A National Insurer 

15 that is part of an insurance holding company system may 

16 be affiliated with an insurer or agency that is not char17 tered or licensed under this Act. 

18 (b) REINSURANCE POOLING AGREEMENTS.—The 

19 Commissioner shall have exclusive jurisdiction over rein20 surance pooling agreements to which 1 or more National 

21 Property/Casualty Insurers and affiliated State property/ 

22 casualty insurers, or agency are parties under which poli23 cies of insurance sold, solicited, negotiated, and under24 written by and reinsurance assumed by affiliated National 


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1 Property/Casualty Insurers and State property/casualty 

2 insurers are pooled. 

3 SEC. 1405. CONFLICT WITH OTHER FEDERAL LAWS. 

4 This title shall be interpreted and applied so as not 

5 to conflict with or supersede the provisions of any other 

6 Federal law or regulation governing the regulation of hold7 ing companies, including financial holding companies as 

8 defined in section 2 of the Bank Holding Company Act 

9 of 1956 (12 U.S.C. 1841). 

10 SEC. 1406. NO DELEGATION PERMITTED. 

11 The Commissioner may not delegate to any insurance 

12 self-regulatory organization any authority conferred under 

13 this title with respect to regulation of a National Insurer 

14 that is a member of an insurance holding company system. 

15 TITLE V—RECEIVERSHIP 

16 SEC. 1501. APPOINTMENT OF OFFICE AS RECEIVER. 

17 (a) IN GENERAL.—Notwithstanding any other provi18 sion of Federal or State law, if any of the grounds under 

19 subsection (c) exist, at the discretion of the Commissioner, 

20 the Commissioner may establish a receivership for a Na21 tional Insurer for the purpose of rehabilitation or liquida22 tion, as appropriate. 

23 (b) APPOINTMENT.—In any receivership established 

24 under this title, the Commissioner shall appoint the Office 

25 as receiver. 


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1 (c) GROUNDS FOR APPOINTMENT.—The grounds for 

2 appointing receivership for the purpose of rehabilitating 

3 or liquidating a National Insurer are as follows: 

4 (1) INSOLVENCY.—The National Insurer is in5 solvent. 

6 (2) SUBSTANTIAL DISSIPATION.—The National 

7 Insurer has substantial dissipation of assets or earn8 ings due to— 

9 (A) any violation of any provision of Fed10 eral or State law; or 

11 (B) any hazardous practice. 

12 (3) HAZARDOUS CONDITION.—The National In13 surer is in such condition that the further trans14 action of business would be hazardous, financially or 

15 otherwise, to policyholders, creditors, or the public. 

16 (4) CEASE-AND-DESIST ORDERS.—The National 

17 Insurer has willfully violated a cease-and-desist 

18 order that has become final. 

19 (5) CONCEALMENT.—The National Insurer has 

20 concealed the books, papers, records, or assets of the 

21 National Insurer, or has refused to submit the 

22 books, papers, records, or affairs of the National In23 surer, for inspection to any examiner or to any law24 ful agent of the Commissioner. 


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1 (6) INABILITY TO MEET OBLIGATIONS..—The 

2 National Insurer is likely to be unable to pay its ob3 ligations or meet the demands of its creditors in the 

4 normal course of business. 

5 (7) LOSSES.—The National Insurer has in6 curred or is likely to incur losses that will deplete all 

7 or substantially all of its capital, and there is no rea8 sonable prospect for the National Insurer to replen9 ish its capital. 

10 (8) VIOLATIONS OF LAW.—The National In11 surer has violated any law or regulation, or com12 mitted any hazardous practice or condition, that is 

13 likely to— 

14 (A) cause insolvency or substantial dissipa15 tion of assets or earnings; or 

16 (B) weaken the condition of the National 

17 Insurer. 

18 (9) CONSENT.—The National Insurer, by reso19 lution of its board of directors or its shareholders or 

20 members, consents to the appointment. 

21 (10) MONEY LAUNDERING..—The Attorney 

22 General notifies the Commissioner in writing that 

23 the National Insurer has been found guilty of a 

24 criminal offense under section 1956 or 1957 of title 


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1 18, United States Code, or section 5322 or 5324 of 

2 title 31, United States Code. 

3 (d) DIRECTORS NOT LIABLE.—The members of the 

4 board of directors of a National Insurer shall not be liable 

5 to the shareholders, members, policyholders, or creditors 

6 of the insurer for acquiescing in, or consenting in good 

7 faith to, the appointment of the Office as a receiver. 

8 (e) OFFICE NOT SUBJECT TO ANY OTHER FEDERAL

9 AGENCY.—When acting as receiver, the Office shall not 

10 be subject to the direction or supervision of any other 

11 agency of the United States or any State in the exercise 

12 of the rights, powers, and privileges of the Office. 

13 SEC. 1502. AUTOMATIC STAY. 

14 (a) AUTOMATIC STAY.—Except as provided in sub15 section (c) or as otherwise provided in this title, the com16 mencement of a receivership proceeding under this title 

17 operates as a stay, applicable to all entities, of— 

18 (1) the commencement or continuation, includ19 ing the issuance or employment of process, of a judi20 cial, administrative, or other action or proceeding 

21 against the National Insurer, including an arbitra22 tion proceeding, that was or could have been com23 menced before the commencement of the receivership 

24 proceeding under this title, or to recover a claim 

25 against the National Insurer that arose before the 


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1 commencement of the receivership proceeding under 

2 this title; 

3 (2) the enforcement, against the National In4 surer or against property of the National Insurer, of 

5 a judgment obtained before the commencement of 

6 the receivership proceeding under this title; 

7 (3) any act to obtain possession of property of 

8 the National Insurer or of property from the Na9 tional Insurer or to exercise control over property or 

10 records of the National Insurer; 

11 (4) any act to create, perfect, or enforce any 

12 lien against property of the National Insurer; 

13 (5) any act to collect, assess, or recover a claim 

14 against the National Insurer that arose before the 

15 commencement of a receivership proceeding under 

16 this title; and 

17 (6) the commencement or continuation of an 

18 action or proceeding against a reinsurer of the Na19 tional Insurer, by the holder of a claim against the 

20 National Insurer, seeking reinsurance recoveries that 

21 are contractually due to the National Insurer. 

22 (b) OTHER STAY.—Except as provided in subsections 

23 (c) and (d) or as otherwise provided in this title, the com24 mencement of a receivership proceeding under this title 

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1 mencement or continuation, including the issuance or em2 ployment of process, of a judicial, administrative, or other 

3 action or proceeding, including the enforcement of any 

4 judgment against any insured that was or could have been 

5 commenced before the commencement of the receivership 

6 proceeding under this title or to recover a claim against 

7 any insured that arose before or after the commencement 

8 of the receivership proceedings under this title and for 

9 which the insurer is or may be liable under an insurance 

10 policy or is obligated to defend a party. The stay provided 

11 by this subsection shall terminate 90 days after appoint12 ment of the receiver unless extended by order of the Com13 missioner, for good cause shown, after notice to any af14 fected parties and such hearing as the Commissioner de15 termines is appropriate, provided that any applicable stat16 ute of limitation with respect to any claim against an in17 sured shall be tolled during the period of the stay provided 

18 by this subsection and any extensions. 

19 (c) EXCEPTIONS.—The commencement of a receiver20 ship proceeding under this title does not operate as a stay 

21 of— 

22 (1) criminal actions; 

23 (2) any act to perfect, or to maintain or con24 tinue the perfection of, an interest in property to the 


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1 extent such act is accomplished within any relation 

2 back period under applicable law; 

3 (3) setoff as permitted by regulations issued by 

4 the Commissioner; 

5 (4) termination of reinsurance contracts cov6 ering insurance policies; 

7 (5) pursuit and enforcement of nonmonetary 

8 governmental claims, judgments, and proceedings; 

9 (6) enforcement of a lessor’s rights under a 

10 lease that expired prior to the filing of the receiver11 ship proceeding; 

12 (7) presentment of a negotiable instrument and 

13 the giving of notice of and protesting dishonor of 

14 such an instrument; 

15 (8) enforcement of rights against single bene16 ficiary trusts; 

17 (9) termination, liquidation, and netting of obli18 gations under qualified financial contracts as such 

19 contracts are defined by regulations issued by the 

20 Commissioner; 

21 (10) discharge by a guaranty association of 

22 statutory responsibilities or the pursuit of claims 

23 against a guaranty association to the extent per24 mitted by law other than this title; or 

25 (11) an action that is— 


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1 (A) an audit by a governmental unit to de2 termine tax liability; 

3 (B) the issuance to the insurer by a gov4 ernmental unit of a notice of tax deficiency; 

5 (C) a demand for tax returns; or 

6 (D) the making of an assessment for any 

7 tax and issuance of a notice and demand for 

8 payment of such an assessment. 

9 (d) LENGTH OF STAY.—Except as provided in sub10 section (f)— 

11 (1) the stay of an act against property of the 

12 insurer under subsection (a) continues until such 

13 property is no longer property of the receivership; 

14 and 

15 (2) the stay of any other act under subsection 

16 (a) continues until the receivership is terminated. 

17 (e) OTHER EXCEPTIONS.—Notwithstanding the pro18 visions of subsection (a)— 

19 (1) claims against the National Insurer that 

20 arose before the commencement of the receivership 

21 proceeding under this title may be asserted as a 

22 counterclaim in any judicial, administrative, or other 

23 action or proceeding initiated by or on behalf of the 

24 receiver against the holder of such claims; and 


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1 (2) a party against whom a judicial, adminis2 trative, or other action or proceeding is initiated by 

3 or on behalf of the receiver may assert and enforce 

4 any contractual right the party may have to require 

5 arbitration of any dispute under any law. 

6 (f) RELIEF FROM STAY.—On request of a party in 

7 interest and after notice and such hearing as the Commis8 sioner determines appropriate, the Commissioner may 

9 grant relief from the stay in effect pursuant to subsection 

10 (a), such as by terminating, annulling, modifying, or con11 ditioning such stay— 

12 (1) for cause; or 

13 (2) with respect to a stay of an action against 

14 property under subsection (a) if— 

15 (A) the National Insurer does not have an 

16 equity in such property; and 

17 (B) such property is not necessary to an 

18 effective plan. 

19 (g) BURDEN OF PROOF.—In any hearing under sub20 section (a), the party seeking relief from the stay shall 

21 have the burden of proof on each issue that must be estab22 lished by clear and convincing evidence. 

23 (h) DAMAGES FOR WILLFUL VIOLATION OF STAY.— 

24 The estate of a National Insurer that is injured by any 

25 willful violation of a stay provided by this section shall 


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1 be entitled to actual damages, including costs and attor2 neys’ fees, and, in appropriate circumstances, the Court 

3 may impose additional sanctions. 

4 SEC. 1503. POWERS AND DUTIES. 

5 (a) IN GENERAL.—The receiver shall have all the 

6 powers of the directors, officers, and managers of the in7 surer, whose authority shall be suspended, except as they 

8 are redelegated by the receiver or liquidator. 

9 (b) SPECIFIC POWERS.—In addition to those powers 

10 otherwise provided by this title, the receiver or liquidator 

11 shall have the power to— 

12 (1) use, sell, or lease property of the insurer; 

13 (2) after notice and a hearing, borrow money 

14 on the security of the National Insurer’s assets, bor15 row money without security, and execute and deliver 

16 all documents necessary to such transaction for the 

17 purpose of facilitating the receiver; 

18 (3) collect all debts and money due and claims 

19 belonging to the National Insurer, wherever located; 

20 (4) institute and pursue legal actions and to 

21 continue any pending action, in any jurisdiction; 

22 (5) suspend, limit, or permit insurance policy 

23 withdrawals in connection with insurance policies; 

24 (6) do other acts as are necessary or expedient 

25 to collect, marshal, or protect the assets or property, 


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1 including the power to sell, compound, compromise, 

2 or assign debts for purposes of collection upon such 

3 terms and conditions as the receiver considers best 

4 and that are consistent with this title; 

5 (7) enter into contracts necessary to carry out 

6 the order of rehabilitation or liquidation; 

7 (8) hold hearings, subpoena witnesses to compel 

8 their attendance, administer oaths, examine a person 

9 under oath, and compel a person to subscribe to the 

10 person’s testimony after it has been correctly re11 duced to writing and, in connection with these pow12 ers, require the production of books, papers, records, 

13 or other documents that the receiver considers rel14 evant to the inquiry; and 

15 (9) exercise all powers held or conferred upon 

16 receivers by the laws of the United States that are 

17 not inconsistent with the provisions of this title. 

18 SEC. 1504. RULEMAKING. 

19 (a) IN GENERAL.—The Commissioner shall establish, 

20 by regulation, standards and procedures for receivership 

21 proceedings commenced under this title, including proce22 dures and priorities for the allowance or disallowance of 

23 claims, standards for the treatment of reinsurance, and 

24 such other matters as the Commissioner determines ap25 propriate. 


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1 (b) MODEL.—The regulations issued by the Commis2 sioner under subsection (a) shall be based upon the Uni3 form Receivership Law adopted by the Interstate Insur4 ance Receivership Compact Commission in September 

5 1998. 

6 SEC. 1505. JUDICIAL REVIEW. 

7 (a) NATIONAL INSURERS.— 

8 (1) IN GENERAL.—Whenever the Office is ap9 pointed as a receiver for a National Insurer, the Na10 tional Insurer may, within 30 days of such appoint11 ment, bring an action in the United States District 

12 Court for the judicial district in which the principal 

13 place of business of such insurer is located, or in the 

14 United States District Court for the District of Co15 lumbia, for an order requiring the Office to remove 

16 itself as receiver. 

17 (2) REVIEW.—Upon the filing of an action 

18 under paragraph (1), the court shall, upon the mer19 its dismiss such action or direct the Office to remove 

20 itself as such receiver. 

21 (b) CLAIMANTS.—If the Office, acting as a receiver, 

22 disallows a claim against the receivership, a claimant may, 

23 within 60 days of the notice of disallowance, bring an ac24 tion in the United States District Court for the judicial 

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1 tional Insurer is located, or in the United States District 

2 Court for the District of Columbia, to challenge the dis3 allowance. 

4 TITLE VI—INSOLVENCY 

5 PROTECTION 

6 SEC. 1601. PARTICIPATION IN GUARANTY ASSOCIATIONS. 

7 (a) PARTICIPATION IN STATE GUARANTY ASSOCIA8 TIONS.— 

9 (1) NATIONAL LIFE INSURERS.—A National 

10 Life Insurer shall become and continue as a member 

11 of the life and health guaranty association in each 

12 qualified State in which the National Insurer is 

13 doing business. 

14 (2) NATIONAL PROPERTY/CASUALTY INSUR15 ERS.—A National Property/Casualty Insurer shall 

16 become and continue as a member of the property/ 

17 casualty guaranty association in each qualified State 

18 in which the National Insurer is doing business. 

19 (3) ASSESSMENTS.—Associations in qualified 

20 States shall be authorized to levy assessments on 

21 National Insurers doing business in such States. Na22 tional Insurers shall be obligated to pay such assess23 ments to the extent that they are levied on the same 

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1 sessments to the association under applicable State 

2 law. 

3 (b) PARTICIPATION IN NATIONAL INSURANCE GUAR4 ANTY ASSOCIATION.—A National Insurer that does busi5 ness in 1 or more nonqualified States shall become and 

6 continue to be a member of the National Insurance Guar7 anty Corporation. 

8 SEC. 1602. QUALIFIED AND NONQUALIFIED STATE. 

9 (a) QUALIFIED STATE DEFINED.—In this title, the 

10 term ‘‘qualified State’’ means a State in which the Com11 missioner has determined that, pursuant to State law— 

12 (1) the State has established— 

13 (A) an association that admits as members 

14 both State life insurers and National Life In15 surers, and that, in the event a member is 

16 placed into receivership for purposes of rehabili17 tation or liquidation, may provide benefits to 

18 the policyholders of such National Life Insurers 

19 that are not less than the benefits provided to 

20 policyholders of State life insurers; and 

21 (B) an association that admits as members 

22 both State property/casualty insurers and Na23 tional Property/Casualty Insurers, and that, in 

24 the event a member is placed into receivership 

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1 erage to policyholders of such National Prop2 erty/Casualty Insurers that is not less than the 

3 coverage provided to policyholders of State 

4 property/casualty insurers; 

5 (2) the boards of directors of the associations 

6 described in paragraph (1) are required to— 

7 (A) be representative of insurers on a basis 

8 that does not unfairly discriminate against Na9 tional Insurers; and 

10 (B) be fairly representative of insurers of 

11 different sizes and lines of insurance written; 

12 and 

13 (3) the bylaws of the associations described in 

14 paragraph (1) provide that if either such association 

15 fails to act within a reasonable period of time with 

16 respect to a National Insurer, the Commissioner 

17 shall have the powers and the duties of the associa18 tion under the laws of the State that established the 

19 association with respect to the National Insurer. 

20 (b) DETERMINATION.— 

21 (1) IN GENERAL.—The Commissioner shall es22 tablish, by regulation, a procedure for determining 

23 whether a State is a qualified State. 


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1 (2) CERTIFICATION.—The Commissioner shall 

2 determine that a State is a qualified State upon re3 ceipt of a— 

4 (A) written request that is jointly filed by 

5 the life and health guaranty association and the 

6 property/casualty guaranty association estab7 lished by a State; and 

8 (B) certification by the State’s insurance 

9 regulator that such State and such associations 

10 satisfy the terms of the definition of a qualified 

11 State, as set forth in subsection (a). 

12 (c) REVOCATION.—The Commissioner shall revoke a 

13 determination that a State is a qualified State if the Com14 missioner determines that a State is a nonqualified State. 

15 In such event, the Commissioner shall provide a written 

16 notice of the revocation to the affected associations and 

17 the relevant State insurance regulator, and the associa18 tions or the State insurance regulator may seek a review 

19 of the revocation under terms of section 1706. 

20 (d) LIST OF QUALIFIED AND NONQUALIFIED

21 STATES.—Not later than 6 months after the initial ap22 pointment and confirmation of the Commissioner, the 

23 Commissioner shall publish, in the Federal Register, a list 

24 of qualified and nonqualified States. 


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1 (e) TEMPORARY STATUS.—In the event that a State 

2 ceases to satisfy the conditions set forth in subparagraph 

3 (A) or (B) of subsection (a)(1) because the Commissioner 

4 increases the benefits or coverage provided by the Cor5 poration pursuant to section 1604 or 1605, such State 

6 shall continue to be classified as a qualified State for a 

7 period of 24 months following the date of the Commis8 sioner’s action to increase the benefits or coverage. 

9 (f) NONQUALIFIED STATE.—For purposes of this 

10 title, any State that is not a qualified State is a ‘‘non11 qualified State.’’ 

12 SEC. 1603. ESTABLISHMENT OF THE NATIONAL INSURANCE 

13 GUARANTY CORPORATION. 

14 (a) ESTABLISHMENT OF THE CORPORATION.— 

15 (1) IN GENERAL.—There is established the Na16 tional Insurance Guaranty Corporation. 

17 (2) NONPROFIT AND SUCCESSION.—The Cor18 poration shall be a nonprofit corporation and shall 

19 have succession until dissolved by an Act of Con20 gress. 

21 (3) APPLICATION OF DISTRICT OF COLUMBIA

22 NONPROFIT CORPORATION ACT.—The Corporation 

23 shall, except as otherwise provided in this title, be 

24 subject to, and have all the powers conferred upon 

25 a nonprofit corporation by the District of Columbia 


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1 Nonprofit Corporation Act (D.C. Code, section 29– 

2 301.01 et seq.). 

3 (b) MEMBERSHIP IN THE CORPORATION.—The mem4 bership of the Corporation shall consist of all National In5 surers and State insurers doing business in 1 or more non6 qualified State. 

7 (c) CORPORATE GOVERNANCE.— 

8 (1) GOVERNING BODY.—The board of directors 

9 of the Corporation shall be the governing body of the 

10 Corporation and shall be vested with all powers nec11 essary for the management and administration of 

12 the affairs of the Corporation and the promotion of 

13 the Corporation’s purposes as authorized by this 

14 Act. The board of directors’ authority shall be speci15 fied in the bylaws of the Corporation. 

16 (2) ELECTION OR APPOINTMENT.—The initial 

17 board of directors of the Corporation shall be elected 

18 by the membership of the Corporation, provided that 

19 if the membership fails to elect the initial board of 

20 the Corporation on or before the chartering and li21 censing commencement date for National Insurers 

22 that is described in section 1210, then the initial 

23 board shall be appointed by the Commissioner. 

24 Membership on the board of directors shall be fairly 


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1 representative of members of differing size and lines 

2 of business written. 

3 (3) INITIAL BYLAWS AND RULES.—The Com4 missioner shall prescribe the initial bylaws and rules 

5 governing the Corporation, which shall set forth the 

6 composition of the board of directors, the term of 

7 board members, filling of board vacancies, board 

8 compensation, election of officers and procedures to 

9 call board meetings, and all matters necessary for 

10 the governance of the Corporation not addressed by 

11 the District of Columbia Nonprofit Corporation Act 

12 (D.C. Code, section 29–301.01 et seq.). 

13 (4) AMENDMENTS TO BYLAWS AND RULES.— 

14 An amendment to the bylaws and rules of the Cor15 poration following the establishment of the initial by16 laws and rules as provided in paragraph (3) shall be 

17 adopted by the board of directors of the Corporation 

18 following the approval of the amendment by the 

19 Commissioner. 

20 (d) RELATIONSHIP OF CORPORATION TO THE FED21 ERAL GOVERNMENT.— 

22 (1) SUPERVISION AND OVERSIGHT.—The Cor23 poration shall be subject to supervision and over24 sight by the Commissioner. 


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1 (2) NOT AN AGENCY OR INSTRUMENTALITY OF

2 THE FEDERAL GOVERNMENT.—The Corporation 

3 shall not be an agency or instrumentality of the 

4 United States Government. 

5 (3) FULL FAITH AND CREDIT.—The obligations 

6 of the Corporation shall not be backed, directly or 

7 indirectly, by the full faith and credit of the United 

8 States. The Corporation shall receive no financial as9 sistance from or have any authority to borrow from 

10 the United States. 

11 (4) FUNDS NOT INCLUDED IN THE FEDERAL

12 BUDGET.—Funds held by or due to the Corporation 

13 shall not be included in the budget of the United 

14 States, nor may the United States borrow or pledge 

15 such funds. 

16 (e) CONTRACTING WITH PERSON TO ADMINISTER

17 BENEFITS.—The Corporation may contract, with the ap18 proval of the Commissioner, with another person to ad19 minister the benefits to be provided by the Corporation 

20 under this title. 

21 (f) ACCOUNTS FOR ADMINISTRATION AND ASSESS22 MENTS.—For purposes of administration and assess23 ments, the Corporation shall establish and separately 

24 maintain 5 accounts as follows: 

25 (1) A life insurance account. 


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1 (2) An annuity account. 

2 (3) A workers’ compensation account. 

3 (4) An automobile insurance account. 

4 (5) An account for all other lines of property/ 

5 casualty insurance to which this title applies. 

6 SEC. 1604. BENEFITS FOR POLICY HOLDERS OF NATIONAL 

7 LIFE INSURERS. 

8 (a) IN GENERAL.—Subject to the provisions of this 

9 title, the Corporation shall provide benefits to the policy10 holders of a National Life Insurer that is doing business 

11 in a nonqualified State and is placed into receivership by 

12 the Commissioner for purposes of rehabilitation or liquida13 tion. 

14 (b) COVERED PERSONS.—Benefits shall be made 

15 available as follows: 

16 (1) To persons who, regardless of where the 

17 persons reside, are the beneficiaries, assignees, or 

18 payees of the persons covered under paragraph (2). 

19 (2) To persons who are owners of or certificate 

20 holders under the insurance policies (other than 

21 unallocated annuity contracts, and structured settle22 ment annuities) and in each case who are residents 

23 of a nonqualified State. 

24 (3) This title shall not provide coverage to a 

25 person who is a payee (or beneficiary) of a 


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1 policyowner resident of a nonqualified State, if the 

2 payee (or beneficiary) is afforded any coverage by a 

3 qualified State’s association. 

4 (4) This title is intended to provide coverage to 

5 persons who are residents of a nonqualified State 

6 and, in special circumstances, to persons who are 

7 not a resident in a nonqualified State. In order to 

8 avoid duplicate coverage, if a person who would oth9 erwise receive coverage under this title is provided 

10 coverage under the laws of any State other than the 

11 non-qualified State, the person shall not be provided 

12 coverage under this title. In determining the applica13 tion of the provisions of this paragraph in situations 

14 where a person could be covered by the association 

15 of more than 1 qualifying or nonqualifying State, 

16 whether as a policyowner, payee, beneficiary, or as17 signee, this title shall be construed in conjunction 

18 with the laws of such States to result in coverage by 

19 only 1 association. 

20 (c) INSURANCE POLICIES COVERED AND COVERAGE

21 LIMITS.— 

22 (1) REGULATION.—The Commissioner shall es23 tablish, by regulation, the lines of insurance covered, 

24 the scope of coverage, defenses, exclusions, and the 

25 coverage limits on benefits for policyholders. 


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1 (2) NAIC MODEL.—The regulations described 

2 in paragraph (1) shall be based on the NAIC’s ‘‘Life 

3 and Health Insurance Guaranty Association Model 

4 Act’’ in effect on the date of enactment of this Act. 

5 (3) NAIC AMENDMENTS.—The Commissioner 

6 may, by regulation, specify that any amendment 

7 made by the NAIC to the lines of insurance covered 

8 in its ‘‘Life and Health Insurance Guaranty Associa9 tion Model Act’’ or the limits on the coverage for 

10 such policies shall apply, in whole or in part, to the 

11 Corporation. 

12 (4) ADJUSTMENTS BY THE COMMISSIONER.— 

13 The Commissioner may, by regulation, modify the 

14 lines of insurance covered by this section or increase 

15 the coverage limits for such insurance, as the Com16 missioner determines appropriate. 

17 (5) PAYMENT OF BENEFITS.—Payments for 

18 benefits under this section shall be made from the 

19 life insurance account or the annuity account, as ap20 propriate. 

21 SEC. 1605. CLAIMS COVERED FOR POLICYHOLDERS OF NA22 TIONAL PROPERTY/CASUALTY INSURERS. 

23 (a) IN GENERAL.—Subject to the provisions of this 

24 title, the Corporation shall provide coverage for claims by 

25 policyholders of a National Property/Casualty Insurer that 


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1 is doing business in a non-qualified State and is placed 

2 into receivership by the Commissioner for purposes of liq3 uidation. 

4 (b) INSURANCE POLICIES COVERED AND COVERAGE

5 LIMITS.— 

6 (1) IN GENERAL.—The Commissioner shall 

7 specify, by regulation, the lines of property/casualty 

8 insurance covered, the scope of coverage, defenses, 

9 exclusions, and the limits on covered claims. 

10 (2) NAIC MODEL.—The regulation described in 

11 paragraph (1) shall be based upon the NAIC’s 

12 ‘‘Property/Casualty Guaranty Association Model 

13 Act’’ in effect on the date of enactment of this Act. 

14 (3) NAIC AMENDMENTS.—The Commissioner 

15 may, by regulation, specify that any amendment 

16 made by the NAIC to the lines of insurance covered 

17 or the coverage limits in the NAIC’s ‘‘Property/Cas18 ualty Guaranty Association Model Act’’ shall apply, 

19 in whole or in part, to coverage provided by the Cor20 poration. 

21 (4) ADJUSTMENTS BY THE COMMISSIONER.— 

22 The Commissioner may, by regulation, modify the 

23 lines of insurance covered or increase the coverage 

24 levels described in this subsection, as the Commis25 sioner determines appropriate. 


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1 (c) PAYMENT OF BENEFITS.—Payments for claims 

2 under this section shall be made from the property and 

3 casualty account established pursuant to section 1603. 

4 SEC. 1606. POWERS AND DUTIES OF THE CORPORATION. 

5 (a) POWERS AND DUTIES RELATED TO NATIONAL

6 LIFE INSURERS.— 

7 (1) NATIONAL INSURERS SUBJECT TO REHA8 BILITATION.—Subject to the provisions of this title, 

9 if a National Life Insurer is placed into receivership 

10 for purposes of rehabilitation, the Corporation may, 

11 in its discretion, and subject to any conditions im12 posed by the Corporation that do not impair the 

13 contractual obligations of the National Life Insurer, 

14 and that are approved by the Commissioner, do one 

15 of the following: 

16 (A) Guarantee, assume, or reinsure, or 

17 cause to be guaranteed, assumed or reinsured, 

18 any or all of the insurance policies of the Na19 tional Life Insurer. 

20 (B) Provide such monies, pledges, loans, 

21 notes, guarantees or other means as are proper 

22 to effectuate subparagraph (A) and assure pay23 ment of the contractual obligations of the Na24 tional Life Insurer pending action under sub25 paragraph (A). 


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1 (2) NATIONAL LIFE INSURERS SUBJECT TO

2 LIQUIDATION.—Subject to the provisions of this 

3 title, if a National Life Insurer is placed into receiv4 ership for purposes of liquidation, the Corporation 

5 shall, in its discretion, take either the actions speci6 fied in subparagraph (A) or the actions specified in 

7 subparagraph (B). 

8 (A) ASSUMPTION OF THE OBLIGATIONS OF

9 THE NATIONAL LIFE INSURER.—The Corpora10 tion shall— 

11 (i)(I) guarantee, assume or reinsure, 

12 or cause to be guaranteed, assumed or re13 insured, the insurance policies of the Na14 tional Life Insurer; or 

15 (II) assure payment of the contractual 

16 obligations of the National Life Insurer; 

17 and 

18 (ii) provide monies, pledges, loans, 

19 notes, guarantees, or other means reason20 ably necessary to discharge the duties im21 posed by this section. 

22 (B) PROVISION OF BENEFITS TO POLICY23 HOLDERS.—The Corporation shall provide ben24 efits in accordance with the following provi25 sions: 


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1 (i) ASSURE PAYMENT OF BENEFITS.— 

2 With respect to life insurance policies and 

3 annuities, the Corporation shall assure 

4 payment of benefits for premiums identical 

5 to the premiums and benefits (except for 

6 terms of conversion and renewability) that 

7 would have been payable under the insur8 ance policies of the National Life Insurer, 

9 for claims incurred— 

10 (I) with respect to group insur11 ance policies, not later than the ear12 lier of the next renewal date under 

13 those insurance policies or 45 days, 

14 but in no event less than 30 days, 

15 after the date on which the Corpora16 tion becomes obligated under this sec17 tion with respect to such policies; and 

18 (II) with respect to nongroup in19 surance policies, not later than the 

20 earlier of the next renewal date (if 

21 any) under the insurance policies or 1 

22 year, but in no event less than 30 

23 days, from the date on which the Cor24 poration becomes obligated under this 

25 section with respect to such policies. 


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1 (ii) NOTICE.—The Corporation shall 

2 make diligent efforts to provide all known 

3 insured or annuitants (for non-group in4 surance policies), or group policyholders 

5 with respect to group insurance policies, 30 

6 days notice of the termination (pursuant to 

7 clause (i)) of the benefits provided. 

8 (iii) SUBSTITUTE COVERAGE.—With 

9 respect to nongroup insurance policies cov10 ered by this title, the Corporation shall 

11 make available to each known insured or 

12 annuitant and to each individual formerly 

13 insured or formerly an annuitant under a 

14 group policy who is not eligible for replace15 ment group coverage, substitute coverage 

16 on an individual basis in accordance with 

17 the provisions of clause (iv), if the insured 

18 or annuitants had a right under law or the 

19 terminated policy or annuity to convert 

20 coverage to individual coverage or to con21 tinue an individual policy or annuity in 

22 force until a specified age or for a specified 

23 time, during which the National Life In24 surer had no right unilaterally to make 

25 changes in any provision of the policy or 


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1 had a right only to make changes in pre2 mium by class. 

3 (iv) ALTERNATIVE OR REISSUED

4 POLICIES.—In providing the substitute 

5 coverage required under clause (iii), the 

6 Corporation may offer either to reissue the 

7 terminated coverage or to issue an alter8 native policy. Alternative or reissued insur9 ance policies shall be offered without re10 quiring evidence of insurability, and shall 

11 not provide for any waiting period or ex12 clusion that would not have applied under 

13 the terminated policy. The Corporation 

14 may reinsure any alternative or reissued 

15 policy. 

16 (v) ALTERNATIVE INSURANCE POLI17 CIES.—Alternative policies adopted or 

18 issued by the Corporation shall be subject 

19 to approval by the Commissioner. 

20 (vi) TERMINATION OF BENEFITS.— 

21 Benefits under this title with respect to 

22 coverage under any policy of an insolvent 

23 National Life Insurer or under any re24 issued or alternative policy shall cease on 

25 the date the coverage or policy is replaced 


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1 by another similar policy by the policy2 holder, the insured, or the Corporation. 

3 (3) TREATMENT OF PREMIUMS.— 

4 (A) NONPAYMENT OF PREMIUMS.—The 

5 nonpayment of premiums within 31 days after 

6 the date required under the terms of any guar7 anteed, assumed, alternative, or reissued policy 

8 or substitute coverage provided pursuant to 

9 paragraphs (1) or (2) shall terminate benefits 

10 under this title with respect to the policy, ex11 cept with respect to any claims incurred or any 

12 net cash surrender value that may be due in ac13 cordance with the provisions of this title. 

14 (B) PREMIUMS DUE AFTER LIQUIDATION

15 INITIATED.—Premiums due for coverage under 

16 covered policies after the Commissioner has ini17 tiated the liquidation of a National Life Insurer 

18 shall belong to and be payable at the direction 

19 of the Corporation, and the Corporation shall 

20 be liable for unearned premiums due to the pol21 icyholders under the covered policies. 

22 (4) PERMANENT AND TEMPORARY LIENS.—In 

23 carrying out the duties under paragraph (2), the 

24 Corporation may, subject to the approval of the 

25 Commissioner— 


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1 (A) impose permanent policy liens in con2 nection with a guarantee, assumption or rein3 surance contract, if the Corporation finds that 

4 the amounts which can be assessed under this 

5 title are less than the amounts needed to assure 

6 full and prompt performance of the protections 

7 provided under this title, or that the economic 

8 or financial conditions as they affect the insur9 ance industry are sufficiently adverse to render 

10 the imposition of such permanent policy liens to 

11 be in the public interest; or 

12 (B) impose temporary moratoriums or 

13 liens on payments of cash values and policy 

14 loans, or any other right to withdraw funds on 

15 payments of cash values and policy loans, or 

16 any other right to withdraw funds held in con17 junction with insurance policies, in addition to 

18 any contractual provisions for deferral of cash 

19 or policy loan value. 

20 (5) INDEXED INSURANCE POLICIES.—In car21 rying out its duties in connection with paragraphs 

22 (1) or (2), the Corporation may, subject to the ap23 proval of the Commissioner, issue substitute cov24 erage for an insurance policy that provides an inter25 est rate, crediting rate, or similar factor determined 


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1 by use of an index or other external reference stated 

2 in the insurance policy employed in calculating re3 turns or changes in value by issuing an alternative 

4 insurance policy in accordance with the following 

5 provisions: 

6 (A) In lieu of the index or other external 

7 reference provided for in the original insurance 

8 policy, the alternative insurance policy provides 

9 for— 

10 (i) a fixed interest rate; 

11 (ii) payment of dividends with min12 imum guarantees; or 

13 (iii) a different method for calculating 

14 interest or changes in value. 

15 (B) There shall be no requirement for evi16 dence of insurability, waiting period, or other 

17 exclusion that would not have applied under the 

18 replaced insurance policy. 

19 (C) The alternative insurance policy is sub20 stantially similar to the replaced insurance pol21 icy in all other material terms. 

22 (b) POWERS AND DUTIES RELATED TO NATIONAL

23 PROPERTY/CASUALTY INSURERS.—Subject to the terms 

24 of this title, when a National Property/Casualty Insurer 

25 is placed into receivership for purposes of liquidation, the 


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1 Corporation shall exercise the powers and duties specified 

2 in this subsection. 

3 (1) ASSUME OBLIGATIONS.—The Corporation 

4 shall be deemed the insurer to the extent of its obli5 gation on covered claims and to that extent shall 

6 have all rights, duties, and obligations of the insol7 vent National Property/Casualty Insurer as if such 

8 Insurer had not become insolvent, including but not 

9 limited to the right to pursue and retain salvage and 

10 subrogation recoverable on covered claims obliga11 tions to the extent paid by the Corporation. 

12 (2) INVESTIGATE AND PAY CLAIMS.—The Cor13 poration shall investigate claims brought against the 

14 Corporation and adjust, compromise, settle and pay 

15 covered claims to the extent of the Corporation’s ob16 ligations. The Corporation shall pay claims in any 

17 order that it determines reasonable, including the 

18 payment of claims as they are received from the 

19 claimants or in groups or categories of claims. The 

20 Corporation may review settlements, releases and 

21 adjustments to which the insolvent National Prop22 erty/Casualty Insurer or its insured were parties to 

23 determine the extent to which the settlements, re24 leases and judgments may be properly contested. 

25 The Corporation shall have the right to appoint or 


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1 substitute and to direct legal counsel retained under 

2 liability insurance policies for the defense of covered 

3 claims. 

4 (c) OTHER CORPORATION POWERS.—In addition to 

5 the rights and powers provided elsewhere in this title, the 

6 Corporation may— 

7 (1) enter into such contracts as are necessary 

8 or proper to carry out the provisions and purposes 

9 of this title; 

10 (2) sue or be sued, including taking any legal 

11 actions necessary or proper to recover any unpaid 

12 assessments under section 1607 and to settle claims 

13 or potential claims against the Corporation; 

14 (3) borrow money to effect the purposes of this 

15 title and any notes or other evidence of indebtedness 

16 of the Corporation not in default shall be legal in17 vestments for National Insurers and may be carried 

18 as assets; 

19 (4) employ or retain such persons as are nec20 essary or appropriate to handle the financial trans21 actions of the Corporation and to perform such 

22 other functions as become necessary or proper under 

23 this title; 


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1 (5) take such legal action as may be necessary 

2 or appropriate to avoid or recover payment of im3 proper claims; 

4 (6) exercise, for the purposes of this title and 

5 to the extent approved by the Commissioner, the 

6 powers of a National Insurer, except that the Cor7 poration may not issue insurance policies or annuity 

8 contracts other than those issued to provide the pro9 tections under this title; 

10 (7) request information from a person seeking 

11 protection under this title in order to aid the Cor12 poration in determining its obligations under this 

13 title with respect to the person, and the person shall 

14 promptly comply with the request; and 

15 (8) take other necessary or appropriate action 

16 to discharge the Corporation’s duties and obligations 

17 under this title or to exercise the Corporation’s pow18 ers under this title. 

19 SEC. 1607. SUBROGATION. 

20 (a) IN GENERAL.—Persons receiving benefits or pay21 ments for claims under this title shall be deemed to have 

22 assigned their rights under, and any causes of action 

23 against any person for losses arising under, resulting 

24 from, or otherwise relating to, their covered policies to the 

25 Corporation, and the Corporation shall have a claim by 


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1 way of subrogation to the rights of such persons against 

2 the assets of the National Insurer, to the extent of the 

3 benefits received or claims paid because of this title. The 

4 Corporation shall also have the right to require an assign5 ment to the Corporation of such rights and cause of action 

6 by any payee, policyowner, beneficiary, insured, or annu7 itant as a condition precedent to the receipt of any right 

8 or benefits conferred by this title upon the person. 

9 (b) COMMON LAW RIGHTS.—In addition to sub10 section (a), the Corporation shall have all common law 

11 rights of subrogation and any other equitable or legal rem12 edy that would have been available to the National Insurer 

13 or policyowner, beneficiary, or payee of an insurance policy 

14 with respect to the policy. 

15 (c) PRIORITY.—The priority of the subrogation rights 

16 of the Corporation against the assets of a National Insurer 

17 shall be governed by the regulations issued by the Com18 missioner pursuant to section 1504. 

19 (d) RESULT IF FOUND INVALID OR INEFFECTIVE.— 

20 If the preceding provisions of this section are invalid or 

21 ineffective with respect to any person or claim for any rea22 son, the amount payable under this title with respect to 

23 the related benefits or payments under this title shall be 

24 reduced by the amount realized by any other person with 

25 respect to the person or claim that is attributable to the 


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1 insurance policies (or portion of the insurance policies) 

2 covered by this title. 

3 (e) PAYMENT OF PORTION.—If benefits or payments 

4 have been provided under this title with respect to a cov5 ered obligation and a person recovers amounts as to which 

6 the Corporation has rights as described in the preceding 

7 subsections, the person shall pay to the Corporation the 

8 portion of the recovery attributable to the insurance poli9 cies (or portion of the insurance policies) covered by this 

10 title. 

11 SEC. 1608. ASSESSMENTS. 

12 (a) ASSESSMENTS BY CORPORATION AUTHORIZED.— 

13 For the purpose of providing the funds necessary to pro14 vide the benefits or payments under this title, the Corpora15 tion shall be authorized to assess National Insurers doing 

16 business in nonqualified States separately for each ac17 count, at such time and for such amounts as the board 

18 of directors of the Corporation finds necessary, in accord19 ance with the provisions of this section. 

20 (b) CLASSES OF ASSESSMENTS.—The Corporation 

21 shall impose 3 classes of assessments as follows: 

22 (1) GENERAL ADMINISTRATIVE ASSESS23 MENTS.— 

24 (A) IN GENERAL.—Each National Insurer 

25 that is a member of the Corporation shall be 


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1 assessed an amount necessary to cover the gen2 eral administrative and legal costs of the Cor3 poration, other than the costs specified in para4 graphs (2) and (3). 

5 (B) AMOUNT.—In setting the amount of 

6 the assessment under subparagraph (A), the 

7 Corporation shall divide such administrative 

8 and legal expenses equally among all members 

9 of the Corporation. 

10 (C) DEPOSIT.—The amount collected pur11 suant to this paragraph shall be deposited, in 

12 equal amounts, in the 5 accounts established 

13 pursuant to section 1603(f). 

14 (2) PROPERTY/CASUALTY ASSESSMENTS.— 

15 (A) IN GENERAL.—The Corporation 

16 shall— 

17 (i) allocate claims paid and expenses 

18 incurred among the workers’ compensation 

19 account, the automobile insurance account, 

20 or the other property/casualty account; and 

21 (ii) assess National Property/Casualty 

22 Insurers that are members of the Corpora23 tion separately for each account described 

24 in clause (i) the amounts necessary to pay 

25 the obligations of the Corporation under 


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1 section 1605 and the expenses of handling 

2 such claims. 

3 (B) AMOUNT.—The assessment established 

4 under subparagraph (A)(ii) for a National 

5 Property/Casualty Insurer shall equal an 

6 amount that bears the same ratio to the total 

7 amount of claims and expenses allocated to an 

8 account pursuant to subparagraph (A)(i) as the 

9 premiums received by such National Property/ 

10 Casualty Insurer on the kind of insurance in 

11 the account in nonqualified States during the 

12 calendar year preceding the assessment bears to 

13 the premiums received by all assessed National 

14 Property/Casualty Insurers on the kind of in15 surance in the account in nonqualified States 

16 during the year preceding the assessment. 

17 (C) DEPOSIT.—The assessments received 

18 pursuant to this paragraph shall be deposited in 

19 the workers’ compensation account, the auto20 mobile insurance account, or the other property/ 

21 casualty account, as appropriate. 

22 (3) LIFE AND ANNUITY ASSESSMENTS.— 

23 (A) IN GENERAL.—The Corporation 

24 shall— 


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1 (i) allocate benefits paid and expenses 

2 incurred among the life insurance account 

3 and the annuity account; and 

4 (ii) assess National Life Insurers that 

5 are members of the Corporation separately 

6 for each account described in clause (i) the 

7 amounts necessary to pay the obligations 

8 of the Corporation under section 1604 and 

9 the expenses of handling such benefits. 

10 (B) AMOUNT.—The assessment established 

11 under subparagraph (A)(ii) for a National Life 

12 Insurer shall equal an amount that bears the 

13 same ratio to the total of benefits and expenses 

14 allocated to an account pursuant to subpara15 graph (A)(i) as the premiums received by such 

16 National Life Insurer on the kind of insurance 

17 in the account in nonqualified States during the 

18 calendar year preceding the assessment bears to 

19 the premiums received by all assessed National 

20 Life Insurers on the kind of insurance in the 

21 account in nonqualified States during the year 

22 preceding the assessment. 

23 (C) DEPOSIT.—The assessments received 

24 pursuant to this paragraph shall be deposited in 


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1 the life insurance account or the annuity ac2 count, as appropriate. 

3 (c) NOTICE AND IMPOSITION OF ASSESSMENTS.— 

4 (1) WRITTEN NOTICE REQUIRED.—The Cor5 poration shall provide each National Insurer a writ6 ten notice of an assessment, and assessments shall 

7 be payable not less than 30 days after such notice. 

8 (2) LATE PAYMENT.—National Insurers that 

9 fail to pay an assessment when due shall be subject 

10 to an interest charge on the assessment, as set by 

11 the Corporation. 

12 (3) ASSESSMENTS NOT MADE UNTIL NEED13 ED.—The Corporation shall not impose an assess14 ment described in paragraph (2) or (3) of subsection 

15 (b) until such funds are needed. 

16 (4) MAXIMUM ASSESSMENT.— 

17 (A) IN GENERAL.—The Corporation may 

18 not assess a National Insurer in any year on 

19 any account an amount greater than 2 percent 

20 of the Insurer’s net direct written premiums for 

21 the calendar year preceding the assessment on 

22 the kind of insurance in the account. 

23 (B) INSUFFICIENT AMOUNT IN LIFE IN24 SURANCE ACCOUNT OR ANNUITY ACCOUNT.— 


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1 (i) INSUFFICIENT AMOUNT IN LIFE

2 INSURANCE ACCOUNT.—If the maximum 

3 assessment in any year does not provide an 

4 amount sufficient to make all necessary 

5 payments from the life insurance account, 

6 the Corporation may assess the annuity ac7 count for the necessary additional amount. 

8 (ii) INSUFFICIENT AMOUNT IN ANNU9 ITY ACCOUNT.—If the maximum assess10 ment in any year does not provide an 

11 amount sufficient to make all necessary 

12 payments from the annuity account, the 

13 Corporation may assess the life insurance 

14 account for the necessary additional 

15 amount. 

16 (C) INSUFFICIENT AMOUNT IN WORKERS’ 

17 COMPENSATION ACCOUNT, AUTOMOBILE INSUR18 ANCE ACCOUNT, OR OTHER PROPERTY/CAS19 UALTY INSURANCE ACCOUNT.— 

20 (i) INSUFFICIENT AMOUNT IN WORK21 ERS’ COMPENSATION ACCOUNT.—If the 

22 maximum assessment in any year does not 

23 provide an amount sufficient to make all 

24 necessary payments from the workers’ 

25 compensation account, the Corporation 


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1 may assess the automobile insurance ac2 count or the other property/casualty insur3 ance account, or both, for the necessary 

4 additional amount. 

5 (ii) INSUFFICIENT AMOUNT IN AUTO6 MOBILE INSURANCE ACCOUNT.—If the 

7 maximum assessment in any year does not 

8 provide an amount sufficient to make all 

9 necessary payments from the automobile 

10 insurance account, the Corporation may 

11 assess the workers’ compensation account 

12 or the other property/casualty insurance 

13 account, or both, for the necessary addi14 tional amount. 

15 (iii) INSUFFICIENT AMOUNT IN OTHER

16 PROPERTY/CASUALTY INSURANCE AC17 COUNT.—If the maximum assessment in 

18 any year does not provide an amount suffi19 cient to make all necessary payments from 

20 the other property/casualty insurance ac21 count, the Corporation may assess the 

22 workers’ compensation account or the 

23 automobile insurance account, or both, for 

24 the necessary additional amount. 


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1 (d) ABATED OR DEFERRED ASSESSMENTS.—The 

2 board of directors of the Corporation may abate or defer, 

3 in whole or in part, the assessment of a National Insurer 

4 if, in the opinion of the board, payment of the assessment 

5 would endanger the ability of the National Insurer to ful6 fill the Insurer’s contractual obligations. In the event an 

7 assessment against a National Insurer is abated or de8 ferred, in whole or in part, the amount by which the as9 sessment is abated or deferred may be assessed against 

10 the other National Insurers doing business in non-quali11 fied States, in a manner consistent with the basis for as12 sessments set forth in this section. Once the conditions 

13 that caused a deferral have been removed or rectified, the 

14 National Insurer shall pay all assessments that were de15 ferred pursuant to a repayment plan approved by the 

16 board of directors of the Corporation. 

17 (e) REFUNDS.—The board of directors of the Cor18 poration may, by an equitable method as established by 

19 operating rules, refund to National Insurers, in proportion 

20 to the contribution of each Insurer to that account, the 

21 amount by which the assets of the account exceed the 

22 amount the board finds is necessary to carry out during 

23 the coming year the obligations of this title with regard 

24 to that account, including assets accruing from assign25 ment, subrogation, net realized gains, and income from inVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00264 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 vestments. A reasonable amount may be retained in any 

2 account to provide funds for the continuing expenses of 

3 the Corporation, and for future claims. 

4 (f) ASSESSMENT PROTESTS.— 

5 (1) IN GENERAL.—A National Insurer that 

6 wishes to protest all or part of an assessment shall 

7 pay when due the full amount of the assessment as 

8 set forth in the notice provided by the Corporation. 

9 The payment shall be available to meet obligations 

10 under this title during the pendency of the protest 

11 or any subsequent appeal. Payment shall be accom12 panied by a statement in writing that the payment 

13 is made under protest and setting forth a brief 

14 statement of the grounds for the protest. 

15 (2) NOTIFICATION OF DETERMINATION.—With16 in 60 days following the payment of an assessment 

17 under protest by a National Insurer, the Corporation 

18 shall notify the National Insurer in writing of the 

19 Corporation’s determination with respect to the pro20 test unless the Corporation notifies the Insurer that 

21 additional time is required to resolve the issues 

22 raised by the protest. 

23 (3) FINAL DECISION.—Within 30 days after a 

24 final decision has been made, the Corporation shall 

25 notify the protesting National Insurer in writing of 


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1 the final decision. Within 60 days of receipt of notice 

2 of the final decision, the protesting National Insurer 

3 may appeal that final action to the Commissioner. 

4 (4) REFERRAL.—In the alternative to rendering 

5 a final decision with respect to a protest based on 

6 a question regarding the assessment base, the Cor7 poration may refer protests to the Commissioner for 

8 a final decision, with or without a recommendation 

9 from the Corporation. 

10 (5) PROTEST OR APPEAL UPHELD.—If the pro11 test or appeal on the assessment is upheld, the 

12 amount paid in error or excess shall be returned to 

13 the National Insurer. Interest on a refund due a 

14 protesting National Insurer shall be paid at the rate 

15 actually earned by the Corporation. 

16 (g) INFORMATION REQUESTS.—The Corporation may 

17 request information of National Insurers doing business 

18 in nonqualified States in order to aid in carrying out the 

19 Corporation’s duties under this section and such Insurers 

20 shall promptly comply with such a request. 

21 SEC. 1609. REGULATION. 

22 In addition to the duties and powers enumerated else23 where in this title, the Commissioner shall issue such regu24 lations as the Commissioner determines necessary to faVerDate Aug 31 2005 08:16 Apr 07, 2006 Jkt 049200 PO 00000 Frm 00266 Fmt 6652 Sfmt 6201 E:\BILLS\S2509.IS S2509

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1 cilitate the operations of the Corporation and implement 

2 the terms of this title. 

3 SEC. 1610. STATE TAXATION. 

4 No State shall have the power to impose its premium, 

5 franchise, or income tax on any National Insurer unless 

6 deductions or offsets of the Corporation and association 

7 assessments against such premium, franchise, or income 

8 tax are allowed National Insurers to the same extent and 

9 in the same manner as allowed State insurers. 

10 SEC. 1611. EXAMINATION OF THE CORPORATION; ANNUAL 

11 REPORT. 

12 The Corporation shall be subject to examination and 

13 regulation by the Commissioner. The Corporation shall 

14 submit to the Commissioner and each State insurance 

15 commissioner in each non-qualified State, a financial re16 port in a form approved by the Commissioner and a report 

17 of the Corporation’s activities during the preceding fiscal 

18 year, as the activities relate to the duties and functions 

19 carried out under this title. 

20 TITLE VII—CONFORMING 

21 AMENDMENTS AND MIS22 CELLANEOUS PROVISIONS 

23 SEC. 1701. NONDISCRIMINATION. 

24 No State may discriminate, in any manner, against— 


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1 (1) any State insurer because such insurer or 

2 any affiliate has applied to become, or has declared 

3 its intention to become, a National Insurer chartered 

4 under this Act; 

5 (2) any State-licensed insurance producer be6 cause such insurance producer or an affiliate has ap7 plied to become, or has declared its intention to be8 come, a National Agency chartered under this Act or 

9 a federally licensed insurance producer licensed 

10 under this Act; 

11 (3) any affiliate of a National Insurer, National 

12 Agency, or a federally licensed insurance producer 

13 because the affiliate is so affiliated; 

14 (4) any policyholder, insured, claimant, State-li15 censed insurance producer, or any person engaged in 

16 the acts described in section 1404(b) because of any 

17 dealing with a National Insurer, National Agency, a 

18 federally licensed insurance producer, or an affiliate 

19 of a National Insurer, National Agency, or a feder20 ally licensed insurance producer; or 

21 (5) any State-licensed insurance producer (in22 cluding with respect to such producer’s sales, solici23 tation, or negotiation of any insurance policy written 

24 or sold by a State insurer) because it sells, solicits, 


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1 or negotiates an insurance policy written or sold by 

2 a National Insurer. 

3 SEC. 1702. APPLICATION OF THE FEDERAL ANTITRUST 

4 LAWS TO NATIONAL INSURERS, NATIONAL 

5 AGENCIES, AND FEDERALLY LICENSED IN6 SURANCE PRODUCERS. 

7 (a) APPLICATION.—Except as provided in subsection 

8 (b), the Sherman Act (15 U.S.C. 1 et seq.), the Clayton 

9 Act (15 U.S.C. 12 et seq.), the Federal Trade Commission 

10 Act (15 U.S.C. 41 et seq.), and the Act of June 19, 1936 

11 (49 Stat. 1526) (commonly known as the Robinson-Pat12 man Antidiscrimination Act), shall be applicable to Na13 tional Insurers, National Agencies, and federally licensed 

14 insurance producers to the same extent as other busi15 nesses are subject to such laws, except as follows: 

16 (1) Such laws shall not apply to the develop17 ment, dissemination, or use of standard insurance 

18 policy forms (including, standard endorsements, 

19 addendums, and policy language), or to activities in20 cidental thereto, by National Insurers, National 

21 Agencies, and federally licensed insurance producers. 

22 (2) Section 3 of the Act of March 9, 1945 (59 

23 Stat. 33; 15 U.S.C. 1013), shall apply to National 

24 Insurers, National Agencies, and federally licensed 


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1 insurance producers to the extent that such insurers 

2 and producers are subject to State law. 

3 (b) EXCEPTION.—Section 5 of the Federal Trade 

4 Commission Act (15 U.S.C. 45) shall not apply to Na5 tional Insurers, National Agencies, and federally licensed 

6 insurance producers. 

7 SEC. 1703. APPLICATION OF STATE LAW AND REGULATION 

8 TO NATIONAL INSURERS, NATIONAL AGEN9 CIES, AND FEDERALLY LICENSED INSURANCE 

10 PRODUCERS. 

11 Except to the extent expressly provided in this Act, 

12 National Insurers, National Agencies and federally li13 censed insurance producers shall not be subject under 

14 State law to any form of licensing, examination, reporting, 

15 regulation, or other supervision relating to the sale, solici16 tation, or negotiation of insurance, to the underwriting of 

17 insurance, or to any other insurance operations. 

18 SEC. 1704. FEDERAL COURT JURISDICTION. 

19 Chapter 87 of part IV of title 28, United States Code, 

20 is amended by adding at the end the following: 

21 ‘‘§ 1414. National Insurer as party 

22 ‘‘The district courts shall have original jurisdiction 

23 of any civil action— 

24 ‘‘(1) commenced by the United States, or by di25 rection of any officers thereof, against any National 


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1 Insurer, National Agency or any federally licensed 

2 insurance producer; 

3 ‘‘(2) to enjoin the Commissioner of National In4 surance in the Commissioner’s capacity as head of 

5 the Office of National Insurance or as the receiver 

6 of a National Insurer.’’. 

7 SEC. 1705. FEDERAL COURT VENUE. 

8 Chapter 87 of part IV of title 28, United States Code, 

9 as amended by section 1704, is further amended by adding 

10 at the end the following: 

11 ‘‘§ 1415. National Insurer or National Agency action 

12 against Commissioner of National Insur13 ance 

14 ‘‘Any civil action by a National Insurer or a National 

15 Agency to enjoin the Commissioner of National Insurance, 

16 under the provisions of any Act of Congress relating to 

17 such insurers or agencies, may be prosecuted in the judi18 cial district where such insurer or agency is located.’’. 

19 SEC. 1706. JUDICIAL REVIEW. 

20 Except as otherwise expressly provided in this Act, 

21 any party aggrieved by an order of the Commissioner 

22 under this Act may obtain a review of such order in the 

23 United States Court of Appeals within any circuit wherein 

24 such party has its main office, or in the Court of Appeals 

25 for the District of Columbia, by filing in the court, within 


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1 30 days after the entry of the Commissioner’s order, a 

2 petition praying that the order of the Commissioner be 

3 set aside, modified, or terminated. A copy of such petition 

4 shall be forthwith transmitted to the Commissioner by the 

5 clerk of the court, and thereupon the Commissioner shall 

6 file in the court the record made before the Commissioner, 

7 as provided in section 2112 of title 28, United States 

8 Code. Upon the filing of such petition, the court shall have 

9 jurisdiction to affirm, set aside, modify, or terminate the 

10 order of the Commissioner and to require the Commis11 sioner to take such action with regard to the matter under 

12 review as the court determines proper. Review of an order 

13 under this section shall be had as provided in chapter 7 

14 of part I of title 5, United States Code. The judgment 

15 and decree of the court shall be final, except that the same 

16 shall be subject to review by the Supreme Court upon cer17 tiorari, as provided in section 1254 of title 28, United 

18 States Code. 

19 SEC. 1707. AMENDMENT TO FREEDOM OF INFORMATION 

20 ACT. 

21 Section 552(b)(8) of title 5, United States Code, is 

22 amended by inserting ‘‘(including National Insurers and 

23 National Agencies)’’ after ‘‘financial institutions’’. 


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1 SEC. 1708. AMENDMENTS TO THE FEDERAL SECURITIES 

2 LAWS. 

3 (a) SECURITIES ACT OF 1933.—The Securities Act 

4 of 1933 (15 U.S.C. 77a et seq.) is amended— 

5 (1) in section 2(a)(13), by inserting ‘‘the Com6 missioner of National Insurance or’’ after ‘‘subject 

7 to supervision by’’; 

8 (2) in section 2(a)(14), by inserting ‘‘the 

9 United States or’’ after ‘‘the laws of’’; 

10 (3) in section 3(a)(8), by inserting ‘‘the Com11 missioner of National Insurance or’’ after ‘‘subject 

12 to the supervision of’’; and 

13 (4) in section 4(5)(A)(ii), by inserting ‘‘the 

14 Commissioner of National Insurance or’’ after ‘‘sub15 ject to the supervision of’’. 

16 (b) SECURITIES EXCHANGE ACT OF 1934.—The Se17 curities Exchange Act of 1934 (15 U.S.C. 78a) is amend18 ed— 

19 (1) in section 17(i)(3)(C)(iii), by inserting ‘‘or 

20 by the Commissioner of National Insurance’’ after 

21 ‘‘appropriate State insurance regulator’’; and 

22 (2) in section 17(i)(4)— 

23 (A) in subparagraph (A), by striking 

24 ‘‘and’’ after the semicolon; 

25 (B) in subparagraph (B), by striking the 

26 period at the end and inserting ‘‘; and’’; and 


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1 (C) by adding at the end the following: 

2 ‘‘(D) the Commissioner of National Insur3 ance with regard to all interpretations of, and 

4 the enforcement of, the National Insurance Act 

5 of 2006 relating to the activities, conduct, and 

6 operations of National Insurers, National Agen7 cies, and federally licensed insurance pro8 ducers.’’. 

9 (c) AMENDMENTS TO INVESTMENT COMPANY ACT OF

10 1940.—The Investment Company Act of 1940 (15 U.S.C. 

11 80a–1 et seq.) is amended— 

12 (1) in section 2(a)(17), by inserting ‘‘the Com13 missioner of National Insurance or’’ after ‘‘subject 

14 to supervision by’’; 

15 (2) in section 2(a)(37), by inserting ‘‘the 

16 United States or’’ after ‘‘the laws of’’; 

17 (3) in section 12(g)— 

18 (A) by inserting ‘‘the Commissioner of Na19 tional Insurance or’’ after ‘‘affect or derogate 

20 from the powers of’’; and 

21 (B) by inserting ‘‘Federal or’’ after ‘‘affect 

22 the right under’’; 

23 (4) in section 26(f)(2)(B)(ii), by inserting ‘‘or, 

24 in the case of a National Insurer chartered under 

25 the National Insurance Act of 2006, files with the 


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1 Commissioner of National Insurance,’’ after ‘‘files 

2 with the insurance regulatory authority of the State 

3 which is the domiciliary State of the insurance com4 pany,’’; and 

5 (5) in section 26(f)(2)(B)(iii), by inserting ‘‘or, 

6 in the case of a National Insurer chartered under 

7 the National Insurance Act of 2006, the Commis8 sioner of National Insurance’’ after ‘‘insurance au9 thority of such State’’. 

10 SEC. 1709. AMENDMENTS TO THE EMPLOYEE RETIREMENT 

11 INCOME SECURITY ACT OF 1974. 

12 The Employee Retirement Income Security Act of 

13 1974 (29 U.S.C. 1001 et seq.) is amended— 

14 (1) in section 401(b)(2)(A), by inserting ‘‘or li15 censed as a National Insurer’’ after ‘‘qualified to do 

16 business in a State’’; and 

17 (2) in section 733(b)(2), by inserting ‘‘or which 

18 is licensed as a National Insurer and which is sub19 ject to the authority of the Commissioner of Na20 tional Insurance’’ after ‘‘(within the meaning of sec21 tion 514(b)(2))’’. 

22 SEC. 1710. AMENDMENTS TO THE GRAMM-LEACH-BLILEY 

23 ACT. 

24 (a) INTERAGENCY CONSULTATION.— 


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1 (1) AMENDMENTS.—Section 307 of the 

2 Gramm-Leach-Bliley Act (15 U.S.C. 6716) is 

3 amended by adding at the end the following: 

4 ‘‘(g) OFFICE OF NATIONAL INSURANCE.—In this sec5 tion, the terms ‘State insurance regulator’, ‘State insur6 ance regulators’, and ‘insurance regulator of any State’ 

7 shall include the Office of National Insurance.’’. 

8 (2) NO WAIVER.—The provision of information 

9 or material by the Office of National Insurance to 

10 a Federal banking agency (as defined in section 3 of 

11 the Federal Deposit Insurance Act (12 U.S.C. 

12 1813)) shall not constitute a waiver of, or otherwise 

13 affect, any privilege or other form of legal protection 

14 or exemption from public disclosure to which such 

15 information or material is otherwise subject. 

16 (b) PRIVACY.—The Gramm-Leach-Bliley Act (Public 

17 Law 106–102; 113 Stat. 1338) is amended— 

18 (1) in section 504(a)(1), by inserting ‘‘the Com19 missioner of National Insurance,’’ after ‘‘Federal 

20 banking agencies,’’; 

21 (2) in section 504(a)(3), by inserting ‘‘, except 

22 that, in the case of the Commissioner of National 

23 Insurance, such regulations shall be issued in final 

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1 actment of the National Insurance Act of 2006’’ 

2 after ‘‘enactment of this Act’’; 

3 (3) in section 505(a)(6), by inserting ‘‘(other 

4 than a person subject to the jurisdiction of the Of5 fice of National Insurance under paragraph (8))’’ 

6 after ‘‘providing insurance’’; 

7 (4) in section 505(a)— 

8 (A) by redesignating paragraph (7) as 

9 paragraph (8); and 

10 (B) by inserting after paragraph (6) the 

11 following: 

12 ‘‘(7) Under subtitle C of title I of the National 

13 Insurance Act of 2006, by the Commissioner of Na14 tional Insurance with respect to any National In15 surer or National Agency, any subsidiaries of such 

16 an entity (except any financial institution or other 

17 person subject to the jurisdiction of any agency or 

18 authority under paragraphs (1) through (6)), and 

19 any federally licensed insurance producer.’’; 

20 (5) in section 505(a)(8), as redesignated by 

21 paragraph (4) of this section, by striking ‘‘through 

22 (6)’’ and inserting ‘‘through (7)’’; 

23 (6) in section 505(b)(2), by striking ‘‘and (7)’’ 

24 and inserting ‘‘(7), and (8)’’; 

25 (7) in section 509(2)— 


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1 (A) by redesignating subparagraphs (E) 

2 and (F) as subparagraphs (F) and (G), respec3 tively; and 

4 (B) by inserting after subparagraph (D) 

5 the following: 

6 ‘‘(E) the Commissioner of National Insur7 ance;’’; 

8 (8) in section 521(e), by inserting ‘‘or Federal’’ 

9 after ‘‘such institution under State’’; 

10 (9) in section 522(b)(1)— 

11 (A) in subparagraph (A)(iv), by striking 

12 ‘‘and’’ after the semicolon; 

13 (B) in subparagraph (B), by striking the 

14 period at the end and inserting ‘‘; and’’; and 

15 (C) by inserting after subparagraph (B) 

16 the following: 

17 ‘‘(C) subtitle C of title I of the National 

18 Insurance Act of 2006, by the Commissioner of 

19 National Insurance with respect to any Na20 tional Insurer or National Agency and any fed21 erally licensed insurance producer.’’; and 

22 (10) in section 525, by inserting ‘‘the Commis23 sioner of National Insurance,’’ after ‘‘National Cred24 it Union Administration,’’. 


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1 (c) OTHER CONFORMING AMENDMENTS.—The 

2 Gramm-Leach-Bliley Act (Public Law 106–102; 113 Stat. 

3 1338) is amended— 

4 (1) in section 104(b), by inserting ‘‘, or as re5 quired by the Commissioner of National Insurance 

6 in accordance with the National Insurance Act of 

7 2006’’ after ‘‘subject to subsections (c), (d), and 

8 (e)’’; 

9 (2) in section 104(f)— 

10 (A) by striking ‘‘Subsections (c) and (d)’’ 

11 and inserting the following: 

12 ‘‘(1) IN GENERAL.—Subsections (c) and (d)’’; 

13 (B) by striking ‘‘(1) the jurisdiction’’ and 

14 inserting the following: ‘‘(A) the jurisdiction’’; 

15 (C) by striking ‘‘(A) to investigate’’ and in16 serting the following: ‘‘(i) to investigate’’; 

17 (D) by striking ‘‘(B) to require’’ and in18 serting the following: ‘‘(ii) to require’’; 

19 (E) by striking ‘‘(2) State laws’’ and in20 serting the following: ‘‘(B) State laws’’; and 

21 (F) by adding at the end the following: 

22 ‘‘(2) OTHER.—Notwithstanding any provision 

23 of subsection (d), paragraphs (2) and (3) of sub24 section (d) and subsection (e) shall not apply to any 

25 person to the extent that such person is engaged in 


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1 the business of insurance or other insurance oper2 ations pursuant to authority provided under the Na3 tional Insurance Act of 2006.’’; 

4 (3) in section 104(g)(4), by striking ‘‘business 

5 of insurance.’’ and inserting ‘‘business of insurance, 

6 but only to the extent that such person is doing so 

7 pursuant to a license issued under the authority of 

8 State law.’’; 

9 (4) in section 112, by inserting in the heading 

10 ‘‘COMMISSIONER OF NATIONAL INSURANCE’’ 

11 after ‘‘AUTHORITY OF STATE INSURANCE REGU12 LATOR’’; 

13 (5) in section 301, by inserting ‘‘, except that 

14 the insurance activities of a National Insurer, Na15 tional Agency, and a federally licensed insurance 

16 producer shall be functionally regulated by the Of17 fice of National Insurance’’ after ‘‘subject to section 

18 104’’; and 

19 (6) in section 311, by inserting at the end the 

20 following: ‘‘This subtitle shall not apply to a Na21 tional Insurer in mutual form that is reorganizing 

22 into a mutual holding company.’’. 


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1 SEC. 1711. AMENDMENTS TO THE FEDERAL DEPOSIT IN2 SURANCE ACT. 

3 The Federal Deposit Insurance Act (12 U.S.C. 1811 

4 et seq.) is amended— 

5 (1) in section 45, by inserting in the heading ‘‘, 

6 COMMISSIONER OF OFFICE OF NATIONAL IN7 SURANCE,’’ after ‘‘STATE INSURANCE REGU8 LATOR’’; and 

9 (2) in section 47(g)(1)— 

10 (A) in subparagraph (A), by striking ‘‘or’’ 

11 after the semicolon; 

12 (B) in subparagraph (B), by striking the 

13 period at the end and inserting ‘‘; or’’; and 

14 (C) by adding at the end the following: 

15 ‘‘(C) any authority of the Commissioner of 

16 National Insurance under the National Insur17 ance Act of 2006.’’. 

18 SEC. 1712. AMENDMENTS TO THE BANK HOLDING COM19 PANY ACT OF 1956. 

20 The Bank Holding Company Act of 1956 (12 U.S.C. 

21 1841 et seq.) is amended— 

22 (1) in section 4(k)(4)(I)(iii), by inserting ‘‘or 

23 Federal’’ after ‘‘relevant State’’; 

24 (2) in section 5(c)(2)(E)(iii), by inserting ‘‘or 

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1 surance’’ after ‘‘for the supervision of insurance 

2 companies’’; 

3 (3) in section 5(c)(3)(A)(ii)(I), by inserting ‘‘or 

4 the Office of National Insurance’’ after ‘‘Securities 

5 and Exchange Commission’’; 

6 (4) in section 5(c)(4)(B), by inserting ‘‘or the 

7 Commissioner of National Insurance’’ after ‘‘a State 

8 insurance authority’’; 

9 (5) in section 5(c)(5)(B)(iv), by inserting ‘‘or by 

10 the Commissioner of National Insurance’’ after 

11 ‘‘State insurance regulator’’; 

12 (6) in section 5(g), by inserting in the heading 

13 ‘‘, COMMISSIONER OF NATIONAL INSURANCE’’ after 

14 ‘‘STATE INSURANCE REGULATOR’’; 

15 (7) in section 5(g)(1)(B), by inserting ‘‘or the 

16 Commissioner of National Insurance’’ after ‘‘State 

17 insurance authority’’; 

18 (8) in section 5(g)(2)— 

19 (A) in the heading, by inserting ‘‘, COM20 MISSIONER OF NATIONAL INSURANCE,’’ after 

21 ‘‘STATE INSURANCE AUTHORITY’’; and 

22 (B) by inserting ‘‘or the Commissioner of 

23 National Insurance’’ after ‘‘the Board shall 

24 promptly notify the State insurance authority’’; 

25 and 


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1 (9) in section 5(g)(3), by inserting ‘‘, the Com2 missioner of National Insurance,’’ after ‘‘If the 

3 Board receives a notice described in paragraph 

4 (1)(B) from a State insurance authority’’. 

5 SEC. 1713. AMENDMENTS TO TITLE 18 (CRIMES AND CRIMINAL 

6 PROCEDURE). 

7 (a) AMENDMENTS TO 18 U.S.C. 1033.—Section 

8 1033(b) of title 18, United States Code, is amended— 

9 (1) in paragraph (1)— 

10 (A) by inserting ‘‘removes, conceals, alters, 

11 destroys,’’ after ‘‘willfully embezzles, abstracts, 

12 purloins,’’; and 

13 (B) by inserting ‘‘assets,’’ after ‘‘moneys, 

14 funds, premiums, credits,’’; and 

15 (2) in paragraph (2)— 

16 (A) in the first sentence, by inserting ‘‘re17 moval, concealment, alteration, destruction,’’ 

18 after ‘‘embezzlement, abstraction, purloining,’’; 

19 and 

20 (B) in the second sentence, by inserting 

21 ‘‘removed, concealed, altered, destroyed,’’ after 

22 ‘‘embezzled, abstracted, purloined,’’. 

23 (b) ADDITION OF A NEW SECTION 1037A.—Title 18, 

24 United States Code, is amended by inserting after section 

25 1037 the following: 


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1 ‘‘§ 1037A. Insurance fraud 

2 ‘‘(a) Whoever commits a fraudulent insurance act or 

3 whoever knowingly and intentionally interferes with the 

4 enforcement of the provisions of subtitle D of title I of 

5 the National Insurance Act of 2006 or investigations of 

6 suspected or actual violations of this section shall be pun7 ished as provided in subsection (b). 

8 ‘‘(b)(1) Except as provided in paragraph (2), the 

9 punishment for an offense under subsection (a) is a fine 

10 as provided under this title or imprisonment for not more 

11 than 10 years, or both. 

12 ‘‘(2) Where the person committing an offense under 

13 subsection (a) is a National Insurer, National Agency, in14 surer-affiliated party, or a federally licensed insurance 

15 producer, punishment for an offense under subsection (a) 

16 shall be a fine, the maximum of which is the greater of— 

17 ‘‘(A) $1,000,000 per violation; or 

18 ‘‘(B) a fine as provided under this title; or im19 prisonment for not more than 10 years, or both. 

20 ‘‘(3) If the fraudulent insurance act involved an 

21 amount or value not exceeding $5,000, whoever violates 

22 subsection (a) shall be fined as provided in this title or 

23 imprisoned not more than 1 year, or both. 

24 ‘‘(4) The punishment in this subsection shall be in 

25 addition to any other penalties under the National Insur26 ance Act of 2006. 


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1 ‘‘(c)(1) Any individual who has been convicted of any 

2 criminal felony involving dishonesty or breach of trust, 

3 and who participates in the business of insurance, shall 

4 be fined as provided in this title or imprisoned not more 

5 than 5 years, or both. 

6 ‘‘(2) Any insurance person who is engaged in the 

7 business of insurance who knowingly and intentionally 

8 permits the participation described in paragraph (1) shall 

9 be fined as provided in this title or imprisoned not more 

10 than 5 years, or both. 

11 ‘‘(3) A person described in paragraph (1) or (2) may 

12 participate in the business of insurance or permit such 

13 participation, as the case may be, if such person has the 

14 written consent of the Commissioner of National Insur15 ance. 

16 ‘‘(d) In this section— 

17 ‘‘(1) the terms ‘Commissioner,’ ‘insurance pol18 icy,’ ‘insurance producer,’ ‘insurer-affiliated party,’ 

19 ‘National Agency,’ ‘National Insurer,’ ‘person,’ and 

20 ‘policy of insurance’ have the meanings given to the 

21 terms in section 3 of the National Insurance Act of 

22 2006; 

23 ‘‘(2) the term ‘business of insurance’ has the 

24 meaning given to the term in section 1033(f)(1); 


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1 ‘‘(3) the term ‘fraudulent insurance act’ means 

2 an act or omission committed by a person who, 

3 knowingly and with intent to defraud, commits or 

4 conceals any material information concerning, 1 or 

5 more of the following— 

6 ‘‘(A) presenting, causing to be presented or 

7 preparing with knowledge or belief that it will 

8 be presented to or by a National Insurer, Na9 tional Agency, or an insurance producer acting 

10 with respect to a policy of insurance written by 

11 a National Insurer, false information as part of, 

12 in support of or concerning a fact material to 

13 1 or more of the following— 

14 ‘‘(i) an application for a new or re15 newal of an insurance policy or reinsurance 

16 contract; 

17 ‘‘(ii) the rating of a National Insurer 

18 that writes an insurance policy or enters 

19 into a reinsurance contract; 

20 ‘‘(iii) a claim for payment or benefit 

21 pursuant to an insurance policy or reinsur22 ance contract; 

23 ‘‘(iv) premiums paid on an insurance 

24 policy or reinsurance contract; 


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1 ‘‘(v) payments made in accordance 

2 with the terms of an insurance policy or 

3 reinsurance contract; 

4 ‘‘(vi) a document filed with the Com5 missioner; 

6 ‘‘(vii) the financial condition of a Na7 tional Insurer; 

8 ‘‘(viii) the formation, acquisition, 

9 merger, consolidation, dissolution, or with10 drawal from 1 or more lines of insurance 

11 or reinsurance by a National Insurer; 

12 ‘‘(ix) the issuance of evidence of in13 surance, whether in writing, electronic 

14 form or otherwise; or 

15 ‘‘(x) the reinstatement of an insurance 

16 policy; 

17 ‘‘(B) solicitation or acceptance of new or 

18 renewal insurance risks on behalf of a National 

19 Insurer, National Agency, or other persons en20 gaged in the business of insurance by a person 

21 who knows or should know that the National 

22 Insurer or other person responsible for the risk 

23 is insolvent at the time of the transaction; 

24 ‘‘(C) removal, concealment, alteration, or 

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1 surer, National Agency, or other person en2 gaged in the business of insurance; 

3 ‘‘(D) transaction of the business of insur4 ance in violation of laws requiring a license 

5 therefore under the National Insurance Act of 

6 2006; or 

7 ‘‘(E) attempting to commit, aiding or abet8 ting in the commission of, or conspiracy to com9 mit the acts or omissions specified in, this para10 graph; and 

11 ‘‘(4) the term ‘insurance person’ means officers, 

12 directors, agents, or employees of National Insurers 

13 or National Agencies, or other persons authorized to 

14 act on behalf of National Insurers or National Agen15 cies.’’. 

16 SEC. 1714. AMENDMENTS TO AMERICANS WITH DISABIL17 ITIES ACT OF 1990. 

18 Section 501(c) of the Americans with Disabilities Act 

19 of 1990 (42 U.S.C. 12201(c)) is amended— 

20 (1) in paragraph (1), by inserting ‘‘or Federal’’ 

21 after ‘‘based on or not inconsistent with State’’; 

22 (2) in paragraph (2), by inserting ‘‘or Federal’’ 

23 after ‘‘based on or not inconsistent with State’’; and 

24 (3) in paragraph (3), by inserting ‘‘or Federal’’ 

25 after ‘‘subject to State’’. 


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1 SEC. 1715. AMENDMENT TO AGE DISCRIMINATION IN EM2 PLOYMENT ACT. 

3 Section 12(c)(2) of the Age Discrimination in Em4 ployment Act of 1967 (29 U.S.C. 631(c)(2)) is amended 

5 by inserting ‘‘and the Commissioner of National Insur6 ance’’ after ‘‘after consultation with the Secretary of the 

7 Treasury’’. 

8 SEC. 1716. AMENDMENTS TO THE FAIR CREDIT REPORTING 

9 ACT. 

10 Section 621 of the Fair Credit Reporting Act (15 

11 U.S.C. 1681s) is amended— 

12 (1) in subsection (b)— 

13 (A) in paragraph (5), by striking ‘‘and’’ 

14 after the semicolon; 

15 (B) in paragraph (6), by striking the pe16 riod at the end and inserting ‘‘; and’’; and 

17 (C) by inserting after paragraph (6) the 

18 following: 

19 ‘‘(7) subtitle C of title I of the National Insur20 ance Act of 2006, by the Commissioner of National 

21 Insurance with respect to any National Insurer, Na22 tional Agency, and any federally licensed insurance 

23 producer.’’; and 

24 (D) by adding after the flush matter at the 

25 end the following: ‘‘The terms used in para26 graph (7) that are not defined in this Act shall 


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•S 2509 IS

1 have the meaning given to them in section 3 of 

2 the National Insurance Act of 2006.’’; and 

3 (2) in subsection (e), by adding at the end the 

4 following: 

5 ‘‘(3) The Commissioner of National Insurance 

6 shall prescribe such regulations as necessary to carry 

7 out the purpose of this Act with respect to any per8 sons identified under subsection (b)(7).’’. 

Æ 


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