I 

111TH CONGRESS 

1ST SESSION H. R. 1880 

To establish a system of regulation and supervision for insurers, insurance 

agencies, and insurance producers chartered or licensed under Federal 

law that ensures the stability and financial integrity of those insurers, 

agencies, and producers and that protects policyholders and other consumers served by such insurers, agencies, or producers. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 2, 2009 

Ms. BEAN (for herself and Mr. ROYCE) introduced the following bill; which 

was referred to the Committee on Financial Services, and in addition to 

the Committees on the Judiciary and Energy and Commerce, for a period 

to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee 

concerned 

A BILL 

To establish a system of regulation and supervision for insurers, insurance agencies, and insurance producers chartered or licensed under Federal law that ensures the 

stability and financial integrity of those insurers, agencies, and producers and that protects policyholders and 

other consumers served by such insurers, agencies, or 

producers. 

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 Consumer Protection Act’’. 

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. Purposes. 

Sec. 3. Definitions. 

TITLE I—OFFICE OF NATIONAL INSURANCE 

Subtitle A—Establishment of Office and Appointment of National Insurance 

Commissioner 

Sec. 101. Establishment of office and appointment of National Insurance Commissioner. 

Sec. 102. Duties and powers of the commissioner. 

Sec. 103. Independence and GAO audit. 

Sec. 104. Office personnel matters. 

Sec. 105. Division of Consumer Affairs. 

Sec. 106. Division of Insurance Fraud. 

Sec. 107. Office of the Ombudsman. 

Sec. 108. Insurance self-regulatory organizations. 

Sec. 109. Relationship to State law. 

Subtitle B—Supervision of National Insurers and National Insurance 

Agencies 

Sec. 111. Prudential supervision. 

Sec. 112. Examinations. 

Sec. 113. Reports. 

Sec. 114. Annual assessments and other fees. 

Sec. 115. Appropriations during start-up period. 

Sec. 116. Disclosure of information. 

Sec. 117. Anti-money laundering compliance. 

Subtitle C—Enforcement Powers of Commissioner 

Sec. 121. Revocation or suspension of charter or license. 

Sec. 122. Other enforcement powers. 

Sec. 123. Insurance fraud. 

Sec. 124. Foreign investigations. 

Sec. 125. Prompt corrective action. 

TITLE II—SYSTEMIC RISK REGULATION, COORDINATING COUNCIL 

FOR FINANCIAL REGULATORS, INTERNATIONAL AGREEMENTS 

Sec. 201. Systemic risk regulation. 

Sec. 202. Coordinating council for financial regulators. 

Sec. 203. International agreements. 


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TITLE III—NATIONAL INSURANCE COMPANIES AND NATIONAL 

INSURANCE AGENCIES 

Subtitle A—Organization, Chartering, and Powers 

Sec. 301. Organization and chartering. 

Sec. 302. Corporate governance. 

Sec. 303. Charter conversions. 

Sec. 304. Powers. 

Sec. 305. Chartering commencement date. 

Subtitle B—Financial, Policy and Market Conduct Standards 

Sec. 311. Financial standards. 

Sec. 312. Policy standards. 

Sec. 313. Market conduct standards. 

Sec. 314. General principles. 

Subtitle C—State Taxation 

Sec. 321. State taxation of national insurers. 

Sec. 322. State taxation of national insurance agencies. 

Sec. 323. State taxation of nonadmitted and surplus lines of insurance. 

TITLE IV—NATIONAL INSURANCE PRODUCERS 

Sec. 401. Licensing of national insurance producers. 

Sec. 402. Supervision and examination. 

Sec. 403. Producer database. 

Sec. 404. Duty to supervise. 

Sec. 405. Relationship to State law. 

Sec. 406. Licensing commencement date. 

TITLE V—CHANGE IN CONTROL AND INSURANCE HOLDING 

COMPANIES 

Sec. 501. Change in control. 

Sec. 502. Reports by and examinations of insurance holding companies. 

Sec. 503. Activities of insurance holding companies and subsidiaries. 

Sec. 504. Capital, liquidity, dividend, operational, and other standards. 

Sec. 505. Affiliate transactions. 

Sec. 506. Relationship to other laws. 

Sec. 507. No delegation permitted. 

TITLE VI—CONSERVATORSHIP, RECEIVERSHIP, THE PAYMENT OF 

BENEFITS AND CLAIMS TO POLICYHOLDERS, AND ASSESSMENTS ON NATIONAL INSURERS 

Sec. 601. Appointment of conservator or receiver. 

Sec. 602. Establishment of the National Insurance Guaranty Corporation. 

Sec. 603. Payment of claims to policyholders of national insurers. 

Sec. 604. Assessments of national insurers. 

Sec. 605. Participation in State guaranty associations. 

Sec. 606. Report to Congress. 

TITLE VII—MISCELLANEOUS PROVISIONS 


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Sec. 701. Applicable law. 

Sec. 702. Application of the Federal antitrust laws. 

1 SEC. 2. PURPOSES. 

2 The purposes of this Act are— 

3 (1) to ensure the financial stability and integ4 rity of national insurers, national insurance agen5 cies, and national insurance producers through a 

6 comprehensive system of national supervision and 

7 regulation; and 

8 (2) to ensure the fair and equitable treatment 

9 of policyholders, claimants, and other consumers 

10 served by national insurers, national insurance agen11 cies, and national insurance producers. 

12 SEC. 3. DEFINITIONS. 

13 In this Act: 

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

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

16 under common control with another person. 

17 (2) ANNUITY.—The term ‘‘annuity’’ means all 

18 agreements to make periodical payments for a period 

19 certain or where the making or continuance of all or 

20 some of a series of such payments, or the amount 

21 of any such payment, depends upon the continuance 

22 of human life. 

23 (3) ANTI-FRAUD ORGANIZATION.—The term 

24 ‘‘anti-fraud organization’’ means an organization— 


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1 (A) whose purposes include investigation, 

2 prevention, and detection of insurance-related 

3 crime and fraud, including assistance to and co4 operation with State and national public offi5 cials and law enforcement officers in their anti6 fraud activities; and 

7 (B) described in section 501(c)(3) of the 

8 Internal Revenue Code of 1986 and exempt 

9 from tax under section 501(a) of such Code. 

10 (4) BUSINESS OF INSURANCE.—The term 

11 ‘‘business of insurance’’ has the meaning given such 

12 term in section 1033(f) of title 18, United States 

13 Code. 

14 (5) COMMISSIONER.—The term ‘‘Commis15 sioner’’ means the National Insurance Commissioner 

16 appointed under section 101. 

17 (6) COMPANY.—The term ‘‘company’’ means 

18 any corporation, partnership, business trust, associa19 tion, or similar organization. 

20 (7) CONTROL.—The term ‘‘control’’— 

21 (A) means the power of a person— 

22 (i) with an ownership interest in a na23 tional insurer or national insurance agency 

24 (whether direct or indirect) to direct the 


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1 management or policies of such national 

2 insurer or national insurance agency; or 

3 (ii) to vote 25 percent or more of any 

4 class of voting securities of a national in5 surer or national insurance agency; and 

6 (B) does not include a person that pos7 sesses power referred to in subparagraph (A) as 

8 a result of an official position, corporate office, 

9 or fiduciary relationship held by such person. 

10 (8) CORPORATION.—The term ‘‘Corporation’’ 

11 means the National Insurance Guaranty Corporation 

12 established under section 601. 

13 (9) FEDERAL BANKING AGENCIES.—The term 

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

15 Comptroller of the Currency, the Board of Gov16 ernors of the Federal Reserve System, the Federal 

17 Deposit Insurance Corporation, and the Office of 

18 Thrift Supervision. 

19 (10) INSURANCE OPERATIONS.—The term ‘‘in20 surance operations’’ includes— 

21 (A) the business of insurance; 

22 (B) all acts and transactions relating to 

23 the sale, solicitation, negotiation, and under24 writing of insurance; 


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1 (C) all acts and transactions relating to 

2 claims adjustment and settlement; 

3 (D) all acts and transactions relating to 

4 the establishment of rates, rules, risk classifica5 tions, rating classifications, rating territories, 

6 and forms (including, endorsements, 

7 addendums, and policy language) for insurance; 

8 (E) all acts and transactions relating to 

9 marketing and sales practices; 

10 (F) financial condition and solvency; 

11 (G) holding company transactions; and 

12 (H) corporate governance. 

13 (11) INSURANCE PRODUCER.—The term ‘‘in14 surance producer’’ means any person that sells, so15 licits, or negotiates policies of insurance, non16 admitted insurance, and surplus lines of insurance, 

17 but does not include a person that provides adminis18 trative services to an insurer. 

19 (12) INSURER-AFFILIATED PARTY.—The term 

20 ‘‘insurer-affiliated party’’ means— 

21 (A) any director, officer, employee, or con22 trolling shareholder of, or agent for, a national 

23 insurer or a national insurance agency; 

24 (B) any shareholder, consultant, joint ven25 ture partner, and any other person as deterVerDate Nov 24 2008 02:15 Apr 07, 2009 Jkt 079200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1880.IH H1880

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1 mined by the Commissioner who participates in 

2 the conduct of the affairs of a national insurer 

3 or a national insurance agency; and 

4 (C) any independent contractor (including 

5 any attorney, actuary, or accountant) of a na6 tional insurer or a national insurance agency 

7 who in that capacity knowingly or recklessly 

8 participates in any violation of any law or regu9 lation, any breach of fiduciary duty, or any con10 duct that involves an undue risk of loss to the 

11 policyholders of a national insurer, and which 

12 violation, breach, or conduct caused or is likely 

13 to cause more than a minimal financial loss to, 

14 or a significant adverse effect on, a national in15 surer or the policyholders of a national insurer. 

16 (13) INSURER IN FRATERNAL FORM.—The 

17 term ‘‘insurer in fraternal form’’ means an incor18 porated society, order, or supreme lodge without 

19 capital stock that— 

20 (A) is conducted solely for the benefit of 

21 its members and their beneficiaries and not for 

22 profit; 

23 (B) is operated on a lodge system with rit24 ualistic form of work; 


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1 (C) has a representative form of govern2 ment; 

3 (D) provides benefits to members and their 

4 dependents; and 

5 (E) operates for one or more social, intel6 lectual, educational, charitable, benevolent, 

7 moral, fraternal, patriotic, or religious purposes 

8 for the benefit of its members, which may also 

9 be extended to others. 

10 (14) LIFE INSURANCE.—The term ‘‘life insur11 ance’’ means every insurance upon the lives of 

12 human beings, and every insurance appertaining 

13 thereto, including disability income insurance, long14 term care insurance, and supplemental health insur15 ance. 

16 (15) NAIC.—The term ‘‘NAIC’’ means the Na17 tional Association of Insurance Commissioners. 

18 (16) NATIONAL INSURANCE AGENCY.—The 

19 term ‘‘national insurance agency’’ means a national 

20 insurance agency chartered under section 301. 

21 (17) NATIONAL INSURANCE HOLDING COM22 PANY.—The term ‘‘national insurance holding com23 pany’’ means a company that controls a national in24 surer or national insurance agency. 


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1 (18) NATIONAL INSURANCE PRODUCER.—The 

2 term ‘‘national insurance producer’’ means a na3 tional insurance agent or broker licensed under sec4 tion 401. 

5 (19) NATIONAL INSURER.—The term ‘‘national 

6 insurer’’ means a national insurance company char7 tered under section 301. 

8 (20) NATIONAL LIFE INSURER.—The term ‘‘na9 tional life insurer’’ means a national insurer that is 

10 chartered under section 301 to sell, solicit, negotiate, 

11 and underwrite life insurance. 

12 (21) NONADMITTED INSURANCE.—The term 

13 ‘‘nonadmitted insurance’’ means property and cas14 ualty insurance permitted by the Commissioner to be 

15 placed directly or through an insurance producer 

16 with a nonadmitted insurer eligible to accept such 

17 insurance. 

18 (22) NONADMITTED INSURER.—The term 

19 ‘‘nonadmitted insurer’’ means an insurer that is not 

20 licensed to engage in the business of insurance in a 

21 State and that— 

22 (A) satisfies the eligibility requirements of 

23 the State in which an insured maintains its 

24 principal place of business, or, in the case of an 

25 individual, maintains a principal residence; and 


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1 (B) is not a national insurer. 

2 (23) OFFICE.—The term ‘‘Office’’ means the 

3 Office of National Insurance established under sec4 tion 101. 

5 (24) PERSON.—The term ‘‘person’’ means any 

6 natural person, business entity, governmental body 

7 or entity, voluntary organization, or similar organi8 zation. 

9 (25) POLICY.—The term ‘‘policy’’ means a pol10 icy, contract, certificate, or other evidence of insur11 ance, or an annuity contract or a rider or endorse12 ment thereto, but does not include a funding agree13 ment, a reinsurance contract, or an agreement, spe14 cial rider, or endorsement relating only to the man15 ner of distributing benefits or to the reservation of 

16 rights and benefits used at the request of the indi17 vidual policyholder. 

18 (26) PROPERTY AND CASUALTY INSURANCE.— 

19 The term ‘‘property and casualty insurance’’ means 

20 a policy that insures, guarantees, or indemnifies 

21 against liability, loss of life, loss of health, or loss 

22 through damage to or destruction of property, in23 cluding surety bonds, private passenger or commer24 cial automobile, homeowners, mortgage guaranty, fi25 nancial guaranty, commercial multiperil, general liVerDate Nov 24 2008 02:15 Apr 07, 2009 Jkt 079200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1880.IH H1880

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1 ability, professional liability, workers’ compensation, 

2 fire and allied lines, farm or ranch owners, 

3 multiperil, aircraft, fidelity, surety, medical mal4 practice, ocean marine, inland marine, and boiler 

5 and machinery insurance. 

6 (27) PROTECTED CELL.—The term ‘‘protected 

7 cell’’ means an identified pool of assets and liabil8 ities of a national insurer segregated and insulated 

9 from the remainder of the national insurer’s assets 

10 and liabilities. 

11 (28) 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 (29) STATE INSURER.—The term ‘‘State in19 surer’’ means an insurer incorporated in or orga20 nized under the laws of a State that is not chartered 

21 as a national insurer under this Act. 

22 (30) SUPPLEMENTAL HEALTH INSURANCE.— 

23 The term ‘‘supplemental health insurance’’ means a 

24 group or individual policy that provides coverage for 

25 hospital, medical or surgical benefits and is sold sepVerDate Nov 24 2008 02:15 Apr 07, 2009 Jkt 079200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H1880.IH H1880

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1 arately and not dependent upon comprehensive 

2 health or medical insurance, including a policy for 

3 accidents, accidental death and dismemberment, 

4 credit disability, dread disease, dental, hospital acci5 dent, hospital indemnity, hospital confinement in6 demnity, limited benefit medical, medical/surgical 

7 policies, Medicare supplement, retiree medical, spe8 cific treatment policies, travel, and vision. 

9 (31) SURPLUS LINES OF INSURANCE.—The 

10 term ‘‘surplus lines of insurance’’ means insurance 

11 on properties, risks, or exposures located or to be 

12 performed in a State with a nonadmitted insurer 

13 that is sold, solicited, or negotiated by a national in14 surance agency, national insurance producer, or 

15 other insurance producer. 

16 (32) TITLE INSURANCE.—The term ‘‘title in17 surance’’ or ‘‘business of title insurance’’ means any 

18 of the following: 

19 (A) A contract insuring or indemnifying 

20 the owners of real or personal property, or 

21 other persons lawfully interested therein, 

22 against loss or damage arising from any of the 

23 following conditions, or the reinsurance thereof: 

24 (i) Defects in or any liens or encum25 brances on the insured title. 


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1 (ii) Unmarketability of the insured 

2 title. 

3 (iii) Invalidity, lack of priority, or un4 enforceability of any liens or encumbrances 

5 on the stated property. 

6 (iv) Lack of legal right of access to 

7 the land. 

8 (v) Unenforceability of rights in title 

9 to the real or personal property. 

10 (B) Insuring the correctness of searches 

11 and examinations of all instruments, liens, or 

12 charges affecting the title to real or personal 

13 property. 

14 (C) Procuring and furnishing information 

15 relative to the title to real or personal property, 

16 including abstracting, searching, and examining 

17 titles. 

18 (D) Handling escrows, settlements, or clos19 ings done in conjunction with subparagraph 

20 (A), (B), (C), (E), or (F). 

21 (E) Any product or service defined by the 

22 laws of any State as title insurance. 

23 (F) Doing or proposing to do any business 

24 substantially equivalent to any of the activities 


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1 described in this paragraph, in a manner de2 signed to evade the provisions of this Act. 

3 (33) TITLE INSURER.—The term ‘‘title insurer’’ 

4 means a company organized under the laws of a 

5 State for the purpose of conducting the business of 

6 title insurance. 

7 TITLE I—OFFICE OF NATIONAL 

8 INSURANCE 

9 Subtitle A—Establishment of Office 

10 and Appointment of National In11 surance Commissioner 

12 SEC. 101. ESTABLISHMENT OF OFFICE AND APPOINTMENT 

13 OF NATIONAL INSURANCE COMMISSIONER. 

14 (a) IN GENERAL.—There is established in the De15 partment of the Treasury the Office of National Insur16 ance. 

17 (b) NATIONAL INSURANCE COMMISSIONER.— 

18 (1) IN GENERAL.—There is established the po19 sition of the National Insurance Commissioner, who 

20 shall be the head of the Office. 

21 (2) APPOINTMENT.—The Commissioner shall be 

22 appointed by the President, by and with the advice 

23 and consent of the Senate, from among individuals 

24 who are citizens of the United States, for a term of 


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1 5 years, unless removed before the end of such term 

2 for cause by the President. 

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

4 Commissioner shall be filled in the manner estab5 lished under paragraph (2). The Commissioner ap6 pointed to fill the vacancy shall be appointed only 

7 for the remainder of the term of the preceding Com8 missioner. 

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

10 serve as the Commissioner after the expiration of 

11 the term for which appointed until such time as a 

12 successor has been appointed in accordance with 

13 paragraph (2). 

14 (5) PROHIBITION ON FINANCIAL INTERESTS.— 

15 The Commissioner may not have a direct or indirect 

16 financial interest in any national insurer or national 

17 insurance agency, except that the Commissioner may 

18 own, directly or indirectly, or may have a direct or 

19 indirect beneficial interest in an insurance policy 

20 written or sold by a national insurer, national insur21 ance agency, or national insurance producer. 

22 (6) GENERAL OVERSIGHT.—The Commissioner 

23 shall be subject to the general oversight of the Sec24 retary of the Treasury, but the Secretary may not 

25 intervene in any matter or proceeding before the 


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1 Commissioner unless otherwise specifically provided 

2 by law. 

3 (7) EXECUTIVE SCHEDULE.—Section 5314 of 

4 title 5, United States Code, is amended by adding 

5 at the end following new item: 

6 ‘‘National Insurance Commissioner.’’. 

7 SEC. 102. DUTIES AND POWERS OF THE COMMISSIONER. 

8 (a) DUTIES.—The Commissioner shall— 

9 (1) oversee the organization, incorporation, op10 eration, regulation, and supervision of national in11 surers and national insurance agencies and shall 

12 issue charters therefore; and 

13 (2) license, regulate, and supervise national in14 surance producers. 

15 (b) INCIDENTAL POWERS.—The Commissioner may 

16 exercise such incidental powers as may be necessary to ful17 fill the duties specified in subsection (a). 

18 (c) RULEMAKING POWERS.—The Commissioner may 

19 issue such rules, regulations, orders, and interpretations 

20 as the Commissioner determines to be necessary to carry 

21 out the purposes of this Act. The Secretary of the Treas22 ury may not delay or prevent the issuance of any rule, 

23 regulation, order, or interpretation by the Commissioner. 

24 (d) LITIGATION POWERS.—The Commissioner may 

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1 gate, in the Commissioner’s name and through the Com2 missioner’s own attorney, in any Federal or State court. 

3 (e) ENFORCEMENT POWERS.—The Commissioner 

4 may apply to the United States district court for the juris5 diction in which the main office of a national insurer or 

6 national insurance agency is located, or in which an in7 surer-affiliated party, national insurance producer, or 

8 other person is located, for the enforcement of any rule, 

9 regulation, order, or interpretation issued pursuant to this 

10 Act. 

11 SEC. 103. INDEPENDENCE AND GAO AUDIT. 

12 (a) INDEPENDENCE OF CONGRESSIONAL TESTIMONY

13 AND RECOMMENDATIONS.—Section 111 of Public Law 

14 93–495 (12 U.S.C. 250) is amended by inserting ‘‘the Na15 tional Insurance Commissioner,’’ after ‘‘the Director of 

16 the Office of Thrift Supervision,’’. 

17 (b) GAO AUDIT.—The Commissioner shall make 

18 available to the Comptroller General of the United States 

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

20 of the Office. 

21 SEC. 104. OFFICE PERSONNEL MATTERS. 

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

23 such persons as are necessary to carry out the provisions 

24 of this Act. 


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

2 compensation and number of employees of the Office with3 out regard to chapter 51 or subchapter III of chapter 53 

4 of title 5, United States Code. 

5 (c) ADDITIONAL COMPENSATION.—The Commis6 sioner may provide additional compensation and benefits 

7 to employees of the Office if the same type of compensa8 tion or benefits are then being provided by any Federal 

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

10 provided by any such agency under applicable provisions 

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

12 amount of compensation and benefits for employees of the 

13 Office, the Commissioner shall consult, and seek to main14 tain comparability with, the Federal banking agencies. 

15 (d) ACTING COMMISSIONER.—The Commissioner 

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

17 Acting Commissioner during the absence or disability of 

18 the Commissioner. 

19 (e) DELEGATION OF POWERS.— 

20 (1) EMPLOYEES AND OTHERS.—Unless other21 wise prohibited by this Act, the Commissioner may 

22 delegate to any employee, representative, or agent 

23 any power of the Commissioner. 

24 (2) SELF-REGULATORY ORGANIZATIONS.—Un25 less otherwise prohibited by this Act, the CommisVerDate Nov 24 2008 02:15 Apr 07, 2009 Jkt 079200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6201 E:\BILLS\H1880.IH H1880

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1 sioner may, by regulation, delegate to any insurance 

2 self-regulatory organization any power of the Com3 missioner. 

4 SEC. 105. DIVISION OF CONSUMER AFFAIRS. 

5 (a) ESTABLISHMENT.—The Commissioner shall es6 tablish a Division of Consumer Affairs within the Office, 

7 and shall appoint a Director of the Division of Consumer 

8 Affairs, who shall report to the Commissioner. 

9 (b) FUNCTION.—The Director of the Division of Con10 sumer Affairs shall— 

11 (1) act as a liaison between the Office and con12 sumers of insurance; 

13 (2) receive questions and complaints from con14 sumer regarding acts or practices of national insur15 ers, national insurance agencies, and national insur16 ance producers; and 

17 (3) take actions to resolve such questions and 

18 complaints. 

19 (c) STATE OFFICES; CALL CENTER.—The Commis20 sioner shall establish an office of the Division of Consumer 

21 Affairs in each State and a centralized call center, toll22 free telephone number, and Internet address order to re23 ceive and act upon questions and complaints from con24 sumers regarding acts or practices of national insurers, 


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1 national insurance agencies, and national insurance pro2 ducers. 

3 (d) REPORTS.—The Commissioner shall annually 

4 submit to the Committee on Financial Services of the 

5 House of Representatives and the Committee on Banking, 

6 Housing, and Urban Affairs of the Senate a report on the 

7 volume of consumer complaints received by the Division 

8 of Consumer Affairs and the ability of the Office to ad9 dress such complaints in a timely manner. 

10 SEC. 106. DIVISION OF INSURANCE FRAUD. 

11 (a) ESTABLISHMENT.—The Commissioner shall es12 tablish a Division of Insurance Fraud within the Office, 

13 and shall appoint a Director of the Division of Insurance 

14 Fraud, who shall report to the Commissioner. 

15 (b) DUTIES.—The Director of the Division of Insur16 ance Fraud shall carry out investigations of insurance 

17 fraud in accordance with section 123. 

18 SEC. 107. OFFICE OF THE OMBUDSMAN. 

19 (a) OFFICE OF THE OMBUDSMAN.—The Commis20 sioner shall establish an Office of the Ombudsman, and 

21 appoint an Ombudsman, who shall report to the Commis22 sioner. 

23 (b) DUTY OF THE OMBUDSMAN.—The Ombudsman 

24 shall act as a liaison between the Office and any national 

25 insurer, national insurance agency, national insurance 


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1 producer, or insurer-affiliated party adversely affected by 

2 the supervisory or regulatory activities of the Office, in3 cluding the failure of the Office to take a requested action. 

4 The Ombudsman shall assure that safeguards exist to en5 courage complainants to come forward and preserve con6 fidentiality. 

7 (c) POWERS OF THE OMBUDSMAN.—The Ombuds8 man— 

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

10 may stay any appealable decision or action during 

11 the resolution of an appealable matter; and 

12 (2) shall review and report any weakness in pol13 icy or procedures to the Commissioner, and make 

14 recommendations to the Commissioner regarding 

15 changes in such policies or procedures. 

16 (d) APPEALABLE MATTERS.—Subject to such proce17 dures as the Commissioner may establish by regulation, 

18 any national insurer, national insurance agency, national 

19 insurance producer, or insurer-affiliated party adversely 

20 affected by an Office decision or action may seek Ombuds21 man review of such decision or action, other than— 

22 (1) the appointment of a receiver or conser23 vator; 


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1 (2) any preliminary examination conclusions 

2 communicated to the regulated person before a final 

3 examination report is issued; 

4 (3) any formal enforcement-related action or 

5 decision, including the issuance of a cease-and-desist 

6 order, assessment of a civil money penalty, or com7 mencement of a formal investigation; 

8 (4) any formal or informal rulemaking pursuant 

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

10 States Code; 

11 (5) any decision or recommended decision fol12 lowing a formal adjudication conducted pursuant to 

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

14 Code; or 

15 (6) any request for agency records pursuant to 

16 section 552 of title 5, United States Code (com17 monly referred to as the Freedom of Information 

18 Act). 

19 (e) DECISIONS OF THE OMBUDSMAN.—The Ombuds20 man shall investigate each matter for which review is 

21 sought under subsection (d) and, after consideration of all 

22 relevant information provided to the Ombudsman by the 

23 person seeking such review and the Commissioner, issue 

24 a written determination of the appeal. Such determination 


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1 shall become the final decision of the Office, unless re2 versed, modified, or stayed by the Commissioner. 

3 (f) RETALIATION PROHIBITED.—An employee of the 

4 Office of National Insurance may not take any adverse 

5 action against a complainant for appealing any decision 

6 or action to the Ombudsman. 

7 SEC. 108. INSURANCE SELF-REGULATORY ORGANIZATIONS. 

8 (a) AUTHORITY OF THE COMMISSIONER.—The Com9 missioner may provide for the registration of one or more 

10 insurance self-regulatory organizations, and supervise and 

11 regulate any such organization. 

12 (b) AUTHORITY OF REGISTERED INSURANCE SELF13 REGULATORY ORGANIZATION.—Except as otherwise pro14 vided in this Act, the Commissioner may authorize an in15 surance self-regulatory organization registered by the 

16 Commissioner to carry out the purposes of this Act, and 

17 enforce compliance by its members with the provisions of 

18 this Act, applicable regulations issued by the Commis19 sioner, and the rules of the organization. 

20 SEC. 109. RELATIONSHIP TO STATE LAW. 

21 (a) IN GENERAL.—Except as authorized by this Act 

22 or otherwise authorized under Federal law, no national in23 surer, national insurance agency, or national insurance 

24 producer shall be subject to any form of licensing, exam25 ination, reporting, regulation, or supervision by a State 


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1 relating to the insurance operations of such insurer, such 

2 agency, or such producer. 

3 (b) APPLICABLE STATE LAWS.—Notwithstanding 

4 subsection (a), a national insurers, national insurance 

5 agencies, and national insurance producers shall be sub6 ject to— 

7 (1) State unclaimed property and escheat laws; 

8 (2) tax laws of a State, in accordance with sec9 tions 321, 322, and 323; 

10 (3) State law relating to participation in an as11 signed risk plan, mandatory joint underwriting asso12 ciation, or any other mandatory residual market 

13 mechanism designed to make insurance available to 

14 those unable to obtain insurance in the voluntary 

15 market, except to the extent that such State law— 

16 (A) relates to participation in any vol17 untary joint underwriting association or similar 

18 arrangement; 

19 (B) results in rates in effect for an as20 signed risk plan, mandatory joint underwriting 

21 association, or any other mandatory residual 

22 market mechanism that fail to cover the ex23 pected value of all future costs associated with 

24 insurance policies written by such residual mar25 ket mechanism; 


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1 (C) requires a national insurer to use any 

2 particular rate, rating element, price, or form; 

3 or 

4 (D) is inconsistent with any provision of 

5 this Act; 

6 (4) State insurance law that prescribes the 

7 compulsory coverage requirements for workers’ com8 pensation or motor vehicle insurance, or both, that 

9 every insurer must provide if the insurer issues in10 surance policies in such State, except to the extent 

11 that such State law requires a national insurer to 

12 use any particular rate, rating element, price, or 

13 form; 

14 (5) State insurance law mandating the partici15 pation of insurers in an advisory or statistical orga16 nization, except to the extent that such State law re17 quires a national insurer to use any particular rate, 

18 rating element, price, or form; and 

19 (6) State law relating to participation in a 

20 workers’ compensation administration mechanism, 

21 except to the extent that such State law is incon22 sistent with any provision of this Act. 

23 (c) DEFINITIONS.—In this section: 

24 (1) ADVISORY OR STATISTICAL ORGANIZA25 TION.—The term ‘‘advisory or statistical organizaVerDate Nov 24 2008 02:15 Apr 07, 2009 Jkt 079200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\H1880.IH H1880

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1 tion’’ does not include the National Association of 

2 Insurance Commissioners. 

3 (2) COMPULSORY COVERAGE.—The term ‘‘com4 pulsory coverage’’ does not include any State statu5 tory requirement other than those prescribing the 

6 minimum extent of insurance protection afforded by 

7 a policy of insurance. 

8 (3) MANDATORY RESIDUAL MARKET.—The 

9 term ‘‘mandatory residual market’’ means a facility, 

10 entity, or plan required by and established pursuant 

11 to State law to provide coverage for persons that 

12 cannot obtain insurance in the private market. 

13 Subtitle B—Supervision of Na14 tional Insurers and National In15 surance Agencies 

16 SEC. 111. PRUDENTIAL SUPERVISION. 

17 (a) SENSE OF CONGRESS.—It is the sense of Con18 gress that the Commissioner should— 

19 (1) promote an open and continuous exchange 

20 of information between national insurers, national 

21 insurance agencies, and national insurance pro22 ducers and the Office; and 

23 (2) encourage such insurers, agencies, and pro24 ducers to self-identify and self-correct actual or po25 tential violations of law, regulation, or any other suVerDate Nov 24 2008 02:15 Apr 07, 2009 Jkt 079200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\H1880.IH H1880

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1 pervisory requirements that the Commissioner con2 siders necessary before such actions harm policy3 holders or other consumers. 

4 (b) REGULATIONS.—The Commissioner shall issue 

5 regulations on prudential supervision to— 

6 (1) require national insurers, national insurance 

7 agencies, and national insurance producers to estab8 lish and implement internal risk control practices 

9 and procedures that are designed to detect and pre10 vent violations of laws, regulations, and any other 

11 supervisory requirements that the Commissioner 

12 considers necessary; 

13 (2) require national insurers, national insurance 

14 agencies, and national insurance producers to self15 report violations of applicable laws, regulations, or 

16 such other supervisory requirements and to correct 

17 such violations; 

18 (3) provide that if the Commissioner determines 

19 a violation of a law, regulation, or other supervisory 

20 requirement upon which an enforcement action may 

21 be based is correctable, the Commissioner shall pro22 vide warning to a national insurer, national insur23 ance agency, or national insurance producer regard24 ing such violation before taking such action; 


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1 (4) identify the range of enforcement actions 

2 the Commissioner may bring in response to a viola3 tion of law, regulation, or other supervisory require4 ment, and provide that, subject to subsection (c), the 

5 Commissioner shall pursue a continuum of enforce6 ment actions that begins with the least severe sanc7 tion or penalty and gradually escalates to the most 

8 severe sanction or penalty; 

9 (5) identify the factors the Commissioner will 

10 consider in determining whether to bring an enforce11 ment action and in determining the type of action to 

12 be brought; and 

13 (6) specify the Commissioner’s practices and 

14 procedures related to investigations, and provide 

15 that the Commissioner shall— 

16 (A) notify a national insurer, national in17 surance agency, or national insurance producer 

18 within 10 days of completing an investigation; 

19 and 

20 (B) review the status of all open investiga21 tions on a semiannual basis and determine if 

22 such matter should remain open or be closed. 


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1 SEC. 112. EXAMINATIONS. 

2 (a) IN GENERAL.—The Commissioner may conduct 

3 such examinations of a national insurer or national insur4 ance agency as the Commissioner considers necessary. 

5 (b) FREQUENCY.— 

6 (1) NATIONAL INSURERS.—The Commissioner 

7 shall conduct a full-scope, on-site examination of 

8 each national insurer not less than once during any 

9 24-month period. 

10 (2) NATIONAL INSURANCE AGENCIES.—The 

11 Commissioner shall conduct an examination of a na12 tional insurance agency in response to a complaint 

13 or evidence that such national insurance agency has 

14 violated or is about to violate— 

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

16 (B) any condition imposed in writing by 

17 the Commissioner in connection with issuing a 

18 license for a Federally licensed insurance pro19 ducer; or 

20 (C) any written agreement entered into 

21 with the Commissioner. 

22 (c) ACCESS TO PEOPLE AND RECORDS.— 

23 (1) IN GENERAL.—In the course of examining 

24 a national insurer or national insurance agency, the 

25 Commissioner, upon request, shall be given prompt 

26 and reasonable access to officers, employees, agents, 


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1 books, records, and documents of such insurer or 

2 agency. 

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

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

5 the Commissioner may apply to the United States 

6 district court for the judicial district in which the 

7 main office of the national insurer or the national 

8 insurance agency is located for an order requiring 

9 that such information be promptly provided. 

10 (3) SUBPOENA POWER.—In connection with ex11 amination of a national insurer or national insur12 ance agency, the Commissioner may— 

13 (A) administer oaths and affirmations; 

14 (B) examine, take, and preserve testimony 

15 under oath as to any matter in respect of the 

16 affairs or ownership of any such national in17 surer or national insurance agency; 

18 (C) issue subpoenas; and 

19 (D) in order to enforce a subpoena issued 

20 under subparagraph (C), apply to the United 

21 States district court for the judicial district— 

22 (i) in which the main office of the na23 tional insurer or national insurance agency 

24 is located; or 


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1 (ii) in which the witness resides or 

2 carries on business. 

3 SEC. 113. REPORTS. 

4 Each national insurer and national insurance agency 

5 shall submit to the Commissioner such reports, containing 

6 such information and in such form, as the Commissioner 

7 may prescribe by regulation. 

8 SEC. 114. ANNUAL ASSESSMENTS AND OTHER FEES. 

9 (a) IN GENERAL.—The Commissioner may impose on 

10 national insurers, national insurance agencies, and na11 tional insurance producers an annual assessment and such 

12 other fees, including examination fees, as the Commis13 sioner determines to be necessary and appropriate to fund 

14 the expenses of the Office, and to repay and loan to the 

15 Office provided under section 115. 

16 (b) REGULATIONS.—The Commissioner shall, by reg17 ulation, establish a schedule for the annual assessment 

18 and other fees authorized in this section. 

19 (c) TREATMENT OF ASSESSMENTS AND FEES.— 

20 (1) DEPOSITS.—The Commissioner may deposit 

21 assessments and fees collected under this section 

22 into any regular Government depository or any State 

23 or national bank. 

24 (2) GOVERNMENT FUNDS AND APPORTION25 MENT.—Notwithstanding any other provision of law, 


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1 assessments and fees imposed under this section 

2 shall not be considered government or public funds 

3 or appropriated money, and shall not be subject to 

4 apportionment for purposes of chapter 15 of title 31, 

5 United States Code, or under any other authority. 

6 (d) WORKING CAPITAL FUND.—The Commissioner 

7 may impose assessments and fees in excess of actual ex8 penses for any given year, to maintain an appropriate 

9 working capital fund, provided that the Commissioner re10 mits to the payers of such assessments and fees any funds 

11 collected in excess of what the Commissioner determines 

12 to be necessary to maintain such working capital fund. 

13 (e) USE OF FUNDS.—The Commissioner may use the 

14 fees and assessments collected pursuant to this section to 

15 pay all operating costs of the Office, including the salary 

16 and administrative expenses of the Office. 

17 SEC. 115. APPROPRIATIONS DURING START-UP PERIOD. 

18 The Commissioner may borrow from the Secretary of 

19 the Treasury such funds as the Commissioner determines 

20 to be necessary and appropriate to organize and begin op21 erations of the Office. Any such loan shall be repaid, in 

22 full (with interest at a rate set by the Secretary of the 

23 Treasury), from assessments imposed under the terms of 

24 section 114 not later than the date that is 30 years after 

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1 ments on any loan to be made in such amounts and at 

2 such times as the Commissioner determines to be appro3 priate. 

4 SEC. 116. DISCLOSURE OF INFORMATION. 

5 (a) REGULATIONS REQUIRED.—The Commissioner 

6 shall issue regulations for the disclosure of reports, appli7 cations, filings, correspondence, records, and other infor8 mation prepared by, reported to, obtained by, or submitted 

9 to the Commissioner. 

10 (b) SUPERVISORY PRIVILEGE.—The regulations 

11 issued pursuant to subsection (a) shall prohibit the disclo12 sure of confidential supervisory information, as such infor13 mation is defined by the Commissioner in such regulation. 

14 (c) OTHER PRIVILEGES.—The submission by any 

15 person of any information to the Commissioner for any 

16 purpose in the course of any supervisory or regulatory 

17 process of the Commissioner shall not be construed as 

18 waiving, destroying, or otherwise affecting any privilege 

19 that such person may claim with respect to such informa20 tion under Federal or State law as to any person or entity 

21 other than the Commissioner. 

22 SEC. 117. ANTI-MONEY LAUNDERING COMPLIANCE. 

23 (a) REGULATION REQUIRED.—The Commissioner 

24 shall, by regulation, require national insurers and national 

25 insurance agencies to establish and maintain procedures 


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1 reasonably designed to assure and monitor compliance 

2 with the recordkeeping and reporting requirements of sub3 chapter II of chapter 53 of title 31, United States Code, 

4 and implementing regulations issued by the Department 

5 of the Treasury, to the extent that those requirements 

6 apply to a national insurer or national insurance agency. 

7 (b) MINIMUM PROCEDURES.—The regulations issued 

8 under subsection (a) shall require— 

9 (1) the establishment of internal controls to 

10 monitor compliance with applicable requirements; 

11 (2) testing for compliance; 

12 (3) training of personnel; and 

13 (4) the designation of an individual or individ14 uals responsible for coordinating and monitoring 

15 compliance. 

16 Subtitle C—Enforcement Powers of 

17 Commissioner 

18 SEC. 121. REVOCATION OR SUSPENSION OF CHARTER OR 

19 LICENSE. 

20 (a) CHARTER REVOCATION.—The Commissioner may 

21 order the revocation of the charter of a national insurer 

22 or national insurance agency if the Commissioner deter23 mines that such insurer or agency— 


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1 (1) is engaged or has engaged in conduct that 

2 is hazardous to the insurer or agency and an undue 

3 risk of loss to the policyholders of such insurer; 

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

5 not consistent with the continuation of existing oper6 ations; or 

7 (3) is violating or has violated any— 

8 (A) applicable law or regulation; 

9 (B) order or condition imposed in writing 

10 by the Commissioner in connection with the ap11 proval of an application, filing, statement, no12 tice, or other request by the insurer or agency; 

13 or 

14 (C) written agreement entered into be15 tween the insurer or agency and the Commis16 sioner. 

17 (b) LICENSE REVOCATION.—The Commissioner may 

18 order the revocation of the license of a national insurance 

19 producer if the Commissioner determines that such pro20 ducer— 

21 (1) is violating or has violated any applicable 

22 law, regulation, order, condition imposed in writing 

23 by the Commissioner in connection with the approval 

24 of an application, filing, statement, notice or other 

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1 tered into between the producer and the Commis2 sioner; 

3 (2) provided incorrect, misleading, incomplete, 

4 or materially untrue information in an application 

5 for a license; 

6 (3) used fraudulent, coercive, or dishonest prac7 tices; or 

8 (4) demonstrated incompetence, 

9 untrustworthiness, or financial irresponsibility as an 

10 insurance producer. 

11 (c) SUSPENSION ORDER.—If the Commissioner, in 

12 the course of a charter or license revocation proceeding 

13 under this section, finds that a national insurer, national 

14 insurance agency, or national insurance producer poses an 

15 undue risk of loss to the policyholders of a national insurer 

16 as a whole, the Commissioner may order the suspension 

17 of the charter or license of such insurer, agency or pro18 ducer, as applicable. 

19 (d) NOTICE.—If the Commissioner orders the revoca20 tion of a charter or a license under subsection (a) or (b), 

21 the Commissioner shall provide the national insurer, na22 tional insurance agency, or national insurance producer 

23 that is the subject of such revocation notice of such rev24 ocation. Such notice shall include— 


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1 (1) a statement of the reasons for such revoca2 tion, including any determination by the Commis3 sioner under subsection (a) or (b); and 

4 (2) a date and place for a hearing before the 

5 Commissioner with respect to such revocation. 

6 (e) HEARING; TERMINATION.—If, on the basis of the 

7 evidence presented at a hearing before the Commissioner 

8 (or any person designated by the Commissioner for such 

9 purpose), in which all issues shall be determined on the 

10 record pursuant to section 554 of title 5, United States 

11 Code, and the written findings of the Commissioner (or 

12 such person) with respect to such evidence (which shall 

13 be conclusive), the Commissioner finds an undue risk of 

14 loss to the policyholders of a national insurer as a whole 

15 or a violation specified in the notice given under subsection 

16 (d) has been established, the Commissioner may issue an 

17 order terminating the charter or license of the national 

18 insurer, national insurance agency, or national insurance 

19 producer effective as of a date subsequent to that finding. 

20 (f) JUDICIAL REVIEW.— 

21 (1) IN GENERAL.—Any hearing provided for in 

22 this section (other than the hearing provided for in 

23 subsection (e)) shall be held in the Federal judicial 

24 district or in the territory in which the home office 

25 of the national insurer, national insurance agency, 


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1 or national insurance producer is located unless the 

2 party afforded the hearing consents to another place, 

3 and shall be conducted in accordance with the provi4 sions of chapter 5 of title 5 of the United States 

5 Code. After such hearing, and within 90 days after 

6 the Commissioner has notified the parties that the 

7 case has been submitted to it for final decision, it 

8 shall render its decision (which shall include findings 

9 of fact upon which its decision is predicated) and 

10 shall issue and serve upon each party to the pro11 ceeding an order consistent with the provisions of 

12 this section. Judicial review of any such order shall 

13 be exclusively as provided in this subsection. 

14 (2) APPEAL.—Any party to a proceeding under 

15 paragraph (1) may obtain a review of any order 

16 issued pursuant to paragraph (1) (other than an 

17 order issued with the consent of the national insurer, 

18 national insurance agency, or national insurance 

19 producer concerned) by the filing in the court of ap20 peals of the United States for the circuit in which 

21 the home office of the national insurer, national in22 surance agency, or national insurance producer is lo23 cated, or in the United States Court of Appeals for 

24 the District of Columbia Circuit, within 30 days 

25 after the date of service of such order, a written peVerDate Nov 24 2008 02:15 Apr 07, 2009 Jkt 079200 PO 00000 Frm 00039 Fmt 6652 Sfmt 6201 E:\BILLS\H1880.IH H1880

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1 tition for the order to be modified, terminated, or set 

2 aside. The party filing such a petition shall transmit 

3 to the Commissioner a copy of the petition and the 

4 Commissioner shall file in the court the record in the 

5 proceeding, as provided in section 2112 of title 28 

6 of the United States Code. Review of such pro7 ceedings shall be had as provided in chapter 7 of 

8 title 5 of the United States Code. The judgment and 

9 decree of the court shall be final, except that the 

10 same shall be subject to review by the Supreme 

11 Court upon certiorari, as provided in section 1254 of 

12 title 28 of the United States Code. 

13 SEC. 122. OTHER ENFORCEMENT POWERS. 

14 (a) IN GENERAL.—The Commissioner may issue 

15 cease and desist orders, prohibition, suspension, removal 

16 orders, and impose civil money penalties upon a national 

17 insurer, national insurance agency, national insurance 

18 producer, and any insurer-affiliated party on the same 

19 grounds and the same terms and conditions applicable to 

20 the issuance of such orders by a Federal banking agency 

21 under section 8 of the Federal Deposit Insurance Act, as 

22 if a national insurer, national insurance agency, or na23 tional insurance producer was an insured depository insti24 tution, an insurer-affiliated party was an institution-affiliVerDate Nov 24 2008 02:15 Apr 07, 2009 Jkt 079200 PO 00000 Frm 00040 Fmt 6652 Sfmt 6201 E:\BILLS\H1880.IH H1880

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1 ated party, the Commissioner was a Federal banking 

2 agency, and a policyholder was a depositor. 

3 (b) HOLDING COMPANIES AND OTHER SUBSIDI4 ARIES.—This section shall apply to a national insurance 

5 holding company and to any subsidiary of a national in6 surance holding company in the same manner as such sec7 tion applies to a national insurer. 

8 SEC. 123. INSURANCE FRAUD. 

9 (a) INVESTIGATIONS.—Director of the Division of In10 surance Fraud may investigate suspected fraudulent in11 surance acts by national insurers, national insurance 

12 agencies, national insurance producers, and other persons. 

13 (b) PENALTY.— 

14 (1) IN GENERAL.—Except as provided in para15 graphs (2) and (3), whoever commits a fraudulent 

16 insurance act or whoever knowingly and intentionally 

17 interferes with the investigations of a suspected 

18 fraudulent insurance act shall be subject to a fine of 

19 not more than $500,000, imprisonment for not more 

20 than 5 years or both. 

21 (2) NATIONAL INSURERS, AGENCIES, INSUR22 ANCE PRODUCERS.—If the person committing an of23 fense referred to in paragraph (1) is a national in24 surer, national insurance agency, national insurance 

25 producer, or insurer-affiliated party, such person 


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1 shall be subject to a fine of not more than 

2 $1,000,000 per violation per day, or imprisonment 

3 for not more than 10 years, or both. 

4 (3) LOW AMOUNTS.—If the person committing 

5 an offense referred to in paragraph (1) is not a na6 tional insurer, national insurance agency, national 

7 insurance producer, or insurer-affiliated party and 

8 the offense is a fraudulent insurance act involving 

9 an amount or value not exceeding $5,000, such per10 son shall be subject to a fine of not more than 

11 $100,000, imprisonment for not more than one year, 

12 or both. 

13 (4) ADDITIONAL PENALTIES.—The penalties 

14 under this subsection shall be in addition to any 

15 other penalties imposed under this Act. 

16 (5) RESTITUTION REQUIRED.—Any person con17 victed of an offense referred to in paragraph (1) 

18 shall make monetary restitution for any financial 

19 loss or damage sustained by any other person as a 

20 result of such offense. Such restitution shall be the 

21 exclusive monetary remedy available to the victim at 

22 law or in equity after entry of judgment. 

23 (c) IMMUNITY FROM LIABILITY.— 

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

25 paragraph (2), any person who shares, furnishes, 


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1 discloses, receives, collects, or uses information con2 cerning a suspected, anticipated, or completed fraud3 ulent insurance act shall not be liable to any person 

4 under any provision of law of the United States or 

5 of any State or political subdivision of any State, or 

6 under any contract or other legally enforceable 

7 agreement, for such act, if the information is pro8 vided to or received from— 

9 (A) the Commissioner or any employee, 

10 agent, or representative of the Commissioner; 

11 (B) a Federal, State, or local enforcement 

12 or regulatory official or an employee, agent, or 

13 representative of such official; 

14 (C) a self-regulatory organization or an 

15 employee, agent, or representative of such orga16 nization; 

17 (D) a person involved in the investigation 

18 (including cooperation or participation in an in19 vestigation), prevention, and detection of fraud20 ulent insurance acts or an employee, agent, or 

21 representative of such person; or 

22 (E) the NAIC or an employee, agent, or 

23 representative of the NAIC. 

24 (2) MALICE.— 


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1 (A) IN GENERAL.—Paragraph (1) shall not 

2 apply with respect to false statements made 

3 with actual malice by a person to a person re4 ferred to in subparagraphs (A) through (E) of 

5 paragraph (1). 

6 (B) CONTENTS OF COMPLAINT.—In an ac7 tion brought against a person for filing a report 

8 or furnishing other information concerning a 

9 fraudulent insurance act, the party bringing the 

10 action shall plead specifically any allegation 

11 that paragraph (1) does not apply because the 

12 person filed the report or furnished the infor13 mation with actual malice. 

14 (d) FRAUDULENT INSURANCE ACT DEFINED.—In 

15 this section, the term ‘‘fraudulent insurance act’’ means 

16 an act or omission committed by a person who, knowingly 

17 and with intent to defraud, and for the purpose of depriv18 ing another of property or for pecuniary gain, commits, 

19 participates in, or aids, abets, or conspires to commit or 

20 solicits another person to commit, or permits its employees 

21 or its agents to commit, one or more of the following: 

22 (1) Presenting, causing to be presented, or pre23 paring with knowledge or belief that it will be pre24 sented to or by a national insurer, national insur25 ance agency, State insurer, State insurance agency, 


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1 or insurance producer acting with respect to a policy 

2 of insurance written by a national insurer or State 

3 insurer, false information as part of, in support of, 

4 or concerning a fact material to one or more of the 

5 following: 

6 (A) An application for a new or renewal of 

7 an insurance policy or reinsurance contract. 

8 (B) The rating of a national insurer or 

9 State insurer that writes an insurance policy or 

10 enters into a reinsurance contract. 

11 (C) A claim for payment or benefit pursu12 ant to an insurance policy or reinsurance con13 tract. 

14 (D) Premiums paid on an insurance policy 

15 or reinsurance contract. 

16 (E) Payments made in accordance with the 

17 terms of an insurance policy or reinsurance con18 tract. 

19 (F) A document filed with the Commis20 sioner. 

21 (G) The financial condition of a national 

22 insurer or State insurer. 

23 (H) The formation, acquisition, merger, 

24 consolidation, or dissolution of a national in25 surer or national insurance agency. 


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1 (I) The issuance of evidence of insurance. 

2 (J) The reinstatement of an insurance pol3 icy. 

4 (2) Solicitation or acceptance of new or renewal 

5 insurance risks on behalf of a national insurer, na6 tional insurance agency, State insurer, State insur7 ance agency, or insurance producer, or other persons 

8 engaged in the business of insurance by a person 

9 who knows or should know that the national insurer 

10 or State insurer is insolvent at the time of the trans11 action. 

12 (3) Removal, concealment, alteration, or de13 struction of the records of a national insurer, na14 tional insurance agency, State insurer, State insur15 ance agency, or insurance producer. 

16 (4) Transaction of the business of insurance in 

17 violation of laws requiring a charter or license under 

18 this Act. 

19 (5) Attempting to commit, aiding or abetting in 

20 the commission of, or conspiracy to commit the acts 

21 or omissions specified in this subsection. 

22 SEC. 124. FOREIGN INVESTIGATIONS. 

23 (a) REQUESTING ASSISTANCE FROM FOREIGN GOV24 ERNMENTS.—In conducting any investigation, examina25 tion, or enforcement action under this subtitle, the ComVerDate Nov 24 2008 02:15 Apr 07, 2009 Jkt 079200 PO 00000 Frm 00046 Fmt 6652 Sfmt 6201 E:\BILLS\H1880.IH H1880

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1 missioner may request the assistance of any foreign gov2 ernment. 

3 (b) PROVIDING ASSISTANCE TO FOREIGN GOVERN4 MENTS.—The Commissioner may assist any foreign gov5 ernment that is conducting an investigation to determine 

6 whether any person has violated, is violating, or is about 

7 to violate any law or regulation relating to insurance mat8 ters or currency transactions administered or enforced by 

9 such foreign government. 

10 SEC. 125. PROMPT CORRECTIVE ACTION. 

11 (a) RULEMAKING.— 

12 (1) IN GENERAL.—Not later than the expira13 tion of the 6-month period beginning upon the date 

14 of submission of the report under subsection (b)(3) 

15 to the Commissioner, the Commissioner shall pro16 mulgate such regulations, applicable to national in17 surers, as the Commissioner determines appropriate 

18 and consistent with the recommendation in that re19 port to ensure that prompt corrective action is taken 

20 to resolve any hazardous financial condition of a na21 tional insurer. 

22 (2) REQUIRED CONTENT.—Rules required by 

23 this subsection shall include such capital measures 

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1 surers, requirements for such insurers, procedures, 

2 provisions regarding conservatorship and receiver3 ship of such insurers, and other provisions as the 

4 Commissioner considers are appropriate and con5 sistent with any recommendations in the report and 

6 the standards established pursuant to section 312 of 

7 this Act. 

8 (b) GAO STUDY AND REPORT.— 

9 (1) IN GENERAL.—The Comptroller General of 

10 the United States shall conduct a study to identify 

11 an appropriate structure of procedures and require12 ments for taking prompt corrective actions with re13 spect to national insurers, to ensure that any haz14 ardous financial condition of such a national insurer 

15 is resolved effectively and efficiently, with the fewest 

16 possible losses. 

17 (2) REQUIREMENTS.—In conducting the study 

18 required by this subsection, the Comptroller General 

19 shall analyze and evaluate various proposals, struc20 tures, methods, and systems for taking prompt cor21 rective actions with respect to various financial enti22 ties and institutions, including— 

23 (A) the prompt corrective action require24 ments under section 38 of the Federal Deposit 


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1 Insurance Act (12 U.S.C. 1831o) with respect 

2 to insured depository institutions; and 

3 (B) the ‘‘Model Regulation to Define 

4 Standards and Commissioner’s Authority for 

5 Companies Deemed to be in Hazardous Finan6 cial Condition’’ of the NAIC. 

7 (3) REPORT.— 

8 (A) IN GENERAL.—Not later than the ex9 piration of the 6-month period beginning on the 

10 date of enactment of this Act, the Comptroller 

11 General shall submit a report to the Committee 

12 on Banking, Housing, and Urban Affairs of the 

13 Senate, the Committee on Financial Services of 

14 the House of Representatives, and the Commis15 sioner, regarding the study required under this 

16 subsection. 

17 (B) CONTENTS.—The report required 

18 under this paragraph shall describe the study 

19 and the results of the evaluations conducted 

20 under the study, and shall include a specific 

21 recommendation to the Commissioner for estab22 lishment of an appropriate structure of proce23 dures and requirements for taking prompt cor24 rective actions with respect to national insurers, 

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1 tion of a national insurer is resolved effectively 

2 and efficiently with the fewest possible losses. 

3 TITLE II—SYSTEMIC RISK REGU4 LATION, COORDINATING 

5 COUNCIL FOR FINANCIAL 

6 REGULATORS, INTER7 NATIONAL AGREEMENTS 

8 SEC. 201. SYSTEMIC RISK REGULATION. 

9 (a) DELEGATION OF AUTHORITY.—Not later than 90 

10 days after the date of enactment of this Act, the President 

11 shall designate a systemic risk regulator for covered insti12 tutions. In making this designation the President shall 

13 consult with the Chairman of the Senate Committee on 

14 Banking, Housing and Urban Affairs, and the House 

15 Committee on Financial Services, and shall designate a 

16 Federal agency, other than the Office of National Insur17 ance, that has experience in financial regulation and su18 pervision as the systemic risk regulator for covered institu19 tions. 

20 (b) POWERS OF SYSTEMIC RISK REGULATOR.—Not21 withstanding any other provision of law, the agency des22 ignated pursuant to subsection (a) may— 

23 (1) request information on the activities and op24 erations of a covered institution, or any affiliate of 

25 a covered institution, from such institution or such 


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1 affiliate, and from the Office or a State insurance 

2 authority responsible for supervising such covered 

3 institution, as applicable; 

4 (2) participate with the Office or a State insur5 ance authority, as applicable, in an examination of 

6 a covered institution and any affiliate of such cov7 ered institution; 

8 (3) if such agency determines that the activities 

9 of a covered institution, any affiliate of a covered in10 stitution, any category of covered institutions, or any 

11 product or service offered by a covered institution is 

12 having, or would have, serious adverse effects on 

13 economic conditions or financial stability, rec14 ommend corrective action to the Commissioner or a 

15 State insurance authority, including recommenda16 tions to— 

17 (A) restrict or prohibit the covered institu18 tion, any affiliate of the covered institution, or 

19 any category of covered institutions from en20 gaging in such activity or practice or offering 

21 such product or service; or 

22 (B) take any other action that the agency 

23 deems appropriate to mitigate or avoid the ad24 verse effects of such activity, practice, product 

25 or service; 


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1 (4) issue a rule or order to address the activi2 ties that are the subject of a recommendation made 

3 pursuant to paragraph (3), if— 

4 (A) the Commissioner or State insurance 

5 authority fail to implement corrective actions 

6 within a reasonable period of time, as deter7 mined by such agency; and 

8 (B) the Coordinating Council for Financial 

9 Regulators established in section 202 deter10 mines, by a two-thirds vote of its membership, 

11 that such corrective action is necessary to miti12 gate or avoid an impending serious adverse ef13 fect on economic conditions or financial stability 

14 in the United States; and 

15 (5) in consultation with the Commissioner— 

16 (A) determine if a covered institution is 

17 systemically important; and 

18 (B) if such covered institution is deter19 mined to be systemically important, determine 

20 if such covered institution should be required to 

21 be chartered under title III of this Act. 

22 (c) ACCESS TO INFORMATION AND CONFIDEN23 TIALITY.— 

24 (1) COURT ORDER.—If the agency designated 

25 pursuant to subsection (a) is not given prompt and 


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1 reasonable access to officers, employees, agents, 

2 books, records and documents of a covered institu3 tion, or any affiliate of a covered institution, such 

4 agency may apply to the United States district court 

5 for the judicial district in which the main office of 

6 the covered institution is located for an order requir7 ing that such access be promptly provided. 

8 (2) CONFIDENTIALITY.—Information provided 

9 or obtained under the terms of paragraph (2) or (3) 

10 of subsection (b) shall be treated as confidential su11 pervisory information and exempt from the require12 ments of section 552 of title 5, United States Code. 

13 (d) JUDICIAL REVIEW.—Any covered institution or 

14 affiliate of a covered institution that is the subject of an 

15 order issued pursuant to this section may obtain review 

16 of such order in the United States Court of Appeals within 

17 any circuit where such institution or such affiliate has its 

18 principal place of business, or in the Court of Appeals in 

19 the District of Columbia, by filing in the court, within 30 

20 days of after issuance of such order, a petition praying 

21 that the order be set aside. Such covered institution or 

22 affiliate shall transmit to the agency designated pursuant 

23 to subsection (a) a copy of such petition and the agency 

24 shall file in the court the record made before the agency, 

25 as provided in section 2112 of title 28, United States 


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1 Code. Upon the filing of such petition, the court shall have 

2 jurisdiction to affirm, set aside, or modify the order and 

3 to require the agency to take such action with regard to 

4 the matter under review as the court deems proper. The 

5 findings of the agency as to the facts, if supported by sub6 stantial evidence, shall be conclusive. 

7 (e) COSTS.—The agency designated pursuant to sub8 section (a) shall recover all direct and indirect costs associ9 ated with the exercise of its authority under this section 

10 through the imposition of an assessment on each covered 

11 institution that is equal to the product of— 

12 (1) an assessment rate established by the agen13 cy, by regulation; and 

14 (2) the amount of the covered institution’s aver15 age total assets during the preceding year. 

16 (f) REPORT TO CONGRESS AND GAO REVIEW.— 

17 (1) REPORT TO CONGRESS.—The agency des18 ignated pursuant to subsection (a) shall provide a 

19 written report to Congress of any action or deter20 mination made under paragraph (3), (4), or (5) of 

21 subsection (b), and an explanation of the basis for 

22 such determination. 

23 (2) GAO REVIEW.—The Comptroller General of 

24 the United States shall review and report to Con25 gress on any determination under paragraph (3), 


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1 (4), or (5) of subsection (b), including the basis for 

2 the determination and the purpose for which any ac3 tion was taken. 

4 (g) COVERED INSTITUTION DEFINED.—In this sec5 tion, the term ‘‘covered institution’’ means a national in6 surer and any insurance company organized and super7 vised under State law. 

8 SEC. 202. COORDINATING COUNCIL FOR FINANCIAL REGU9 LATORS. 

10 (a) ESTABLISHMENT AND PURPOSE.—There is es11 tablished the Coordinating National Council for Financial 

12 Regulators (in this section referred to as the ‘‘Council’’) 

13 to serve as a forum for financial regulators to collectively 

14 identify and consider issues related to the regulation and 

15 supervision of financial services firms, including the sta16 bility and integrity of financial markets, investor and con17 sumer protection, the efficiency and effectiveness of regu18 lation and supervision, and other matters of mutual con19 cern. 

20 (b) FUNCTIONS OF THE COUNCIL.— 

21 (1) DUTIES.—The Council shall— 

22 (A) monitor and measure the health and 

23 competitiveness of the financial services indus24 try in the United States, including its compo25 nent segments; 


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1 (B) develop early warning systems to de2 tect potential points of weakness or strains in 

3 financial markets; 

4 (C) recommend coordinated actions for na5 tional and State financial regulators and finan6 cial services firms, especially in times of market 

7 stress or financial crisis; 

8 (D) develop model supervisory policies for 

9 national and State financial regulators; and 

10 (E) as necessary, make determinations re11 ferred to in section 201(b)(4)(B). 

12 (2) LIMITATION.—Except as provided in para13 graph (1)(E), the Council shall not have any inde14 pendent supervisory or regulatory authority. 

15 (c) COMPOSITION.—The Council shall be composed 

16 of— 

17 (1) the Secretary of the Treasury, who shall 

18 serve as the chair of the Council; 

19 (2) the Chairman of the Board of Governors of 

20 the Federal Reserve System; 

21 (3) the Chairman of the Securities and Ex22 change Commission; 

23 (4) the Chairman of the Commodities Futures 

24 Trading Commission; 

25 (5) the Comptroller of the Currency; 


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1 (6) the Director of the Office of Thrift Super2 vision; 

3 (7) the Chairman of the Federal Deposit Insur4 ance Corporation; 

5 (8) the Commissioner of National Insurance; 

6 (9) an individual appointed by the President, by 

7 and with the advice and consent of the Senate, who 

8 is knowledgeable in State regulation of depository in9 stitutions and other State licensed lenders; 

10 (10) an individual appointed by the President, 

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

12 who is knowledgeable in State regulation of the busi13 ness of insurance; and 

14 (11) an individual appointed by the President, 

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

16 who is knowledgeable in State regulation of securi17 ties activities. 

18 (d) CONDITIONS APPLICABLE TO APPOINTED MEM19 BERS OF THE COUNCIL.— 

20 (1) CONSULTATION.—In making the appoint21 ments under paragraphs (9), (10), and (11) of sub22 section (c), the President shall consult with the Con23 ference of State Bank Supervisors, the National As24 sociation of Insurance Commissioners, and the 

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1 tion, or any successor organizations formed to rep2 resent the interests of State banking, insurance, and 

3 securities regulators. 

4 (2) TERM AND VACANCY.—Members appointed 

5 under paragraphs (9), (10), and (11) of subsection 

6 (c) shall serve for a term of 5 years. A vacancy in 

7 the Council of a member appointed under one of 

8 such paragraphs shall be filled in the same manner 

9 in which the original appointment was made. The 

10 member appointed to fill the vacancy shall be ap11 pointed only for the remainder of the term of the 

12 preceding member. 

13 (3) TRAVEL EXPENSES.—Members appointed 

14 under paragraphs (9), (10), and (11) of subsection 

15 (c) shall receive travel expenses, including per diem 

16 in lieu of subsistence, in accordance with applicable 

17 provisions under subchapter I of chapter 57 of title 

18 5, United States Code. 

19 (4) PROHIBITION ON FINANCIAL INTERESTS.— 

20 A member appointed under paragraph (9), (10), or 

21 (11) of subsection (c) may not have a direct finan22 cial interest in any financial services firm. 

23 (e) MEETINGS.—The Council shall meet at least 

24 every 90 days upon the call of the Chair. Each member 

25 of the Council (other than the members appointed under 


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1 paragraphs (9), (10), and (11) of subsection (c)) may des2 ignate a senior policymaking official to represent such 

3 member at a meeting of the Council, as necessary and ap4 propriate. 

5 (f) CONSULTATION.—The Council shall consult, as 

6 appropriate, with major market participants, the various 

7 exchanges, clearinghouses, self-regulatory bodies, trade as8 sociations and others, and may seek private sector solu9 tions to issues whenever possible. 

10 (g) INFORMATION SHARING.—The members of the 

11 Council shall, to the extent permitted by law, share infor12 mation as may be necessary to fulfill the functions of the 

13 Council. 

14 (h) ANNUAL REPORT.—The Council shall submit an 

15 annual report to the President, Congress, and the gov16 ernors and legislatures of each State on its activities. 

17 (i) ADMINISTRATIVE SUPPORT.—The Secretary of 

18 the Treasury shall provide the Council with such adminis19 trative support services as may be necessary for the per20 formance of its functions. 

21 (j) AUTHORIZATION.—There is authorized to be ap22 propriated such funds as may be necessary to carry out 

23 this section. 


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1 SEC. 203. INTERNATIONAL AGREEMENTS. 

2 (a) IN GENERAL.—The Commissioner may engage in 

3 international efforts to secure bilateral and multilateral 

4 agreements with foreign insurance regulators and regional 

5 and global regulatory organizations in order to— 

6 (1) promote the stability and integrity of insur7 ance markets; 

8 (2) encourage open and fair competition in such 

9 markets; and 

10 (3) improve the quality and uniformity of insur11 ance supervision and regulation internationally and 

12 provide the regulation of cross-border provisions of 

13 insurance and reinsurance services. 

14 (b) TECHNICAL ASSISTANCE.—The Commissioner 

15 may provide technical assistance to, and cooperation with, 

16 foreign insurance regulators and regional and global regu17 latory organizations, including the development and imple18 mentation of international regulatory standards for insur19 ance, and the development and implementation of bilateral 

20 and multilateral mutual recognition agreements on the li21 censing of insurers and insurance producers. 

22 (c) CONSULTATION.—In exercising the authority 

23 granted under this section, the Commissioner shall consult 

24 and cooperate with the Executive Office of the President 

25 and the United States Trade Representative. 


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1 TITLE III—NATIONAL INSUR2 ANCE COMPANIES AND NA3 TIONAL INSURANCE AGEN4 CIES 

5 Subtitle A—Organization, 

6 Chartering, and Powers 

7 SEC. 301. ORGANIZATION AND CHARTERING. 

8 (a) CHARTERS.— 

9 (1) IN GENERAL.—The Commissioner shall, 

10 under such regulations as the Commissioner pre11 scribes, issue charters to and provide for the organi12 zation of— 

13 (A) national insurers in stock, mutual, re14 ciprocal, or fraternal form; and 

15 (B) national agencies as corporations, 

16 partnerships, limited liability companies, or in 

17 other forms recognized under State law. 

18 (2) NATIONAL INSURERS.—A charter for a na19 tional insurer issued under paragraph (1) may limit 

20 such national insurer to a specified line of insurance 

21 and shall only be issued for property and casualty 

22 insurance, life insurance, or the reinsurance of prop23 erty and casualty insurance and life insurance. A na24 tional insurer may only provide insurance for the 


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1 lines of insurance for which such insurer has been 

2 issued a charter under such paragraph. 

3 (3) NATIONAL AGENCIES.—A charter may be 

4 issued under paragraph (1) to a national insurance 

5 agency that sells, solicits, or negotiates property and 

6 casualty insurance, life insurance, or the reinsurance 

7 of property and casualty insurance and life insur8 ance. A national insurance agency may sell, solicit, 

9 or negotiate lines of insurance other than those for 

10 which such national insurance agency has been 

11 issued a charter under paragraph (1) in accordance 

12 with applicable State laws. 

13 (b) CHARTERING CRITERIA.—In determining wheth14 er to issue a charter for a national insurer or national 

15 insurance agency, the Commissioner shall consider the 

16 character and competency of the parties seeking the char17 ter, and the financial resources and future prospects of 

18 the proposed national insurer or proposed national insur19 ance agency. 

20 (c) LICENSING OF NON-UNITED STATES INSUR21 ERS.— 

22 (1) IN GENERAL.—A non-United States insurer 

23 may transact insurance in the United States through 

24 a United States branch by chartering the United 

25 States branch to do business as a national insurer 


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1 under this Act, under such regulations as the Com2 missioner may prescribe. 

3 (2) CHARTERING CRITERIA.—In carrying out 

4 subsection (b) with respect to a non-United States 

5 insurer, the Commissioner may take into account the 

6 nature of the insurance or reinsurance business that 

7 the non-United States insurer proposes to conduct 

8 through a United States branch and may give ap9 propriate recognition to the capital and other assets 

10 maintained by the non-United States insurer in a ju11 risdiction other than the United States. 

12 (3) OTHER APPLICABLE LAWS.—Nothing in 

13 this section shall be construed to prohibit a non14 United States insurer from doing business as an in15 surer without a charter under this Act on any basis 

16 permitted under applicable State laws or an inter17 national agreement. 

18 (4) NONDISCRIMINATION.— 

19 (A) IN GENERAL.—Except as provided in 

20 this section, the Commissioner may not impose 

21 any condition for the issuance of a charter 

22 under this section to a national insurer solely 

23 because the national insurer is— 

24 (i) a subsidiary of a non-United 

25 States person; 


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1 (ii) partially owned by a non-United 

2 States person; or 

3 (iii) a United States branch of a non4 United States insurer. 

5 (B) EXCEPTION.—Notwithstanding sub6 paragraph (A), the Commissioner may impose 

7 conditions for the issuance of a charter under 

8 this section that are different from those im9 posed on other national insurers if— 

10 (i) the conditions attached are con11 tained in the charter under which the na12 tional insurer chooses to operate; and 

13 (ii) the Commissioner makes a written 

14 finding that the conditions are related to 

15 the protection of policyholders and are the 

16 minimum conditions necessary to achieve 

17 the purposes of this Act. 

18 (d) NO DELEGATION PERMITTED.—The Commis19 sioner may not delegate the authorities of the Commis20 sioner under this section to any insurance self-regulatory 

21 organization. 

22 SEC. 302. CORPORATE GOVERNANCE. 

23 (a) MAIN OFFICE.—A national insurer or national in24 surance agency may designate any office at which it con25 ducts insurance operations as its main office, and for purVerDate Nov 24 2008 02:15 Apr 07, 2009 Jkt 079200 PO 00000 Frm 00064 Fmt 6652 Sfmt 6201 E:\BILLS\H1880.IH H1880

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1 poses of jurisdiction, a national insurer or national insur2 ance agency shall be deemed a citizen of the State in which 

3 its main office is located and of the State in which it has 

4 its principal place of business. 

5 (b) APPLICABLE LAW.—A national insurer or na6 tional insurance agency may elect to follow the corporate 

7 governance procedures of the law of the State in which 

8 the main office of the such insurer or agency is located, 

9 the law of the State in which a company that controls the 

10 insurer or agency is incorporated, title 8 of the Delaware 

11 Code (Delaware General Corporation Law), r the Model 

12 Business Corporation Act of the American Bar Associa13 tion. A national insurer or national insurance agency shall 

14 designate in its bylaws the body of law selected. 

15 (c) INDEPENDENT AUDIT COMMITTEE FOR NA16 TIONAL INSURERS.— 

17 (1) IN GENERAL.—Each national insurer and 

18 national insurance agency shall establish an audit 

19 committee of the board of directors of such insurer 

20 or such agency, which shall be composed entirely of 

21 outside directors who are independent of manage22 ment of such insurer or such agency. 

23 (2) SATISFACTION.—The requirement described 

24 in paragraph (1) shall be satisfied if a company that 

25 controls a national insurer or national insurance 


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1 agency has established an audit committee of its 

2 board of directors entirely composed of outside direc3 tors who are independent of management of such 

4 controlling person, and such committee reviews the 

5 financial statements of the national insurer or na6 tional insurance agency. 

7 (d) PARTICIPATING POLICY PROCEDURES.— 

8 (1) IN GENERAL.—A national insurer in mutual 

9 form shall elect to either adhere to participating pol10 icy procedures of the relevant law of the State in 

11 which its main office is located, or adhere to the 

12 participating policy procedures established by the 

13 Commissioner under paragraph (2). 

14 (2) REGULATIONS.—The Commissioner shall, 

15 by regulation, establish participating policy proce16 dures, as the Commissioner determines to be appro17 priate to carry out paragraph (1). 

18 (e) CONSUMER LIAISON.— 

19 (1) IN GENERAL.—Each national insurer and 

20 national insurance agency shall appoint a liaison to 

21 serve consumers and address complaints or disputes. 

22 (2) PROCEDURES.—Each national insurer and 

23 national insurance agency shall establish policies and 

24 procedures designed to reasonably ensure fair and 


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1 expeditious handling of consumer complaints and 

2 disputes. 

3 (3) REGULATIONS.—The Commissioner shall 

4 issue regulations governing the standards for the li5 aison referred to in paragraph (1). 

6 SEC. 303. CHARTER CONVERSIONS. 

7 (a) CONVERSION FROM STATE TO NATIONAL CHAR8 TER.— 

9 (1) IN GENERAL.—Notwithstanding any other 

10 provision of law, the Commissioner may, pursuant to 

11 regulations issued by the Commissioner, allow a 

12 State insurer to convert to a national insurer and a 

13 State insurance agency to convert to a national in14 surance agency. 

15 (2) EFFECT OF CONVERSION.—A State insurer 

16 or State insurance agency that converts under this 

17 section shall, by operation of law and without fur18 ther action, hold and be subject to all rights, privi19 leges, liabilities, property interests, and other inter20 ests and obligations that the State insurer or State 

21 insurance agency held, or was subject to, imme22 diately before the conversion. 

23 (3) SPECIAL AUTHORITY.—The Commissioner 

24 may, subject to such conditions as the Commissioner 

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1 surer or national insurance agency resulting from 

2 the conversion of a State insurer or State insurance 

3 agency, as applicable, to retain, hold, or exercise as4 sets, liabilities, powers, and authorities that do not 

5 conform to the legal requirements otherwise applica6 ble to national insurers or national insurance agen7 cies to the extent the Commissioner determines is 

8 appropriate. 

9 (b) CONVERSION FROM NATIONAL TO STATE CHAR10 TER.— 

11 (1) IN GENERAL.—A national insurer may con12 vert to a State insurer and a national insurance 

13 agency may convert to a State insurance agency in 

14 accordance with applicable State law if— 

15 (A) such national insurer or such national 

16 insurance agency notifies the Commissioner of 

17 the intention to convert in accordance with such 

18 procedures as the Commissioner may prescribe 

19 by regulation; and 

20 (B) after conducting a review of such na21 tional insurer or such national insurance agen22 cy, the Commissioner approves the conversion. 

23 (2) SAVINGS PROVISION.—Nothing in this sec24 tion or in the conversion of a national insurer to a 

25 State insurer or a national insurance agency to a 


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1 State insurance Agency shall operate to abrogate 

2 any rights, privileges, liabilities, property interests, 

3 or other interests or obligations that a national in4 surer or national insurance agency held or was sub5 ject to immediately before the conversion. 

6 (c) NO DELEGATION PERMITTED.—The Commis7 sioner may not delegate any authority under this section 

8 to any insurance self-regulatory organization. 

9 SEC. 304. POWERS. 

10 (a) IN GENERAL.— 

11 (1) NATIONAL INSURER.—A national insurer 

12 may, pursuant to such regulations as the Commis13 sioner prescribes— 

14 (A) engage in the sale, solicitation, nego15 tiation, and underwriting of property and cas16 ualty insurance (other than title insurance), life 

17 insurance, and reinsurance; 

18 (B) establish and maintain one or more 

19 separate accounts and allocate amounts to such 

20 accounts, and establish and maintain one or 

21 more protected cells in connection with an in22 surance securitization and attribute to such 

23 cells insurance and reinsurance obligations with 

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1 ing to the insurance securitization, and assets 

2 to fund such obligations; 

3 (C) hold and accumulate funds pursuant to 

4 funding agreements; 

5 (D) provide investment advice and invest6 ment management services; and 

7 (E) engage in all other insurance oper8 ations and exercise all such incidental powers as 

9 shall be necessary to carry on insurance oper10 ations. 

11 (2) NATIONAL INSURANCE AGENCY.—A na12 tional insurance agency may, pursuant to such regu13 lations and the Commissioner prescribes— 

14 (A) engage in the sale, solicitation, and ne15 gotiation of policies of insurance issued by any 

16 national insurer or State insurer, and the sale, 

17 solicitation and negotiation of surplus lines of 

18 insurance and nonadmitted insurance for a non19 admitted insurer; and 

20 (B) exercise all such incidental powers as 

21 shall be necessary to carry out such activities, 

22 including claims adjustment and settlement, 

23 risk management, employee benefits advice, re24 tirement planning, and any other insurance-re25 lated consulting activities. 


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1 (b) OTHER POWERS.—A national insurer or national 

2 insurance agency may, subject to such regulations as the 

3 Commissioner prescribes— 

4 (1) adopt and use a corporate seal, or a fac5 simile of it; 

6 (2) have perpetual succession until such time as 

7 it is liquidated, dissolved, merged, or otherwise 

8 wound up in accordance with applicable law; 

9 (3) adopt, amend, and repeal by-laws; 

10 (4) sue or be sued, complain and defend, and 

11 otherwise litigate in any court and participate, as a 

12 party or otherwise, in any judicial, administrative, 

13 arbitral, or other proceeding, in its corporate name; 

14 (5) make contracts and guarantees, incur liabil15 ities, borrow money, issue notes, bonds, and other 

16 obligations (which may be convertible into or include 

17 the option to purchase other securities of the na18 tional insurer or national insurance agency), and se19 cure any of its obligations by mortgage or pledge of 

20 any of its property, franchises, or income; 

21 (6) purchase, receive, subscribe for, or other22 wise acquire, own, hold, vote, improve, employ, use, 

23 and otherwise deal in and with real and personal 

24 property or other assets, or any interest therein, and 

25 sell, convey, mortgage, lease, exchange, transfer, or 


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1 otherwise dispose of, or mortgage or pledge, all or 

2 any of its property and assets, or any interest there3 in; 

4 (7) lend money, invest, and reinvest its funds 

5 and receive and hold real and personal property as 

6 security for repayment; 

7 (8) participate with others in any corporation, 

8 partnership, limited partnership, joint venture, or 

9 other association, or in any transaction, under10 taking, or arrangement, which the national insurer 

11 or national insurance agency would have power to 

12 conduct by itself, whether or not such participation 

13 involves sharing or delegating control with or to oth14 ers; 

15 (9) elect or appoint directors, officers, employ16 ees, and agents of the national insurer or national 

17 insurance agency, define their duties, fix their com18 pensation, and lend them money and credit; 

19 (10) make donations and otherwise devote its 

20 resources for the public welfare or for charitable, sci21 entific, educational, humanitarian, philanthropic, or 

22 religious purposes; and 

23 (11) engage in any other lawful activity that is 

24 necessary or convenient to further its activities and 

25 affairs. 


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1 (c) SUBSIDIARIES.—No national insurer or national 

2 insurance agency may establish or acquire a subsidiary 

3 without prior notice to the Commissioner, and shall con4 duct the activities in accordance with regulations and or5 ders of the Commissioner. 

6 (d) OTHER CORPORATE TRANSACTIONS.—No na7 tional insurer or national insurance agency shall engage 

8 in mutual to stock conversions, stock to mutual conver9 sions, mergers, acquisitions, asset transfers, and other 

10 similar corporate transactions without the prior approval 

11 of the Commissioner, and subject to regulations and or12 ders of the Commissioner. 

13 (e) PROHIBITED ACTIVITIES.—No national insurer or 

14 national insurance agency may engage in any activity that 

15 the Commissioner determines, by regulation or order, 

16 poses a serious risk to the solvency of a national insurer 

17 or national insurance agency, jeopardizes the interests of 

18 policyholders of a national insurer or national insurance 

19 agency, or otherwise is incompatible with the public inter20 est. 

21 (f) BULK TRANSFERS.— 

22 (1) BULK TRANSFERS AUTHORIZED.—A na23 tional insurer may only effect the following bulk 

24 transfers: 


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1 (A) A State insurer as the transferring in2 surer and a permitted national insurer as the 

3 assuming insurer. 

4 (B) A permitted national insurer as the 

5 transferring insurer and a State insurer as the 

6 assuming insurer. 

7 (C) A national insurer as the transferring 

8 insurer and a national insurer as the assuming 

9 insurer. 

10 (D) A State insurer as the transferring in11 surer and a national insurer that is not a per12 mitted national insurer as the assuming in13 surer. 

14 (E) A national insurer that is not a per15 mitted national insurer as the transferring in16 surer and a State insurer as the assuming in17 surer. 

18 (2) COMMISSIONER APPROVAL.— 

19 (A) IN GENERAL.—A national insurer shall 

20 not effect a bulk transfer as authorized under 

21 subparagraph (A), (B), (C), or (E) of para22 graph (1) without the prior approval of the 

23 Commissioner, in accordance with such regula24 tions as the Commissioner shall prescribe. 


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1 (B) STANDARD OF APPROVAL.—The Com2 missioner shall approve a bulk transfer under 

3 subparagraph (B), after notice and a hearing, 

4 unless the Commissioner determines that the 

5 bulk transfer is likely to be hazardous to policy6 holders of transferred insurance policies, policy7 holders of the transferring insurer, or policy8 holders of the assuming insurer. 

9 (3) POLICYHOLDER CONSENT.— 

10 (A) STATE INSURER AND PERMITTED NA11 TIONAL INSURER.—Notwithstanding any other 

12 provision of law, a national insurer is not re13 quired to obtain the consent of policyholders to 

14 effect a bulk transfer authorized under sub15 paragraph (A) or (B) of paragraph (1). 

16 (B) BETWEEN NATIONAL INSURERS OR

17 STATE INSURER AND OTHER NATIONAL IN18 SURER.—Notwithstanding any other provision 

19 of law, the Commissioner shall determine 

20 whether a national insurer wishing to effect a 

21 bulk transfer authorized under subparagraph 

22 (C) or (E) of paragraph (1) is required to ob23 tain the consent of policyholders to effect such 

24 transfer and the form in which such consent 

25 must be obtained. 


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1 (4) RELEASE FROM LIABILITY.—Upon the com2 pletion of a bulk transfer under this section, the 

3 transferring insurer shall be released from its obliga4 tions under the transferred insurance policies. 

5 (5) STATE LAW.— 

6 (A) PROHIBITION.—Except as provided in 

7 subparagraph (B), a State may not— 

8 (i) require a national insurer or a 

9 State insurer to— 

10 (I) obtain policyholder consent to 

11 a bulk transfer; or 

12 (II) submit the bulk transfer to 

13 State review or action (including ap14 proval and nondisapproval); or 

15 (ii) prevent or significantly interfere 

16 with a bulk transfer effected pursuant to 

17 this section. 

18 (B) CONSTRUCTION.—Subparagraph (A) 

19 shall not be construed to prohibit any State 

20 from— 

21 (i) collecting, reviewing, and taking 

22 action (including approval or disapproval) 

23 on applications and other documents or re24 ports concerning a proposed bulk transfer 

25 authorized under— 


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1 (I) subparagraph (B), (D), or 

2 (E) of paragraph (1) to which a State 

3 insurer (other than a permitted na4 tional insurer) domiciled in that State 

5 is a party; or 

6 (II) subparagraph (D) or (E) of 

7 paragraph (1) to which a State in8 surer (other than a permitted national 

9 insurer) doing business in that State, 

10 other than a State insurer domiciled 

11 in that State, is a party, if the review 

12 or action meets the standards set 

13 forth in subparagraph (C); or 

14 (ii) requiring policyholder consent of a 

15 proposed bulk transfer permitted under 

16 paragraph (4) or (5) of subsection (b). 

17 (C) STANDARDS.—A review or action 

18 meets the standards under this paragraph, if 

19 it— 

20 (i) is based on standards that are not 

21 more onerous than those imposed by the 

22 Commissioner; 

23 (ii) occurs within a reasonable time 

24 frame that advances the purposes of this 

25 section; 


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1 (iii) is made in close consultation and 

2 cooperation with the Commissioner; 

3 (iv) is without bias or discrimination 

4 toward either the transferring insurer or 

5 the assuming insurer; 

6 (v) serves a legitimate State interest; 

7 and 

8 (vi) does not frustrate the proposed 

9 bulk transfer. 

10 (D) NOTICE OF FAILURE.—If the Commis11 sioner finds that any State review or action 

12 under subparagraph (B)(i) fails to meet any of 

13 the standards set forth in subparagraph (C), 

14 the Commissioner may provide the applicable 

15 State with notice of such failure and the rea16 sons for such failure. 

17 (6) DIFFERENTIAL TREATMENT PROHIBITED.— 

18 A State may not treat a national insurer or a State 

19 insurer entering into a bulk transfer agreement with 

20 a national insurer or a State insurer, or any affiliate 

21 or subsidiary of such insurer, differently than any 

22 other insurer operating in that State. 

23 (7) NO DELEGATION PERMITTED.—The Com24 missioner may not delegate to any insurance self25 regulatory organization any authority conferred 


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1 under this subsection with respect to any bulk trans2 fer involving a national insurer. 

3 (8) DEFINITIONS.—In this subsection: 

4 (A) ASSUMING INSURER.—The term ‘‘as5 suming insurer’’ means the insurer that pur6 chases or otherwise acquires existing insurance 

7 policies from another insurer by bulk transfer. 

8 (B) BLOCK OF BUSINESS.—The term 

9 ‘‘block of business’’ means all those insurance 

10 policies of an insurer under a particular policy 

11 form. 

12 (C) BULK TRANSFER.—The term ‘‘bulk 

13 transfer’’— 

14 (i) means the transfer by an insurer 

15 to another insurer of existing insurance 

16 policies constituting all or substantially all 

17 of one or more of its lines of business or 

18 blocks of business; and 

19 (ii) does not include— 

20 (I) any sale in which the trans21 ferring insurer retains direct or indi22 rect control of the assets supporting 

23 the transferred insurance policies; 

24 (II) any transaction effected by 

25 an agreement under which the transVerDate Nov 24 2008 02:15 Apr 07, 2009 Jkt 079200 PO 00000 Frm 00079 Fmt 6652 Sfmt 6201 E:\BILLS\H1880.IH H1880

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1 ferring insurer continues to remain di2 rectly liable to the policyholders under 

3 the insurance policies; 

4 (III) the substitution of one in5 surer for another upon the expiration 

6 of insurance coverage pursuant to 

7 statutory or contractual requirements 

8 and the issuance of a new policy of in9 surance by that insurer; 

10 (IV) the transfer of policies of in11 surance pursuant to merger or con12 solidation of two or more insurers to 

13 the extent that those transactions are 

14 regulated by statute; 

15 (V) any transaction effected by 

16 an insurer subject to a judicial order 

17 of receivership, liquidation, or reha18 bilitation; or 

19 (VI) any transfer of liabilities 

20 from one insurer to another under a 

21 single group insurance policy upon the 

22 request of the group policyholder. 

23 (D) PERMITTED NATIONAL INSURER.— 

24 The term ‘‘permitted national insurer’’ 

25 means— 


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1 (i) a State insurer that has recently 

2 converted to a national insurer under sec3 tion 303, as determined by the Commis4 sioner; or 

5 (ii) a national insurer that has been 

6 issued a charter under section 301 for a 

7 new line of insurance, as determined by 

8 the Commissioner. 

9 (E) TRANSFERRED INSURANCE POLI10 CIES.—The term ‘‘transferred insurance poli11 cies’’ means the insurance policies that are sub12 ject to the bulk transfer. 

13 (F) TRANSFERRING INSURER.—The term 

14 ‘‘transferring insurer’’ means the insurer in 

15 privity of contract with the policyholders under 

16 the existing insurance policies that are subject 

17 to the bulk transfer. 

18 (g) EFFECT OF STATE LAW.—No State may prevent 

19 or restrict a national insurer or national insurance agency 

20 from exercising any power conferred by this section or by 

21 any regulation authorized by this section. 

22 SEC. 305. CHARTERING COMMENCEMENT DATE. 

23 The Commissioner may not charter a national insurer 

24 or national insurance agency until the Commissioner noti25 fies Congress that the Office is operational and that all 


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1 regulations necessary to govern the organization, forma2 tion, operations, and supervision of such insurers and 

3 agencies have been issued in final or interim final form. 

4 The Commissioner shall provide a notification to Congress 

5 not later than 2 years after the date of the enactment of 

6 this Act. 

7 Subtitle B—Financial, Policy and 

8 Market Conduct Standards 

9 SEC. 311. FINANCIAL STANDARDS. 

10 The Commissioner shall establish, by regulation, 

11 standards for national insurers and national insurance 

12 agencies on— 

13 (1) accounting and disclosure; 

14 (2) auditing; 

15 (3) risk management; 

16 (4) internal controls; 

17 (5) investments; 

18 (6) capital and liquidity; 

19 (7) actuarial opinions; 

20 (8) reinsurance; and 

21 (9) such other matters as the Commissioner 

22 deems necessary to ensure the financial stability and 

23 integrity of national insurers and national insurance 

24 agencies. 


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1 SEC. 312. POLICY STANDARDS. 

2 (a) POLICY STANDARDS.—The Commissioner shall 

3 establish, by regulation, general policy requirements and 

4 requirements for different categories of policies issued by 

5 national insurers. 

6 (b) FILING REQUIREMENT.—No national insurer 

7 may issue a policy until the form of the policy has been 

8 filed with the Commissioner. The form shall be accom9 panied by written certification by an officer of the national 

10 insurer that the policy complies with requirements estab11 lished under subsection (a). 

12 (c) LAW APPLICABLE.— 

13 (1) LAW SPECIFIED BY PARTIES.—The provi14 sions of any insurance policy or other product of a 

15 national life insurer shall be interpreted in accord16 ance with the law of the jurisdiction specified by the 

17 parties to the insurance policy or other product if 

18 the parties have specified the law of— 

19 (A) the jurisdiction in which the main of20 fice of the national life insurer is located; 

21 (B) the jurisdiction in which the principal 

22 place of business of the national life insurer is 

23 located; or 

24 (C) the jurisdiction in which the insurance 

25 policy or other product is delivered. 


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1 (2) DEFAULT LAW.—If the parties to an insur2 ance policy or other product of a national life in3 surer have not specified the jurisdiction whose law 

4 shall govern the provisions of the insurance policy or 

5 other product, such provisions shall be interpreted in 

6 accordance with the law of the jurisdiction in which 

7 the insurance policy or other product is delivered. 

8 (3) RULEMAKING.—The Commissioner shall es9 tablish, by regulation, choice of law rules under this 

10 subsection. 

11 (d) INTERPRETIVE RULINGS.— 

12 (1) PROCEDURES.—The Commissioner shall es13 tablish procedures by which national insurers may 

14 obtain interpretive rulings from the Office regarding 

15 the interpretation and application of the require16 ments established under this section. 

17 (2) PUBLIC AVAILABILITY.—Except as provided 

18 under paragraph (3), requests by national insurers 

19 for interpretive rulings from the Office and the com20 plete text of such interpretive rulings shall not be 

21 made available to the public. 

22 (3) PUBLICATION OF SUMMARIES.—Notwith23 standing paragraph (2), the Commissioner shall pub24 lish a summary of each interpretive opinion, exclud25 ing the name of the national insurer and any other 


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1 identifying information, either promptly after the 

2 issuance of such opinion or, upon the request of the 

3 national insurer, after such delay as the Commis4 sioner determines appropriate. 

5 (e) RATES, RATING ELEMENTS, AND PRICE.—The 

6 Commissioner may not require a national insurer to use 

7 any particular rate, rating element, or price. 

8 SEC. 313. MARKET CONDUCT STANDARDS. 

9 (a) STANDARDS.—The Commissioner shall establish, 

10 by regulation, market conduct standards for national in11 surers, national insurance agencies, and national insur12 ance producers that implement the model laws of the 

13 NAIC entitled ‘‘Unfair Trade Practices Act’’ and ‘‘Unfair 

14 Claims Settlement Practices Act’’. 

15 (b) DISCLOSURE.— 

16 (1) IN GENERAL.—Subject to paragraph (2), 

17 the Commissioner shall require each policy issued by 

18 a national insurer to include the following disclosure 

19 on the cover page: 

20 ‘‘This policy has been issued by a national in21 surer, which is supervised by the Office of National 

22 Insurance. If you have any questions or complaints 

23 about this policy, you may contact the Division of 

24 Consumer Affairs, Office of National Insurance, 

25 llll.’’. 


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1 (2) ADDRESS.—The disclosure required under 

2 paragraph (1) shall, in place of the blank at the end, 

3 include the appropriate address, toll-free number, 

4 and Internet address of the Division of Consumer 

5 Affairs for the office of the Division located in the 

6 State in which the policyholder resides. 

7 SEC. 314. GENERAL PRINCIPLES. 

8 (a) GENERAL PRINCIPLES.—The financial, policy, 

9 and market conduct standards issued by the Commis10 sioner pursuant to this subtitle shall— 

11 (1) promote the stability and integrity of na12 tional insurers and national insurance agencies; 

13 (2) protect policyholders and other consumers 

14 and investors; and 

15 (3) encourage innovation and competition by 

16 national insurers and national insurance agencies. 

17 (b) NAIC STANDARDS.—In establishing the finan18 cial, policy, and market conduct standards required by this 

19 subtitle, the Commissioner shall take into consideration 

20 standards, models, practices, and instructions established 

21 by the NAIC. 

22 Subtitle C—State Taxation 

23 SEC. 321. STATE TAXATION OF NATIONAL INSURERS. 

24 (a) STATE TAXATION RULE.—Except as provided in 

25 subsection (b) and section 605(b), a national insurer doing 


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1 business in any State shall be subject to all applicable 

2 State and local taxes, assessments, and charges, including 

3 insurance retaliatory taxes or other similar taxes, and 

4 shall be entitled to all applicable tax credits, deductions, 

5 and offsets provided under State law, as well as all policy6 holder surcharge provisions under State law, to the same 

7 extent and in the same manner as an insurer licensed to 

8 do business in such State and chartered in the State where 

9 the national insurer is considered domiciled under sub10 section (c) or (d), except that, such national insurer shall 

11 not be subject to— 

12 (1) any additional taxes, assessments, and 

13 charges imposed by such State (or local government) 

14 by reason of the failure of the national insurer to be 

15 licensed or otherwise authorized to conduct business 

16 or write or sell insurance policies, by such State; or 

17 (2) special assessments and charges that fund 

18 services that the State does not provide with respect 

19 to the national insurer. 

20 (b) EXCEPTION.—No State shall have the power to 

21 impose an insurance retaliatory tax on any national in22 surer, unless— 

23 (1) for any tax purpose for which the State of 

24 domicile is relevant, every national insurer is treated 


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1 by such State as domiciled in the State designated 

2 by each national insurer under subsection (c); and 

3 (2) the insurance retaliatory tax is imposed by 

4 such State on every national insurer to the same ex5 tent and in the same manner as it is imposed on 

6 every insurer chartered in the State where the na7 tional insurer is considered domiciled under sub8 section (c). 

9 (c) DESIGNATION OF DOMICILE.— 

10 (1) IN GENERAL.—A national insurer may des11 ignate as its State of domicile, by filing such des12 ignation in writing with the Commissioner— 

13 (A) the State in which the national insur14 er’s principal place of business in the United 

15 States is located; or 

16 (B) in the case of an insurer that has con17 verted from a State insurer to a national in18 surer under this Act, the State in which such 

19 insurer was domiciled immediately before such 

20 conversion. 

21 (2) NO DESIGNATION BY NATIONAL INSURER.— 

22 If a national insurer does not make a designation of 

23 a State of domicile under this subsection, the na24 tional insurer shall be deemed to have designated as 


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1 its State of domicile the State in which its principal 

2 place of business in the United States is located. 

3 (3) CHANGE IN DOMICILE.—A national insurer 

4 may change its State of domicile, with the approval 

5 of the Commissioner, to any other State in accord6 ance with paragraph (1). 

7 (d) STATUS OF NATIONAL INSURER.—For purposes 

8 of State taxation, except as provided in this section, a na9 tional insurer shall not be exempt from any State tax or 

10 subject to a lesser burden of any State tax, solely by rea11 son of its status as a national insurer under this Act. 

12 SEC. 322. STATE TAXATION OF NATIONAL INSURANCE 

13 AGENCIES. 

14 (a) STATE TAXATION RULE.—A national insurance 

15 agency shall be subject to all taxes imposed under any ap16 plicable provision of State law, to the same extent and in 

17 the same manner as an agency chartered in the State in 

18 which the national insurance agency is considered domi19 ciled pursuant to subsection (b). 

20 (b) STATE OF DOMICILE.—For purposes of this sec21 tion, the State of domicile of a national insurance agency 

22 shall be deemed to be the State in which the principal 

23 place of business of the national insurance agency in the 

24 United States is located. 


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1 (c) STATUS OF NATIONAL INSURANCE AGENCY.— 

2 For purposes of State taxation, except as provided in this 

3 section, a national insurance agency shall not be exempt 

4 from any State tax or subject to a lesser burden of any 

5 State tax, solely by reason of its status as a national insur6 ance agency under this Act. 

7 SEC. 323. STATE TAXATION OF NONADMITTED AND SUR8 PLUS LINES OF INSURANCE. 

9 No State, other than the State in which an insured 

10 maintains its principal place of business or, in the case 

11 of an individual, maintains a principal residence, may re12 quire a tax, fee, assessment, or other charge imposed on 

13 an insured, either directly or through a producer, that is 

14 based upon any payment made as consideration for non15 admitted insurance or surplus lines insurance, and any 

16 other compensation given in consideration for a contract 

17 of insurance. 

18 TITLE IV—NATIONAL 

19 INSURANCE PRODUCERS 

20 SEC. 401. LICENSING OF NATIONAL INSURANCE PRO21 DUCERS. 

22 (a) AUTHORITY.—The Commissioner may license an 

23 individual person as a national insurance producer. 


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1 (b) REQUIREMENTS FOR SALE OF NATIONAL INSUR2 ANCE.—An individual may sell, solicit, or negotiate insur3 ance for a national insurer only if— 

4 (1) such individual— 

5 (A) is licensed by the Commissioner under 

6 subsection (a); and 

7 (B) is— 

8 (i) an agent or employee of a national 

9 insurer or a national insurance agency; or 

10 (ii) self-employed and not affiliated 

11 with another national insurance producer, 

12 as determined by the Commissioner; or 

13 (2) such individual is licensed as an insurance 

14 producer under the laws of a State and sells, solicits, 

15 or negotiates such insurance to persons in such 

16 State. 

17 (c) SCOPE OF LICENSE.— 

18 (1) IN GENERAL.—A national insurance pro19 ducer may— 

20 (A) sell, solicit, or negotiate insurance in 

21 any State for a national insurer or a State in22 surer; 

23 (B) sell, solicit, or negotiate surplus lines 

24 of insurance and nonadmitted insurance for a 

25 non-admitted insurer; and 


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1 (C) exercise all such incidental powers as 

2 shall be necessary to carry out the activities re3 ferred to in subparagraphs (A) and (B), includ4 ing claims adjustments and settlement, risk 

5 management, employee benefits advice, retire6 ment planning, and any other insurance-related 

7 consulting activities. 

8 (2) LIMITATIONS.—The Commissioner may 

9 limit a license to one or more specified lines or types 

10 of insurance. 

11 (d) QUALIFICATIONS.—The Commissioner shall, by 

12 regulation, specify educational and examination require13 ments for obtaining a national insurance producer license, 

14 and may impose different requirements for different lines 

15 or types of insurance. 

16 SEC. 402. SUPERVISION AND EXAMINATION. 

17 (a) EXAMINATIONS.— 

18 (1) IN GENERAL.—The Commissioner may ex19 amine a national insurance producer to assess the 

20 producer’s compliance with this Act and the regula21 tions issued pursuant to this Act. 

22 (2) MANDATORY EXAMINATIONS.—The Com23 missioner shall provide for the examination of a na24 tional insurance producer in response to a complaint 


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1 or any evidence that such producer has violated or 

2 is about to violate— 

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

4 (B) any condition imposed in writing by 

5 the Commissioner in connection with issuing a 

6 national insurance producer license; or 

7 (C) any written agreement entered into 

8 with the Commissioner. 

9 (b) REPORTS.—The Commissioner may require a na10 tional insurance producer to make such reports, con11 taining such information and in such form, as the Com12 missioner may prescribe by regulation. 

13 (c) POWERS.—The powers authorized the Commis14 sioner in section 121 shall apply to reports by and exami15 nations of national insurance producers. 

16 (d) LIMITATION ON LIABILITY.— 

17 (1) IN GENERAL.—Subject to paragraph (2), no 

18 civil liability shall be imposed on and no cause of ac19 tion shall arise from a national insurer or national 

20 insurance agency, an insurer-affiliated party, or a 

21 national insurance producer submitting a statement 

22 or information required under this Act, or any regu23 lation thereunder, or requested in writing by the 

24 Commissioner relating to the conduct of a national 

25 insurance producer. 


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1 (2) EXCEPTION.—Paragraph (1) shall not 

2 apply with respect to false statements made with ac3 tual malice. 

4 SEC. 403. PRODUCER DATABASE. 

5 (a) IN GENERAL.—The Commissioner shall develop 

6 and implement an electronic database consisting of infor7 mation relating to national insurance producers and an 

8 electronic communication network that links the Commis9 sioner with State insurance regulators and national insur10 ers, national insurance agencies, and State insurers for 

11 an electronic exchange of such information. 

12 (b) MAINTENANCE.—The Commissioner may dele13 gate authority over the maintenance of each database de14 scribed in subsection (a) to an insurance self-regulatory 

15 organization. 

16 SEC. 404. DUTY TO SUPERVISE. 

17 (a) NATIONAL INSURERS.—Unless a national insur18 ance producer is subject to the supervision of a national 

19 insurance agency under subsection (b), a national insurer 

20 shall supervise the sales and marketing practices of a na21 tional insurance producer with respect to the sale, solicita22 tion, or negotiation of insurance policies of such national 

23 insurer, if— 

24 (1) such producer is an— 

25 (A) employee of the national insurer; or 


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1 (B) agent of the national insurer; and 

2 (2) the principal business activity of such pro3 ducer is devoted to the sale, solicitation, or negotia4 tion of insurance policies for such insurer, the super5 vision of the agents for such insurer, or both. 

6 (b) NATIONAL INSURANCE AGENCIES.—A national 

7 insurance agency shall supervise the sales and marketing 

8 practices of a national insurance producer with respect to 

9 the sale, solicitation, or negotiation of insurance policies, 

10 if such producer— 

11 (1) is an employee of such agency and the sale, 

12 solicitation, and negotiation of insurance is within 

13 the scope of employment of the producer; or 

14 (2) is an agent of such agency and the sale, so15 licitation, and negotiation of insurance is pursuant 

16 to the terms of an agreement between the agent and 

17 such agency. 

18 (c) STANDARDS FOR SUPERVISION.—The Commis19 sioner shall, by regulation, establish standards for the du20 ties under subsections (a) and (b). Such standards shall 

21 not conflict with the rules adopted by any self-regulatory 

22 organization approved by the Securities and Exchange 

23 Commission pursuant to its authority under section 

24 19(b)(1) of the Securities Exchange Act of 1934 (15 


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1 U.S.C. 78s(b)(1)) for broker-dealer supervision of reg2 istered representatives. 

3 (d) EXEMPTION.—The Commissioner may, by regula4 tion, exempt any class of persons from the duties under 

5 subsections (a) and (b), if the Commissioner determines 

6 that, given the nature of the business relationship with 

7 the national insurance producer, it would be unreasonable 

8 or inappropriate to require the class member to supervise 

9 such producer. 

10 (e) NO DUTY.—A national insurer or national insur11 ance agency is not required to supervise the sales and mar12 keting practices of persons other than those referred to 

13 in subsections (a) or (b). 

14 (f) OVERSIGHT OF INDEPENDENT NATIONAL INSUR15 ANCE PRODUCERS.— 

16 (1) IN GENERAL.—The Commissioner shall 

17 oversee the sales and marketing practices of a na18 tional insurance producer with respect to the sale, 

19 solicitation, or negotiation of insurance policies if 

20 such producer is not a person subject to supervision 

21 under subsection (a) or (b). 

22 (2) STANDARDS AND PROCEDURES.—The Com23 missioner shall, by regulation, establish standards 

24 and procedures for the oversight of the sales and 


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1 marketing practices of national insurance producers 

2 described in paragraph (1). 

3 SEC. 405. RELATIONSHIP TO STATE LAW. 

4 (a) NO STATE RESTRICTIONS.—No State may pre5 vent or restrict a national insurer or national insurance 

6 agency from engaging in the acts described in subsection 

7 (b) or from engaging the services of a person who engages 

8 in such acts for the national insurer or national insurance 

9 agency, nor shall any State require that a person be li10 censed by reason of engaging in such acts for a national 

11 insurer or national insurance agency. 

12 (b) ACTS PROTECTED FROM STATE RESTRIC13 TIONS.—The acts referred to in subsection (a) are the fol14 lowing: 

15 (1) Investigating, evaluating, ascertaining, or 

16 determining the amount of or negotiating, settling, 

17 or adjusting or otherwise participating in the dis18 posal of claims, losses, or damages arising under in19 surance policies written by a national insurer. 

20 (2) Soliciting, negotiating, or placing reinsur21 ance cessions or retrocessions on behalf of a ceding 

22 national insurer without the authority or power to 

23 bind reinsurance on behalf of such national insurer. 

24 (3) Binding or managing all or part of the as25 sumed reinsurance business of a national insurer 


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1 that is a reinsurer (including the management of a 

2 separate division, department, or underwriting of3 fice) and acting as an agent for such reinsurer. 

4 (4) Directly or indirectly underwriting, col5 lecting charges or premiums, or adjusting or settling 

6 claim, in connection with policies of insurance writ7 ten by a national insurer. 

8 (c) ACTIVITIES OF NATIONAL INSURANCE PRO9 DUCERS.—No State may— 

10 (1) prevent or restrict a national insurance pro11 ducer from engaging in any activity authorized by 

12 this title; or 

13 (2) require such producer to be licensed by rea14 son of engaging in such activity on behalf of a na15 tional insurer, national insurance agency, State in16 surer, or a United States branch of a non-United 

17 States insurer. 

18 (d) ACTIVITIES OF STATE INSURANCE PRO19 DUCERS.—No State may prevent or restrict an insurance 

20 producer licensed by such State from selling, soliciting, or 

21 negotiating insurance in such State on behalf of a national 

22 insurer or being employed by a national insurance agency. 

23 (e) INTERNATIONAL AGREEMENTS.—To the extent 

24 that a non-United States insurer is eligible to conduct a 


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1 cross-border business pursuant to an international agree2 ment, no State may— 

3 (1) prevent or restrict such non-United States 

4 insurer from engaging in the activities authorized 

5 under such agreement; or 

6 (2) prevent or restrict a national insurance 

7 agency or national insurance producer from engag8 ing in any activity authorized by this Act on behalf 

9 of such non-United States insurer or require the 

10 agency or producer to be licensed by reason of en11 gaging in such activity for such non-United States 

12 insurer. 

13 SEC. 406. LICENSING COMMENCEMENT DATE. 

14 The Commissioner shall not license a national insur15 ance producer until the Commissioner notifies Congress 

16 that the Office is operational and that all regulations nec17 essary to govern the licensing, operations, and supervision 

18 of such producer have been issued in final or interim final 

19 form. The Commissioner shall provide a notification to 

20 Congress not later than 2 years after the date of the en21 actment of this Act. 


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1 TITLE V—CHANGE IN CONTROL 

2 AND INSURANCE HOLDING 

3 COMPANIES 

4 SEC. 501. CHANGE IN CONTROL. 

5 (a) IN GENERAL.— 

6 (1) LIMITATION.—A person shall not, directly 

7 or indirectly or through or in concert with one or 

8 more other persons, acquire control of a national in9 surer until— 

10 (A) such person has submitted a written 

11 notice as described in subsection (f) to the 

12 Commissioner of the intention of such person to 

13 acquire control of such national insurer; and 

14 (B) the expiration of the disapproval pe15 riod and all extensions of such period referred 

16 to in paragraph (2). 

17 (2) DISAPPROVAL PERIOD.— 

18 (A) IN GENERAL.—The Commissioner may 

19 disapprove the acquisition of effective control of 

20 a national insurer by issuing notice to the per21 son wishing to acquire such effective control 

22 within 60 days of receiving a notice referred to 

23 in paragraph (1)(A). 

24 (B) EXTENSION AUTHORIZED.—The pe25 riod for disapproval under subparagraph (A) 


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1 may be extended not more than twice for a pe2 riod of not more than 45 days each time, if— 

3 (i) the Commissioner determines that 

4 an acquiring person has not furnished all 

5 the information required under this sec6 tion; 

7 (ii) in the judgment of the Commis8 sioner, any material information submitted 

9 is substantially inaccurate; 

10 (iii) the Commissioner has been un11 able to complete the investigation of an ac12 quiring person required under this section 

13 because of any delay caused by, or the in14 adequate cooperation of, such acquiring 

15 person; or 

16 (iv) the Commissioner determines that 

17 additional time is needed— 

18 (I) to investigate and determine 

19 that no acquiring person has a record 

20 of failing to comply with the require21 ments of subchapter II of chapter 53 

22 of title 31, United States Code; or 

23 (II) to analyze the safety and 

24 soundness of any plans or proposals 

25 described in subsection (f)(6) or the 


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1 future prospects of the national in2 surer. 

3 (b) INVESTIGATION OF PRINCIPALS.— 

4 (1) IN GENERAL.—Upon receiving a notice 

5 under subsection (a)(1), the Commissioner shall— 

6 (A) conduct an investigation of the com7 petence, experience, integrity, and financial 

8 ability of each person named in a notice of a 

9 proposed acquisition as a person by whom or 

10 for whom such acquisition is to be made; and 

11 (B) make an independent determination of 

12 the accuracy and completeness of any informa13 tion described in subsection (f) with respect to 

14 such person. 

15 (2) REPORT.—The Commissioner shall prepare 

16 a written report of any investigation under para17 graph (1) that includes a summary of the results of 

18 such investigation and shall make such report pub19 licly available in accordance with regulations issued 

20 by the Commissioner for the publication of reports 

21 under this paragraph. 

22 (c) PUBLIC COMMENT.—Upon receiving notice of a 

23 proposed acquisition, the Commissioner shall, unless the 

24 Commissioner determines that an emergency exists, within 

25 a reasonable period of time— 


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1 (1) publish the name of the national insurer to 

2 be acquired and the name of each person identified 

3 in such notice as a person by whom or for whom 

4 such acquisition is to be made; and 

5 (2) solicit public comment on such proposed ac6 quisition, particularly from persons in the geo7 graphic area where the national insurer is located, 

8 before final consideration of such notice by the Com9 missioner. 

10 (d) GROUNDS FOR DISAPPROVAL.—The Commis11 sioner may disapprove a proposed acquisition, if— 

12 (1) either the financial condition of any acquir13 ing person or the future prospects of the institution 

14 is such as might jeopardize the financial stability of 

15 the national insurer or prejudice the interests of the 

16 customers of such insurer; 

17 (2) the competence, experience, or integrity of 

18 any acquiring person or of any of the proposed man19 agement personnel indicates that it would not be in 

20 the interest of the customers of the national insurer, 

21 or in the interest of the public to permit such person 

22 to control the national insurer; or 

23 (3) any acquiring person neglects, fails, or re24 fuses to furnish the Commissioner with all the infor25 mation required by the Commissioner. 


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1 (e) NOTICE OF DISAPPROVAL, HEARING.— 

2 (1) NOTICE OF DISAPPROVAL.—Not later than 

3 3 days after a decision to disapprove a proposed ac4 quisition under this section, the Commissioner shall 

5 notify the acquiring person in writing of the dis6 approval. Such notice shall provide a statement of 

7 the basis for the disapproval. 

8 (2) HEARING.— 

9 (A) IN GENERAL.—Not later than 10 days 

10 after the receipt of a notice of disapproval 

11 under paragraph (1), a person may request a 

12 hearing before a United States district court 

13 with jurisdiction on the proposed acquisition. 

14 (B) STANDARD OF REVIEW.—A judge re15 viewing a notice of disapproval under paragraph 

16 (1) shall determine whether the decision of the 

17 Commissioner is reasonable. 

18 (3) JUDICIAL REVIEW.—A person whose pro19 posed acquisition is disapproved after a hearing 

20 under paragraph (2) may obtain review by the 

21 United States court of appeals for the circuit in 

22 which the main office of the national insurer is to 

23 be acquired is located, or the United States Court of 

24 Appeals for the District of Columbia Circuit, by fil25 ing a notice of appeal in such court within 10 days 


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1 from the date of such order, and simultaneously 

2 sending a copy of such notice by registered or cer3 tified mail to the Commissioner. The Commissioner 

4 shall promptly certify and file in such court the 

5 record upon which the disapproval was based. The 

6 findings of the Commissioner shall be set aside if 

7 found to be arbitrary or capricious or if found to 

8 violate procedures established by this section. 

9 (f) INFORMATION.—A notice described in this sub10 section is a notice that includes such relevant information 

11 in such form as the Commissioner may require by regula12 tion or by specific request in connection with a particular 

13 notice. 

14 SEC. 502. REPORTS BY AND EXAMINATIONS OF INSURANCE 

15 HOLDING COMPANIES. 

16 (a) REPORTS.—Each national insurance holding com17 pany and each subsidiary of such company, other than a 

18 national insurer, shall file with the Commissioner such re19 ports as may be required by the Commissioner. Such re20 ports shall be made under oath, and shall be in such form 

21 and for such periods as the Commissioner may prescribe. 

22 Each report shall contain such information concerning the 

23 operations of such national insurance holding company 

24 and its subsidiaries as the Commissioner may require. 


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1 (b) EXAMINATIONS.—Each national insurance hold2 ing company and each subsidiary thereof shall be subject 

3 to such examinations as the Commissioner may prescribe. 

4 The cost of such examinations shall be assessed against 

5 and paid by such national insurance holding company. 

6 (c) APPLICABILITY TO NON-UNITED STATES INSUR7 ANCE HOLDING COMPANIES AND SUBSIDIARIES.—Each 

8 non-United States insurance holding company and each 

9 non-United States subsidiary thereof shall be subject to 

10 the report and examination authority of this section only 

11 to the extent authorized by an applicable international 

12 agreement. 

13 (d) REPORTS AND EXAMINATIONS FILED WITH

14 OTHER AGENCIES.—The Commissioner shall, to the full15 est extent deemed feasible, use for the purposes of this 

16 section reports filed with and examinations made by other 

17 Federal agencies. 

18 (e) POWERS.—The powers authorized for the Com19 missioner in section 121 shall apply to reports by and ex20 aminations of insurance holding companies and their sub21 sidiaries. 

22 SEC. 503. ACTIVITIES OF INSURANCE HOLDING COMPANIES 

23 AND SUBSIDIARIES. 

24 (a) IN GENERAL.—No national insurance holding 

25 company and no subsidiary of a national insurance holding 


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1 company shall engage in any activity that the Commis2 sioner determines poses a significant risk to the solvency 

3 of a national insurer, jeopardizes the interests of the pol4 icyholders of such insurer, or is incompatible with the pub5 lic interest. 

6 (b) DETERMINATION AND NOTICE FOR CORRECTIVE

7 ACTION.—If the Commissioner determines that a national 

8 insurance holding company or subsidiary of a national in9 surance holding company is engaged, or has engaged, or 

10 the Commissioner has reasonable cause to believe is about 

11 to engage in an activity in violation of the terms of sub12 section (a), the Commissioner shall provide a written no13 tice to such company or subsidiary, which shall specify the 

14 action or actions the company or subsidiary must take to 

15 correct the violation and a time period for taking such cor16 rective action or actions. The issuance of a notice under 

17 this section does not prevent the Commissioner from tak18 ing any other enforcement action against the company or 

19 subsidiary. 

20 (c) HEARING.— 

21 (1) IN GENERAL.—Not later than 10 days after 

22 the date of receipt of a notice issued pursuant to 

23 subsection (b), a national insurance holding com24 pany or subsidiary of such company may request a 

25 hearing before a United States district court with 


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1 jurisdiction on the corrective action or actions speci2 fied in the notice and the time period for taking 

3 such action or actions. 

4 (2) STANDARD OF REVIEW.—A judge reviewing 

5 a notice issued pursuant to subsection (b) shall de6 termine whether the decision of the Commissioner is 

7 reasonable. 

8 (d) JUDICIAL REVIEW.—A national insurance hold9 ing company or subsidiary of a national insurance holding 

10 company that remains subject to a notice for corrective 

11 action following a hearing under subsection (c) may obtain 

12 review of the notice by the United States court of appeals 

13 for the circuit in which the main office of the national 

14 insurer to be acquired is located, or the United States 

15 Court of Appeals for the District of Columbia Circuit, by 

16 filing an appeal in such court not later than 10 days after 

17 the date on which the Commissioner has affirmed or modi18 fied the notice, and simultaneously sending a copy of such 

19 appeal by registered or certified mail to the Commissioner. 

20 The Commissioner shall promptly certify and file in such 

21 court the record upon which the notice was based. The 

22 determination of the Commissioner shall be set aside if 

23 found to be arbitrary or capricious. 

24 (e) APPLICABILITY TO NON-UNITED STATES INSUR25 ANCE HOLDING COMPANIES AND SUBSIDIARIES.—Each 


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1 non-United States insurance holding company and each 

2 non-United States subsidiary thereof shall be subject to 

3 the report and examination authority of this section only 

4 to the extent authorized by an applicable international 

5 agreement. 

6 SEC. 504. CAPITAL, LIQUIDITY, DIVIDEND, OPERATIONAL, 

7 AND OTHER STANDARDS. 

8 The Commissioner shall establish, by rule or order, 

9 capital, liquidity, dividend, operational, and any other 

10 standards for a national insurance holding company that 

11 the Commissioner deems appropriate to ensure the sol12 vency and sound operation of each national insurance 

13 holding company. 

14 SEC. 505. AFFILIATE TRANSACTIONS. 

15 (a) IN GENERAL.—Transactions between a national 

16 insurer and any affiliate shall be subject to the following 

17 standards: 

18 (1) The terms shall be fair, reasonable, and at 

19 least as favorable to the national insurer as those 

20 that would be offered to, or would apply to, a non21 affiliate. 

22 (2) Charges or fees for services performed shall 

23 be reasonable and at least as favorable to the na24 tional insurer as those that would be offered to, or 

25 would apply to, a nonaffiliate. 


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1 (3) Expenses incurred and payment received 

2 shall be allocated to the national insurer in con3 formity with customary insurance accounting prac4 tices consistently applied. 

5 (4) The books, accounts, and records of each 

6 party to all such transactions shall be so maintained 

7 as to clearly and accurately disclose the nature and 

8 details of the transactions including such accounting 

9 information as is necessary to support the reason10 ableness of the charges or fees to the respective par11 ties. 

12 (5) The national insurer’s surplus following any 

13 dividends or distributions to shareholders shall be 

14 reasonable in relation to the outstanding liabilities of 

15 the national insurer and adequate to meet its finan16 cial needs. 

17 (b) APPROVAL OF CERTAIN TRANSACTIONS.—The 

18 Commissioner may, by regulation, specify certain trans19 actions involving a national insurer and any affiliate that 

20 are not permissible for a national insurer, unless the na21 tional insurer has notified the Commissioner in writing of 

22 its intention to enter into the transaction and the Commis23 sioner has either approved or failed to approve the trans24 action within a specified time period. 


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1 SEC. 506. RELATIONSHIP TO OTHER LAWS. 

2 (a) PERMITTED AFFILIATION.—A national insurer 

3 may be affiliated with an insurer or agency that is not 

4 chartered or licensed under this Act. 

5 (b) REINSURANCE POOLING AGREEMENTS.—The 

6 Commissioner shall have exclusive jurisdiction over rein7 surance pooling agreements to which one or more national 

8 insurers and affiliated State insurers are parties under 

9 which policies of insurance sold, solicited, negotiated, and 

10 underwritten by, and reinsurance assumed by, affiliated 

11 national insurers and State insurers are pooled. 

12 (c) CONFLICT WITH OTHER FEDERAL LAWS.—This 

13 title shall not be construed to conflict with or supersede 

14 the provisions of any other Federal law or regulation gov15 erning the regulation of holding companies, including fi16 nancial holding companies, as defined in section 2 of the 

17 Bank Holding Company Act of 1956 (12 U.S.C. 1841), 

18 and savings and loan holding companies, as defined in sec19 tion 10 of the Home Owners’ Loan Act (12 U.S.C. 

20 1467a). 

21 SEC. 507. NO DELEGATION PERMITTED. 

22 The Commissioner may not delegate to any insurance 

23 self-regulatory organization any authority conferred under 

24 this title with respect to regulation of a national insurer 

25 that is an affiliate of a national insurance holding com26 pany. 


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1 TITLE VI—CONSERVATORSHIP, 

2 RECEIVERSHIP, THE PAY3 MENT OF BENEFITS AND 

4 CLAIMS TO POLICYHOLDERS, 

5 AND ASSESSMENTS ON NA6 TIONAL INSURERS 

7 SEC. 601. APPOINTMENT OF CONSERVATOR OR RECEIVER. 

8 (a) IN GENERAL.—Notwithstanding any other provi9 sion of law, if any of the grounds under subsection (b) 

10 exist, the Commissioner may appoint a person as a conser11 vator or receiver for a national insurer. 

12 (b) GROUNDS FOR APPOINTMENT.—The grounds for 

13 establishing a conservatorship or receivership are as fol14 lows: 

15 (1) INSOLVENCY.—The national insurer is in16 solvent. 

17 (2) SUBSTANTIAL DISSIPATION.—The national 

18 insurer has substantial dissipation of assets or earn19 ings due to— 

20 (A) a violation of any provision of Federal 

21 or State law; or 

22 (B) a hazardous practice. 

23 (3) HAZARDOUS CONDITION.—The national in24 surer is in such condition that the further transVerDate Nov 24 2008 01:42 Apr 08, 2009 Jkt 079200 PO 00000 Frm 00112 Fmt 6652 Sfmt 6201 E:\BILLS\H1880.IH H1880

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1 action of business would be hazardous, financially or 

2 otherwise, to policyholders, creditors, or the public. 

3 (4) CEASE-AND-DESIST ORDER.—The national 

4 insurer has willfully violated a cease-and-desist 

5 order. 

6 (5) CONCEALMENT.—The national insurer has 

7 concealed the books, papers, records, or assets of the 

8 insurer, or has refused to submit the books, papers, 

9 records, or affairs of the insurer, for inspection to 

10 any examiner or to any lawful agent of the Commis11 sioner. 

12 (6) INABILITY TO MEET OBLIGATIONS.—The 

13 national insurer is likely to be unable to pay its obli14 gations or meet the demands of its creditors in the 

15 normal course of business. 

16 (7) VIOLATION OF LAW.—The national insurer 

17 has willfully and continuously violated any law or 

18 regulation, or committed any hazardous practice or 

19 condition, that is likely to— 

20 (A) cause insolvency or substantial dissipa21 tion of assets or earnings; or 

22 (B) weaken the condition of the national 

23 insurer. 


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1 (8) CONSENT.—The national insurer, by resolu2 tion of its board of directors or its shareholders or 

3 members, consents to the appointment. 

4 (9) MONEY LAUNDERING.—The Attorney Gen5 eral notifies the Commissioner in writing that the 

6 national insurer has been found guilty of a criminal 

7 offense under section 1956 or 1957 of title 18, 

8 United States Code, or section 5322 or 5324 of title 

9 31, United States Code. 

10 SEC. 602. ESTABLISHMENT OF THE NATIONAL INSURANCE 

11 GUARANTY CORPORATION. 

12 (a) ESTABLISHMENT.—There is established the Na13 tional Insurance Guaranty Corporation. 

14 (b) DIRECTOR.—The head of the National Insurance 

15 Guaranty Corporation shall be the Director of the Na16 tional Insurance Guaranty Corporation, who shall be ap17 pointed by the Commissioner. 

18 (c) NONPROFIT AND SUCCESSION.—The Corporation 

19 shall be a nonprofit corporation and shall have succession 

20 until dissolved by an Act of Congress. 

21 (d) APPLICATION OF DISTRICT OF COLUMBIA NON22 PROFIT CORPORATION ACT.—The Corporation shall, ex23 cept as otherwise provided in this title, be subject to, and 

24 have all the powers conferred upon a nonprofit corporation 


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1 by the District of Columbia Nonprofit Corporation Act 

2 (D.C. Code, 29–301.01 et seq., or any successor thereto). 

3 SEC. 603. PAYMENT OF CLAIMS TO POLICYHOLDERS OF NA4 TIONAL INSURERS. 

5 (a) LIFE INSURANCE POLICIES.—If a national in6 surer is placed into receivership for purposes of liquida7 tion, the Director of the Corporation shall pay the claims 

8 on life insurance policies issued by such insurer in a man9 ner that is consistent with the terms and limits of the 

10 ‘‘Life and Health Insurance Guaranty Association Model 

11 Act’’ of the NAIC. 

12 (b) PROPERTY AND CASUALTY POLICIES.—If a na13 tional insurer is placed into receivership for purposes of 

14 liquidation, the Director of the Corporation shall pay the 

15 claims of property and casualty insurance policies issued 

16 by such insurer in a manner that is consistent with the 

17 terms and limits of the ‘‘Post-Assessment Property and 

18 Liability Insurance Guaranty Association Model Act’’ of 

19 the NAIC. 

20 SEC. 604. ASSESSMENTS OF NATIONAL INSURERS. 

21 (a) ASSESSMENTS AUTHORIZED.—For the purpose of 

22 paying the claims of policyholders and other claims 

23 against a national insurer that is placed into receivership, 

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1 ment against all other national insurers in accordance 

2 with this section. 

3 (b) NOTICE AND IMPOSITION OF ASSESSMENTS.— 

4 (1) ASSESSMENTS ONLY TO INSURERS IN SAME

5 LINE OF BUSINESS.— 

6 (A) IN GENERAL.—The Director of the 

7 Corporation shall only impose an assessment 

8 against a national insurer if such national in9 surer is in the business of providing the same 

10 type of insurance as the national insurer that is 

11 placed into receivership. 

12 (B) LINES OF INSURANCE.—In deter13 mining whether a national insurer is in the 

14 business of providing the same type of insur15 ance as the national insurer that is placed into 

16 receivership under subparagraph (A), the Direc17 tor may consider subsets of property and cas18 ualty insurance or life insurance as different 

19 types of insurance. 

20 (2) WRITTEN NOTICE REQUIRED.—The Direc21 tor of the Corporation shall provide each national in22 surer a written notice of an assessment, and assess23 ments shall be payable not later than 30 days after 

24 the date of receipt of such notice. 


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1 (3) LATE PAYMENT.—A national insurer that 

2 fails to pay an assessment when due shall be subject 

3 to an interest charge on the assessment, as set by 

4 the Director of the Corporation. 

5 (4) ASSESSMENTS NOT IMPOSED UNTIL NEED6 ED.—The Director of the Corporation shall not im7 pose an assessment upon a national insurer until 

8 such funds are needed. 

9 (5) AMOUNT OF ASSESSMENT.—Each national 

10 insurer shall be assessed its share of all claims in11 curred by the receivership, including administrative 

12 costs of the Director of the Corporation, in an 

13 amount equal to the product of— 

14 (A) an assessment rate established by the 

15 Director of the Corporation by regulation; and 

16 (B) the proportion that the net direct writ17 ten premiums of the insurer for the calendar 

18 year preceding the assessment bears to the net 

19 direct written premiums of all national insurers 

20 determined by the Commissioner to be in the 

21 business of providing the same type of insur22 ance as the national insurer that is placed into 

23 receivership under paragraph (1)(A) for the cal24 endar year preceding the assessment. 


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1 (c) ABATED OR DEFERRED ASSESSMENTS.—The Di2 rector of the Corporation may abate or defer, in whole or 

3 in part, an assessment imposed on a national insurer if 

4 payment of the assessment would endanger the ability of 

5 the insurer to fulfill its contractual obligations. In the 

6 event an assessment against a national insurer is abated 

7 or deferred, in whole or in part, the amount by which the 

8 assessment is abated or deferred may be assessed against 

9 all other national insurers, in a manner consistent with 

10 the basis for assessments set forth in this section. Once 

11 the conditions that caused action under this subsection 

12 have been removed or rectified, the insurer shall pay all 

13 assessments that were deferred pursuant to a repayment 

14 plan approved by the Director of the Corporation. 

15 SEC. 605. PARTICIPATION IN STATE GUARANTY ASSOCIA16 TIONS. 

17 (a) IN GENERAL.—A national insurer shall partici18 pate in the State guaranty association for a line of insur19 ance in each State in which such insurer is doing business 

20 in such line of insurance, provided that no State may 

21 charge an assessment rate or otherwise treat a national 

22 insurer in a manner differently than such State treats a 

23 State insurer doing business in such State. 

24 (b) TAXATION.—No State shall impose a premium 

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1 mary tax applicable to insurance companies on any na2 tional insurer, unless such State allows the national in3 surer to recoup assessments allocable to such State in the 

4 same manner and to the same extent that a State insurer 

5 is allowed to recoup such assessments. 

6 SEC. 606. REPORT TO CONGRESS. 

7 Not later than two years after the date of the enact8 ment of this Act, the Director of the Corporation shall 

9 submit to Congress a recommendation on— 

10 (1) whether national insurers should continue 

11 to be members of State guaranty associations; 

12 (2) whether State insurance commissioners 

13 should be given the opportunity to require State in14 surers to be covered by the National Insurance 

15 Guaranty Corporation instead of State guaranty as16 sociations; and 

17 (3) whether policyholders of national insurers 

18 would be better protected if assessments under sec19 tion 604 were imposed before such funds are nec20 essary to make payments on claims against a na21 tional insurer that is placed into receivership. 


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1 TITLE VII—MISCELLANEOUS 

2 PROVISIONS 

3 SEC. 701. APPLICABLE LAW. 

4 (a) INAPPLICABILITY OF STATE LAW.—Except to the 

5 extent expressly provided in this Act, national insurers, 

6 national insurance agencies, and national insurance pro7 ducers shall not be subject under State law to any form 

8 of licensing, examination, reporting, regulation, or other 

9 supervision relating to the sale, solicitation, or negotiation 

10 of insurance, to the underwriting of insurance, or to any 

11 other insurance operations. 

12 (b) NO DISCRIMINATION.—No State may discrimi13 nate against— 

14 (1) any State insurer because such insurer or 

15 any affiliate has applied to become, or has declared 

16 its intention to become, a national insurer chartered 

17 under this Act; 

18 (2) any State-licensed insurance producer be19 cause such insurance producer or an affiliate has ap20 plied to become, or has declared its intention to be21 come, a national insurance agency chartered under 

22 this Act or a national insurance producer licensed 

23 under this Act; 


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1 (3) any affiliate of a national insurer, national 

2 insurance agency, or a national insurance producer 

3 because the affiliate is so affiliated; 

4 (4) any policyholder, insured, claimant, State-li5 censed insurance producer, or any person engaged in 

6 the acts described in section 405(b) because of any 

7 dealing with a national insurer, national insurance 

8 agency, a national insurance producer, or an affiliate 

9 of a national insurer, national insurance agency, or 

10 a national insurance producer; or 

11 (5) any State-licensed insurance producer (in12 cluding with respect to such producer’s sales, solici13 tation, or negotiation of any insurance policy written 

14 or sold by a State insurer) because it sells, solicits, 

15 or negotiates an insurance policy written or sold by 

16 a national insurer. 

17 SEC. 702. APPLICATION OF THE FEDERAL ANTITRUST 

18 LAWS. 

19 (a) IN GENERAL.—Subject to subsection (b), the 

20 Sherman Act (15 U.S.C. 1 et seq.), the Clayton Act (15 

21 U.S.C. 12 et seq.), the Federal Trade Commission Act (15 

22 U.S.C. 41 et seq.), and the Act of June 19, 1936 (49 Stat. 

23 1526) (commonly known as the Robinson-Patman Anti24 discrimination Act), shall be applicable to national insur25 ers, national insurance agencies, and national insurance 


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1 producers to the same extent as other businesses are sub2 ject to such laws, except as follows: 

3 (1) Such laws shall not apply to the develop4 ment, dissemination, or use of standard insurance 

5 policy forms (including standard endorsements, 

6 addendums, and policy language), or to activities in7 cidental thereto, by national insurers, national insur8 ance agencies, and national insurance producers. 

9 (2) Section 3 of the Act of March 9, 1945 (59 

10 Stat. 33; 15 U.S.C. 1013), shall apply to national 

11 insurers, national insurance agencies, and national 

12 insurance producers to the extent that such insurers 

13 and producers are subject to State law. 

14 (b) EXCEPTION.—Notwithstanding any other provi15 sion of law, section 5 of the Federal Trade Commission 

16 Act (15 U.S.C. 45) shall not apply with respect to a na17 tional insurer, national insurance agency, or national in18 surance producer. 

Æ 


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