II 

112TH CONGRESS 

2D SESSION S. 2342 

To reform the National Association of Registered Agents and Brokers, and 

for other purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 24 (legislative day, APRIL 23), 2012 

Mr. TESTER (for himself and Mr. JOHANNS) introduced the following bill; 

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

A BILL 

To reform the National Association of Registered Agents 

and Brokers, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘National Association 

5 of Registered Agents and Brokers Reform Act of 2012’’. 


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1 SEC. 2. REESTABLISHMENT OF THE NATIONAL ASSOCIA2 TION OF REGISTERED AGENTS AND BRO3 KERS. 

4 (a) IN GENERAL.—Subtitle C of title III of the 

5 Gramm-Leach-Bliley Act (15 U.S.C. 6751 et seq.) is 

6 amended to read as follows: 

7 ‘‘Subtitle C—National Association 

8 of Registered Agents and Brokers 

9 ‘‘SEC. 321. NATIONAL ASSOCIATION OF REGISTERED 

10 AGENTS AND BROKERS. 

11 ‘‘(a) ESTABLISHMENT.—There is established the Na12 tional Association of Registered Agents and Brokers 

13 (hereafter in this subtitle referred to as the ‘Association’). 

14 ‘‘(b) STATUS.—The Association shall— 

15 ‘‘(1) be a nonprofit corporation; 

16 ‘‘(2) have succession until dissolved by an Act 

17 of Congress; 

18 ‘‘(3) not be an agent or instrumentality of the 

19 United States Government; and 

20 ‘‘(4) except as otherwise provided in this sub21 title, be subject to, and have all the powers conferred 

22 upon a nonprofit corporation by the District of Co23 lumbia Nonprofit Corporation Act (D.C. Code, sec. 

24 29–301.01 et seq.). 

25 ‘‘(c) EFFECTIVE DATE.—The provisions of this sub26 title shall take effect upon the expiration of the 24-month 


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1 period beginning on the date of enactment of the National 

2 Association of Registered Agents and Brokers Reform Act 

3 of 2012. Notwithstanding such effective date, such per4 sons as are required to establish the Association shall take 

5 such actions as are necessary to establish the operations 

6 of the Association by the effective date. 

7 ‘‘SEC. 322. PURPOSE. 

8 ‘‘The purpose of the Association shall be to provide 

9 a mechanism through which licensing, continuing edu10 cation, and other nonresident insurance producer quali11 fication requirements and conditions may be adopted and 

12 applied on a multi-state basis without affecting the laws, 

13 rules, and regulations, and preserving the rights of a 

14 State, pertaining to— 

15 ‘‘(1) licensing, continuing education, and other 

16 qualification requirements of producers who are not 

17 members of the Association; 

18 ‘‘(2) resident or nonresident producer appoint19 ment requirements; 

20 ‘‘(3) supervising and disciplining resident and 

21 nonresident insurance producers; 

22 ‘‘(4) establishing licensing fees for resident and 

23 nonresident insurance producers so that there is no 

24 loss of producer licensing revenue to the State; and 


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1 ‘‘(5) prescribing and enforcing laws and regula2 tions regulating the conduct of resident and non3 resident insurance producers. 

4 ‘‘SEC. 323. MEMBERSHIP. 

5 ‘‘(a) ELIGIBILITY.— 

6 ‘‘(1) IN GENERAL.—Any insurance producer li7 censed in its home State shall, subject to paragraphs 

8 (2) and (4), be eligible to become a member of the 

9 Association. 

10 ‘‘(2) INELIGIBILITY FOR SUSPENSION OR REV11 OCATION OF LICENSE.—Subject to paragraph (3), 

12 an insurance producer is not eligible to become a 

13 member of the Association if a State insurance regu14 lator has suspended or revoked such producer’s in15 surance license in that State. 

16 ‘‘(3) RESUMPTION OF ELIGIBILITY.—Paragraph 

17 (2) shall cease to apply to any insurance producer 

18 if— 

19 ‘‘(A) the State insurance regulator reissues 

20 or renews the license of such producer in the 

21 State in which the license was suspended or re22 voked, or otherwise terminates or vacates the 

23 suspension or revocation; or 


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1 ‘‘(B) the suspension or revocation expires 

2 or is subsequently overturned by a court of 

3 competent jurisdiction. 

4 ‘‘(4) CRIMINAL BACKGROUND RECORD CHECK

5 REQUIRED.— 

6 ‘‘(A) IN GENERAL.—An insurance pro7 ducer shall not be eligible to become a member 

8 of the Association unless the producer has un9 dergone a national criminal background record 

10 check of the producer’s Federal Bureau of In11 vestigation identification record that complies 

12 with regulations prescribed by the Attorney 

13 General under subparagraph (L). 

14 ‘‘(B) CRIMINAL BACKGROUND RECORD

15 CHECK REQUESTED BY HOME STATE.—An in16 surance producer who is licensed in a State and 

17 who has undergone a national criminal back18 ground record check of the producer’s Federal 

19 Bureau of Investigation identification record 

20 during the 2-year period preceding the date of 

21 submission of an application to become a mem22 ber of the Association, in compliance with such 

23 requirements as a condition for such licensure, 

24 shall be deemed to have undergone a national 


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1 criminal background record check for purposes 

2 of subparagraph (A). 

3 ‘‘(C) CRIMINAL BACKGROUND RECORD

4 CHECK REQUESTED BY ASSOCIATION.— 

5 ‘‘(i) IN GENERAL.—The Association 

6 shall, upon request by an insurance pro7 ducer licensed in a State, submit identi8 fication information obtained from such 

9 producer, and a request for a national 

10 criminal background record check of such 

11 producer, to the Federal Bureau of Inves12 tigation. 

13 ‘‘(ii) BYLAWS OR RULES.—The board 

14 of directors of the Association shall pre15 scribe bylaws or rules for obtaining and 

16 utilizing identification information and 

17 criminal history record information, includ18 ing the establishment of reasonable fees re19 quired to perform a criminal background 

20 record check and appropriate safeguards 

21 for maintaining confidentiality and security 

22 of the information. 

23 ‘‘(D) FORM OF REQUEST.—A submission 

24 under subparagraph (C)(i) shall include such 

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1 torney General concerning the person about 

2 whom the record is requested and a statement 

3 signed by the person authorizing the Associa4 tion to obtain the information. 

5 ‘‘(E) PROVISION OF INFORMATION BY AT6 TORNEY GENERAL.—Upon receiving a submis7 sion under subparagraph (C)(ii) from the Asso8 ciation, the Attorney General shall search all 

9 records of the Criminal Justice Information 

10 Services Division of the Federal Bureau of In11 vestigation that the Attorney General deems ap12 propriate for criminal history records cor13 responding to the identification information 

14 provided under subparagraph (D) and provide 

15 all information contained in such records that 

16 pertains to the request to the Association. 

17 ‘‘(F) LIMITATION ON PERMISSIBLE USES

18 OF INFORMATION.—The Association may use 

19 information provided under subparagraph (E) 

20 only— 

21 ‘‘(i) for purposes of determining com22 pliance with membership criteria estab23 lished by the Association; and/or 

24 ‘‘(ii) to disclose to State insurance 

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1 forcement agencies, in conformance with 

2 applicable law. 

3 ‘‘(G) APPLICANT ACCESS TO CRIMINAL

4 HISTORY RECORDS.—Notwithstanding subpara5 graph (F), a producer shall have the right to 

6 obtain from the Association a copy of any 

7 criminal history record information concerning 

8 the producer that is provided to the Association 

9 under subparagraph (E). 

10 ‘‘(H) PENALTY FOR IMPROPER USE OR

11 DISCLOSURE.—Whoever knowingly uses any in12 formation provided under subparagraph (E) for 

13 a purpose not authorized in subparagraph (F), 

14 or discloses any such information to anyone not 

15 authorized to receive it, shall be fined under 

16 title 18, United States Code, imprisoned for not 

17 more than 2 years, or both. 

18 ‘‘(I) RELIANCE ON INFORMATION.—Nei19 ther the Association nor any of its directors, of20 ficers, or employees shall be liable in any action 

21 for using information provided under subpara22 graph (E) as permitted under subparagraph 

23 (F) in good faith and in reasonable reliance on 

24 its accuracy. 


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1 ‘‘(J) FEES.—The Attorney General may 

2 charge a reasonable fee to defray the expense of 

3 conducting the search and providing the infor4 mation under subparagraph (E), and any such 

5 fee shall be collected and remitted by the Asso6 ciation. 

7 ‘‘(K) RULE OF CONSTRUCTION.—Nothing 

8 in this paragraph shall be construed as— 

9 ‘‘(i) requiring a State insurance regu10 lator to perform criminal background 

11 checks under this section; or 

12 ‘‘(ii) limiting any other authority that 

13 allows access to criminal background 

14 records. 

15 ‘‘(L) REGULATIONS.—The Attorney Gen16 eral shall prescribe regulations to carry out this 

17 paragraph, which shall include— 

18 ‘‘(i) appropriate protections for ensur19 ing the confidentiality of information pro20 vided under subparagraph (E); and 

21 ‘‘(ii) procedures providing a reason22 able opportunity for a producer to contest 

23 the accuracy of information regarding the 

24 producer provided under subparagraph 

25 (E). 


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1 ‘‘(M) INELIGIBILITY FOR MEMBERSHIP.— 

2 ‘‘(i) IN GENERAL.—The Association 

3 may, under reasonably consistently applied 

4 standards, deny membership to an insur5 ance producer on the basis of criminal his6 tory information provided under subpara7 graph (E), or where the insurance pro8 ducer has been subject to disciplinary ac9 tion, as described in paragraph (2). 

10 ‘‘(ii) RIGHTS OF APPLICANTS DENIED

11 MEMBERSHIP.—The Association shall no12 tify any producer who is denied member13 ship on the basis of criminal history record 

14 information provided under subparagraph 

15 (E) of the right of the producer to— 

16 ‘‘(I) obtain a copy of all criminal 

17 history record information provided to 

18 the Association under subparagraph 

19 (E) with respect to the producer; and 

20 ‘‘(II) challenge the accuracy and 

21 completeness of the information. 

22 ‘‘(b) AUTHORITY TO ESTABLISH MEMBERSHIP CRI23 TERIA.—The Association may establish membership cri24 teria that bear a reasonable relationship to the purposes 

25 for which the Association was established. 


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1 ‘‘(c) ESTABLISHMENT OF CLASSES AND CATEGORIES

2 OF MEMBERSHIP.— 

3 ‘‘(1) CLASSES OF MEMBERSHIP.—The Associa4 tion may establish separate classes of membership, 

5 with separate criteria, if the Association reasonably 

6 determines that performance of different duties re7 quires different levels of education, training, experi8 ence, or other qualifications. 

9 ‘‘(2) BUSINESS ENTITIES.—The Association 

10 shall establish a class of membership and member11 ship criteria for business entities. A business entity 

12 that applies for membership shall be required to des13 ignate an individual Association member responsible 

14 for the business entity’s compliance with Association 

15 rules and the insurance laws, rules, and regulations 

16 of any State in which the business entity seeks to do 

17 business on the basis of Association membership. 

18 ‘‘(3) CATEGORIES.— 

19 ‘‘(A) SEPARATE CATEGORIES FOR PRO20 DUCERS PERMITTED.—The Association may es21 tablish separate categories of membership for 

22 producers and for other persons within each 

23 class, based on the types of licensing categories 

24 that exist under State laws. 


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1 ‘‘(B) SEPARATE TREATMENT FOR DEPOSI2 TORY INSTITUTIONS PROHIBITED.—No special 

3 categories of membership, and no distinct mem4 bership criteria, shall be established for mem5 bers which are depository institutions or for 

6 employees, agents, or affiliates of depository in7 stitutions. 

8 ‘‘(d) MEMBERSHIP CRITERIA.— 

9 ‘‘(1) IN GENERAL.—The Association may estab10 lish criteria for membership which shall include 

11 standards for personal qualifications, education, 

12 training, and experience. The Association shall not 

13 establish criteria that unfairly limit the ability of a 

14 small insurance producer to become a member of the 

15 Association, including imposing discriminatory mem16 bership fees. 

17 ‘‘(2) QUALIFICATIONS.—In establishing criteria 

18 under paragraph (1), the Association shall not adopt 

19 any qualification less protective to the public than 

20 that contained in the NAIC Producer Licensing 

21 Model Act in effect as of the date of enactment of 

22 the National Association of Registered Agents and 

23 Brokers Reform Act of 2012, and shall consider the 

24 highest levels of insurance producer qualifications 

25 established under the licensing laws of the States. 


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1 ‘‘(3) ASSISTANCE FROM STATES.— 

2 ‘‘(A) IN GENERAL.—The Association may 

3 request a State to provide assistance in inves4 tigating and evaluating a prospective member’s 

5 eligibility for membership in the Association. 

6 ‘‘(B) RULE OF CONSTRUCTION.—Subpara7 graph (A) shall not be construed as requiring or 

8 authorizing any State to adopt new or addi9 tional requirements concerning the licensing or 

10 evaluation of insurance producers. 

11 ‘‘(4) DENIAL OF MEMBERSHIP.—The Associa12 tion may, based on reasonably consistently applied 

13 standards, deny membership to any State-licensed 

14 insurance producer for failure to meet the member15 ship criteria established by the Association. 

16 ‘‘(e) EFFECT OF MEMBERSHIP.— 

17 ‘‘(1) AUTHORITY OF ASSOCIATION MEMBERS.— 

18 Membership in the Association shall— 

19 ‘‘(A) authorize an insurance producer to 

20 sell, solicit, or negotiate insurance in any State 

21 for which the member pays the licensing fee set 

22 by such State for any line or lines of insurance 

23 specified in such producer’s home State license, 

24 and exercise all such incidental powers, as shall 

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1 ing claims adjustments and settlement to the 

2 extent permissible under such State’s laws, risk 

3 management, employee benefits advice, retire4 ment planning, and any other insurance-related 

5 consulting activities; 

6 ‘‘(B) be the equivalent of a nonresident in7 surance producer license for purposes of author8 izing the producer to engage in the activities 

9 described in subparagraph (A) in any State 

10 where the member pays the licensing fee; and 

11 ‘‘(C) be the equivalent of a nonresident in12 surance producer license for the purpose of sub13 jecting an insurance producer to all laws, regu14 lations, provisions or other action of any State 

15 concerning revocation, suspension, or other en16 forcement action related to a member’s ability 

17 to engage in any activity within the scope of au18 thority granted under this subsection and to all 

19 State laws, regulations, provisions and actions 

20 preserved under paragraph (5). 

21 ‘‘(2) VIOLENT CRIME CONTROL AND LAW EN22 FORCEMENT ACT OF 1994.—Nothing in this subtitle 

23 shall be construed to alter, modify, or supercede any 

24 requirement established by section 1033 of title 18, 

25 United States Code. 


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1 ‘‘(3) AGENT FOR REMITTING FEES.—The Asso2 ciation shall act as any member’s agent for purposes 

3 of remitting licensing fees to any State pursuant to 

4 paragraph (1). 

5 ‘‘(4) REGULATOR NOTIFICATION.— 

6 ‘‘(A) IN GENERAL.—The Association shall 

7 notify the States and the National Association 

8 of Insurance Commissioners or its designee 

9 when a producer has satisfied the membership 

10 criteria of this section. The States and the Na11 tional Association of Insurance Commissioners 

12 or its designee shall have 10 business days after 

13 such notification to provide the Association with 

14 evidence that the producer does not satisfy the 

15 criteria for membership for the Association’s 

16 consideration in its final membership deter17 mination. 

18 ‘‘(B) ONGOING DISCLOSURES REQUIRED.— 

19 On an ongoing basis, the Association shall dis20 close to the States and the National Association 

21 of Insurance Commissioners or its designee the 

22 States in which each member is authorized to 

23 operate. The Association shall immediately no24 tify the States and the National Association of 

25 Insurance Commissioners or its designee when 


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1 a member is newly authorized to operate in one 

2 or more States, or is no longer authorized to 

3 operate in one or more States on the basis of 

4 Association membership. 

5 ‘‘(5) PRESERVATION OF STATE CONSUMER PRO6 TECTION AND MARKET CONDUCT REGULATION.—No 

7 provision of this section shall be construed as alter8 ing or affecting the applicability or continuing effec9 tiveness of any law, regulation, provision, or other 

10 action of any State, including any law, regulation, 

11 provision, or other action that— 

12 ‘‘(A) regulates market conduct, producer 

13 conduct, or unfair trade practices; 

14 ‘‘(B) establishes consumer protections; or 

15 ‘‘(C) requires insurance producers to be 

16 appointed by a licensed or authorized insurer, 

17 to the extent that such law, regulation, provision, or 

18 other action is not inconsistent with the provisions 

19 of this subtitle related to market entry for non20 resident insurance producers, and then only to the 

21 extent of such inconsistency. 

22 ‘‘(f) BIENNIAL RENEWAL.—Membership in the Asso23 ciation shall be renewed on a biennial basis. 

24 ‘‘(g) CONTINUING EDUCATION.— 


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1 ‘‘(1) IN GENERAL.—The Association shall es2 tablish, as a condition of membership, continuing 

3 education requirements which shall be comparable to 

4 the continuing education requirements under the li5 censing laws of a majority of the States. 

6 ‘‘(2) STATE CONTINUING EDUCATION REQUIRE7 MENTS.—A member may not be required to satisfy 

8 continuing education requirements imposed under 

9 the laws, regulations, provisions, or actions of any 

10 State other than such member’s home State. 

11 ‘‘(3) RECIPROCITY.—The Association shall not 

12 require a member to satisfy continuing education re13 quirements that are equivalent to any continuing 

14 education requirements of the member’s home State 

15 that have been satisfied by the member during the 

16 applicable licensing period. 

17 ‘‘(4) LIMITATION ON ASSOCIATION.—The Asso18 ciation shall not directly or indirectly offer any con19 tinuing education courses for insurance producers. 

20 ‘‘(h) PROBATION, SUSPENSION AND REVOCATION.— 

21 ‘‘(1) DISCIPLINARY ACTION.—The Association 

22 may place an insurance producer that is a member 

23 of the Association on probation or suspend or revoke 

24 such producer’s membership in the Association, or 


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1 assess monetary fines or penalties, as the Associa2 tion determines to be appropriate, if— 

3 ‘‘(A) the producer fails to meet the appli4 cable membership criteria or other rules of the 

5 Association; 

6 ‘‘(B) the producer has been subject to dis7 ciplinary action pursuant to a final adjudicatory 

8 proceeding under the jurisdiction of a State in9 surance regulator; 

10 ‘‘(C) an insurance license held by the pro11 ducer has been suspended or revoked by a State 

12 insurance regulator; or 

13 ‘‘(D) the producer has been convicted of a 

14 crime that would have resulted in the denial of 

15 membership pursuant to subsection (a)(4)(M)(i) 

16 at the time of application and the Association 

17 has received a copy of the final disposition from 

18 a court of competent jurisdiction. 

19 ‘‘(2) VIOLATIONS OF ASSOCIATION RULES.— 

20 The Association shall have the power to investigate 

21 alleged violations of Association rules. 

22 ‘‘(3) REPORTING.—The Association shall imme23 diately notify the NAIC or its designee when a pro24 ducer’s membership has been placed on probation or 

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1 nated, or when the Association has assessed mone2 tary fines or penalties. 

3 ‘‘(i) CONSUMER COMPLAINTS.— 

4 ‘‘(1) IN GENERAL.—The Association shall— 

5 ‘‘(A) refer any complaint against a mem6 ber of the Association from a consumer relating 

7 to alleged misconduct or violations of State in8 surance laws to the State insurance regulator 

9 where the consumer resides and, when appro10 priate, to any additional State insurance regu11 lator, as determined by rules adopted by the 

12 Association; and 

13 ‘‘(B) make any related records and infor14 mation available to the NAIC or its designee 

15 and to each State insurance regulator to whom 

16 the complaint is forwarded. 

17 ‘‘(2) TELEPHONE AND OTHER ACCESS.—The 

18 Association shall maintain a toll-free number for 

19 purposes of this subsection and, as practicable, other 

20 alternative means of communication with consumers, 

21 such as an Internet webpage. 

22 ‘‘(3) FINAL DISPOSITION OF INVESTIGATION.— 

23 State insurance regulators shall provide the Associa24 tion with information regarding the final disposition 

25 of a complaint referred pursuant to paragraph 


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1 (1)(A), but nothing shall be construed to compel a 

2 State to release confidential investigation reports or 

3 other information protected by State law to the As4 sociation. 

5 ‘‘(j) INFORMATION SHARING.—The Association may 

6 share documents, materials, or other information, includ7 ing confidential and privileged documents, with a State, 

8 Federal, or international regulatory agency or enforce9 ment authority, or with the NAIC, provided that the re10 cipient has the authority and agrees to maintain the con11 fidentiality or privileged status of the document, material, 

12 or other information. 

13 ‘‘SEC. 324. BOARD OF DIRECTORS. 

14 ‘‘(a) ESTABLISHMENT.—There is established the 

15 board of directors of the Association (hereafter in this sub16 title referred to as the ‘Board’), which shall have authority 

17 to govern and supervise all activities of the Association. 

18 ‘‘(b) POWERS.—The Board shall have such of the As19 sociation’s powers and authority as may be specified in 

20 the bylaws of the Association. 

21 ‘‘(c) COMPOSITION.— 

22 ‘‘(1) IN GENERAL.—The Board shall consist of 

23 13 members who shall be appointed by the Presi24 dent, by and with the advice and consent of the Sen25 ate, of whom— 


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1 ‘‘(A) 8 shall be State insurance commis2 sioners appointed in the manner provided in 

3 paragraph (2); 

4 ‘‘(B) 2 shall be representatives of property 

5 and casualty insurance producers; 

6 ‘‘(C) 1 shall be a representative of life or 

7 health insurance producers; 

8 ‘‘(D) 1 shall be a representative of prop9 erty and casualty insurers; and 

10 ‘‘(E) 1 shall be a representative of life or 

11 health insurers. 

12 ‘‘(2) STATE INSURANCE REGULATOR REP13 RESENTATIVES.— 

14 ‘‘(A) Before making any appointments 

15 pursuant to subparagraph (A) of paragraph 

16 (1), the President shall request a list of rec17 ommended candidates from the NAIC, which 

18 shall not be binding on the President. If the 

19 NAIC fails to submit a list of recommendations 

20 within 15 business days of the request, the 

21 President may make the requisite appointments 

22 without considering the views of the NAIC. 

23 ‘‘(B) Not more than 4 members appointed 

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1 paragraph (A) of paragraph (1) shall belong to 

2 the same political party. 

3 ‘‘(C) If fewer than 8 State insurance com4 missioners accept appointment to the Board, 

5 the President may appoint the remaining State 

6 insurance commissioner members of the Board 

7 from among individuals who are former State 

8 insurance commissioners, provided that any 

9 former insurance commissioner so appointed 

10 shall not be employed by or have a present di11 rect or indirect financial interest in any insurer, 

12 insurance producer, or other entity in the insur13 ance industry other than direct or indirect own14 ership of, or beneficial interest in, an insurance 

15 policy or annuity contract written or sold by an 

16 insurer. 

17 ‘‘(3) PRIVATE SECTOR REPRESENTATIVES.—In 

18 making any appointments pursuant to subpara19 graphs (B) through (E) of paragraph (1), the Presi20 dent may seek recommendations for candidates from 

21 national trade associations representing the category 

22 of individuals described, which shall not be binding 

23 on the President. 

24 ‘‘(4) STATE INSURANCE COMMISSIONER DE25 FINED.—For purposes of this subsection, the term 


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1 ‘State insurance commissioner’ means a person who 

2 serves in the position in State government, or on the 

3 board, commission, or other body that is the prin4 cipal insurance regulatory authority for the State. 

5 ‘‘(d) TERMS.— 

6 ‘‘(1) IN GENERAL.—The term of each Board 

7 member shall be for 2 years, except that— 

8 ‘‘(A) the term of— 

9 ‘‘(i) 4 of the State insurance commis10 sioner members of the Board initially ap11 pointed under subparagraph (A) of para12 graph (1); 

13 ‘‘(ii) 1 of the property and casualty 

14 insurance producer members of the Board 

15 initially appointed under subparagraph (B) 

16 of paragraph (1); and 

17 ‘‘(iii) 1 of the insurer representative 

18 members of the Board initially appointed 

19 under subparagraphs (D) and (E) of para20 graph (1), 

21 shall be 1 year, as designated by the President 

22 at the time of the nomination of such members; 

23 ‘‘(B) a member of the Board may continue 

24 to serve after the expiration of the term to 


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1 which such member was appointed until a suc2 cessor is qualified; and 

3 ‘‘(C) any member of the Board appointed 

4 to fill a vacancy occurring before the expiration 

5 of the term for which the member’s predecessor 

6 was appointed shall be appointed only for the 

7 remainder of that term. 

8 ‘‘(2) SUCCESSIVE TERMS.—Board members 

9 may be reappointed to successive terms. 

10 ‘‘(e) INITIAL APPOINTMENTS.—The appointment of 

11 initial Board members shall be made no later than 90 days 

12 after the date of enactment of the National Association 

13 of Registered Agents and Brokers Reform Act of 2012. 

14 ‘‘(f) MEETINGS.— 

15 ‘‘(1) IN GENERAL.—The Board shall meet at 

16 the call of the chairperson, as requested in writing 

17 to the chairperson by at least 5 members of the 

18 Board, or as otherwise provided by the bylaws of the 

19 Association. 

20 ‘‘(2) QUORUM REQUIRED.—A majority of direc21 tors shall constitute a quorum. 

22 ‘‘(3) VOTING.—Decisions of the Board shall re23 quire the approval of a majority of all directors 

24 present at a meeting, a quorum being present. 


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1 ‘‘(4) INITIAL MEETING.—The Board shall hold 

2 its first meeting not later than 45 days after the 

3 date on which all initial members of the Board have 

4 been appointed. 

5 ‘‘(g) RESTRICTION ON CONFIDENTIAL INFORMA6 TION.—Members of the Board appointed pursuant to 

7 paragraph (3) of subsection (c) shall not have access to 

8 confidential information received by the Association in 

9 connection with complaints, investigations, or disciplinary 

10 proceedings involving insurance producers. 

11 ‘‘(h) ETHICS AND CONFLICTS OF INTEREST.—The 

12 Board shall issue and enforce an ethical conduct code to 

13 address permissible and prohibited activities of Board 

14 members and Association officers, employees, agents, or 

15 consultants. The code shall, at a minimum, include provi16 sions that prohibit any Board member or Association offi17 cer, employee, agent or consultant from— 

18 ‘‘(1) engaging in unethical conduct in the 

19 course of performing Association duties; 

20 ‘‘(2) participating in the making or influencing 

21 the making of any Association decision, the outcome 

22 of which he or she knows or had reason to know 

23 would have a reasonably foreseeable material finan24 cial effect, distinguishable from its effect on the pubVerDate Mar 15 2010 21:24 Apr 25, 2012 Jkt 019200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\S2342.IS S2342

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1 licly generally, on the person or a member of his or 

2 her immediate family; 

3 ‘‘(3) accepting any gift from any person or enti4 ty other than the Association that is given because 

5 of the position held by the person in the Association; 

6 ‘‘(4) making political contributions to any per7 son or entity on behalf of the Association; and 

8 ‘‘(5) lobbying or paying someone to lobby on be9 half of the Association. 

10 ‘‘SEC. 325. OFFICERS. 

11 ‘‘(a) POSITIONS.—The officers of the Association 

12 shall consist of a chairperson and a vice chairperson of 

13 the Board, an executive director, secretary, and treasurer 

14 of the Association, and such other officers and assistant 

15 officers as may be deemed necessary. 

16 ‘‘(b) MANNER OF SELECTION.—Each officer of the 

17 Board and the Association shall be elected or appointed 

18 at such time, in such manner, and for such terms as may 

19 be prescribed in the bylaws of the Association. 

20 ‘‘SEC. 326. BYLAWS, RULES, AND DISCIPLINARY ACTION. 

21 ‘‘(a) ADOPTION AND AMENDMENT OF BYLAWS AND

22 RULES.— 

23 ‘‘(1) COPY REQUIRED TO BE FILED.—The 

24 board of directors of the Association shall submit to 

25 the President and the NAIC any proposed bylaw or 


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1 rules of the Association or any proposed amendment 

2 to the bylaws or rules, accompanied by a concise 

3 general statement of the basis and purpose of such 

4 proposal. Rules shall be promulgated in accordance 

5 with the Federal Administrative Procedure Act. 

6 ‘‘(2) EFFECTIVE DATE.—Any proposed bylaw 

7 or rule or proposed amendment to the bylaws or 

8 rules shall take effect, after notice published in the 

9 Federal Register and opportunity for comment, upon 

10 such date as the Association may designate, unless 

11 suspended under subsection (c) of section 330. 

12 ‘‘(b) DISCIPLINARY ACTION BY THE ASSOCIATION.— 

13 ‘‘(1) SPECIFICATION OF CHARGES.—In any pro14 ceeding to determine whether membership shall be 

15 denied, suspended, revoked, or not renewed or to de16 termine whether a member of the Association should 

17 be placed on probation (in this section referred to as 

18 a ‘disciplinary action’) or whether to assess fines or 

19 monetary penalties, the Association shall bring spe20 cific charges, notify such member of such charges, 

21 give the member an opportunity to defend against 

22 the charges, and keep a record. 

23 ‘‘(2) SUPPORTING STATEMENT.—A determina24 tion to take disciplinary action shall be supported by 

25 a statement setting forth— 


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1 ‘‘(A) any act or practice in which such 

2 member has been found to have been engaged; 

3 ‘‘(B) the specific provision of this subtitle, 

4 the rules or regulations under this subtitle, or 

5 the rules of the Association which any such act 

6 or practice is deemed to violate; and 

7 ‘‘(C) the sanction imposed and the reason 

8 for such sanction. 

9 ‘‘(3) INELIGIBILITY OF PRIVATE SECTOR REP10 RESENTATIVES.—Members of the Board appointed 

11 pursuant to section 324(c)(3) shall not participate in 

12 any disciplinary action, and shall not have access to 

13 confidential information concerning such actions. 

14 ‘‘SEC. 327. POWERS. 

15 ‘‘In addition to all the powers conferred upon a non16 profit corporation by the District of Columbia Nonprofit 

17 Corporation Act, the Association shall have the following 

18 powers: 

19 ‘‘(1) To establish and collect such membership 

20 fees as the Association finds necessary to impose to 

21 cover the costs of its operations. 

22 ‘‘(2) To adopt, amend, and repeal bylaws and 

23 rules governing the conduct of Association business 

24 and performance of its duties. 


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1 ‘‘(3) To establish procedures for providing no2 tice and opportunity for comment pursuant to sec3 tion 326(a). 

4 ‘‘(4) To enter into and perform such agree5 ments as necessary to carry out its duties. 

6 ‘‘(5) To hire employees, professionals or special7 ists, and elect or appoint officers, and to fix their 

8 compensation, define their duties and give them ap9 propriate authority to carry out the purposes of this 

10 subtitle, and determine their qualification; and to es11 tablish the Association’s personnel policies and pro12 grams relating to, among other things, conflicts of 

13 interest, rates of compensation, and qualifications of 

14 personnel. 

15 ‘‘(6) To borrow money. 

16 ‘‘(7) To secure funding for such amounts as the 

17 Association determines to be necessary and appro18 priate to organize and begin operations of the Asso19 ciation, which shall be treated as loans to be repaid 

20 by the Association with interest at market rate, ex21 cept that the Board shall not secure funding from 

22 an insurer, insurance producer, or insurance associa23 tion, but may secure funding from the NAIC. 


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1 ‘‘SEC. 328. REPORT BY ASSOCIATION. 

2 ‘‘(a) IN GENERAL.—As soon as practicable after the 

3 close of each fiscal year, the Association shall submit to 

4 the President and the NAIC a written report regarding 

5 the conduct of its business, and the exercise of the other 

6 rights and powers granted by this subtitle, during such 

7 fiscal year. 

8 ‘‘(b) FINANCIAL STATEMENTS.—Each report sub9 mitted under subsection (a) with respect to any fiscal year 

10 shall include financial statements setting forth the finan11 cial position of the Association at the end of such fiscal 

12 year and the results of its operations (including the source 

13 and application of its funds) for such fiscal year. 

14 ‘‘SEC. 329. LIABILITY OF THE ASSOCIATION AND THE DI15 RECTORS, OFFICERS, AND EMPLOYEES OF 

16 THE ASSOCIATION. 

17 ‘‘(a) IN GENERAL.—The Association shall not be 

18 deemed to be an insurer or insurance producer within the 

19 meaning of any State law, rule, regulation, or order regu20 lating or taxing insurers, insurance producers, or other en21 tities engaged in the business of insurance, including pro22 visions imposing premium taxes, regulating insurer sol23 vency or financial condition, establishing guaranty funds 

24 and levying assessments, or requiring claims settlement 

25 practices. 


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1 ‘‘(b) LIABILITY OF DIRECTORS, OFFICERS, AND EM2 PLOYEES.—No director, officer, or employee of the Asso3 ciation shall be personally liable to any person for any ac4 tion taken or omitted in good faith in any matter within 

5 the scope of their responsibilities in connection with the 

6 Association. 

7 ‘‘SEC. 330. PRESIDENTIAL OVERSIGHT. 

8 ‘‘(a) REMOVAL OF BOARD.—If the President deter9 mines that the Association is acting in a manner contrary 

10 to the interests of the public or the purposes of this sub11 title or has failed to perform its duties under this subtitle, 

12 the President may remove the entire existing Board for 

13 the remainder of the term to which the members of the 

14 Board were appointed and appoint, in accordance with 

15 section 324 and with the advice and consent of the Senate, 

16 new members to fill the vacancies on the Board for the 

17 remainder of such terms. 

18 ‘‘(b) REMOVAL OF BOARD MEMBER.—The President 

19 may remove a member of the Board only for neglect of 

20 duty or malfeasance in office. 

21 ‘‘(c) SUSPENSION OF RULES OR ACTIONS.—Fol22 lowing notice to the Board, the President, or a person des23 ignated by the President for such purpose, may suspend 

24 the effectiveness of any rule, or prohibit any action, of the 


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1 Association which the President or the designee deter2 mines is contrary to the purposes of this subtitle. 

3 ‘‘SEC. 331. RELATIONSHIP TO STATE LAW. 

4 ‘‘(a) PREEMPTION OF STATE LAWS.—State laws, 

5 regulations, provisions, or other actions purporting to reg6 ulate insurance producers shall be preempted to the extent 

7 provided in subsection (b). 

8 ‘‘(b) PROHIBITED ACTIONS.— 

9 ‘‘(1) IN GENERAL.—No State shall— 

10 ‘‘(A) impede the activities of, take any ac11 tion against, or apply any provision of law or 

12 regulation arbitrarily or discriminatorily to, any 

13 insurance producer because that insurance pro14 ducer or any affiliate plans to become, has ap15 plied to become, or is a member of the Associa16 tion; 

17 ‘‘(B) impose any requirement upon a mem18 ber of the Association that it pay fees different 

19 from those required to be paid to that State 

20 were it not a member of the Association; or 

21 ‘‘(C) impose any continuing education re22 quirements on any nonresident insurance pro23 ducer that is a member of the Association. 


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1 ‘‘(2) STATES OTHER THAN A HOME STATE.— 

2 No State, other than a member’s home State, 

3 shall— 

4 ‘‘(A) impose any licensing, personal or cor5 porate qualifications, education, training, expe6 rience, residency, continuing education, or 

7 bonding requirement upon a member of the As8 sociation that is different from the criteria for 

9 membership in the Association or renewal of 

10 such membership; 

11 ‘‘(B) impose any requirement upon a mem12 ber of the Association that it be licensed, reg13 istered, or otherwise qualified to do business or 

14 remain in good standing in such State, includ15 ing any requirement that such insurance pro16 ducer register as a foreign company with the 

17 secretary of state or equivalent State official; 

18 ‘‘(C) require that a member of the Associa19 tion submit to a criminal history record check 

20 as a condition of doing business in such State; 

21 or 

22 ‘‘(D) impose any licensing, registration, or 

23 appointment requirements upon a member of 

24 the Association, or require a member of the As25 sociation to be authorized to operate as an inVerDate Mar 15 2010 21:24 Apr 25, 2012 Jkt 019200 PO 00000 Frm 00033 Fmt 6652 Sfmt 6201 E:\BILLS\S2342.IS S2342

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1 surance producer, in order to sell, solicit, or ne2 gotiate insurance for commercial property and 

3 casualty risks to an insured with risks located 

4 in more than one State, if such member is li5 censed or otherwise authorized to operate in the 

6 State where the insured maintains its principal 

7 place of business and the contract of insurance 

8 insures risks located in that State. 

9 ‘‘(3) PRESERVATION OF STATE DISCIPLINARY

10 AUTHORITY.—Nothing in this section may be con11 strued to prohibit a State from investigating and 

12 taking appropriate disciplinary action, including sus13 pension or revocation of a producer’s authority to do 

14 business in a State, in accordance with such State’s 

15 law and that is not inconsistent with the provisions 

16 of this section, against a member of the Association 

17 as a result of a complaint or for any alleged activity, 

18 regardless of whether such activity occurred before 

19 or after the producer commenced doing business in 

20 that State pursuant to Association membership. 

21 ‘‘SEC. 332. COORDINATION WITH OTHER REGULATORS. 

22 ‘‘(a) COORDINATION WITH STATE INSURANCE REGU23 LATORS.—The Association may— 

24 ‘‘(1) establish a central clearinghouse, or utilize 

25 the NAIC or any other appropriate entity as a cenVerDate Mar 15 2010 21:24 Apr 25, 2012 Jkt 019200 PO 00000 Frm 00034 Fmt 6652 Sfmt 6201 E:\BILLS\S2342.IS S2342

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1 tral clearinghouse, through which members of the 

2 Association may pursuant to section 323(e) disclose 

3 their intent to operate in 1 or more States and pay 

4 the licensing fees to the appropriate States; and 

5 ‘‘(2) establish a national database for the collec6 tion of regulatory information concerning the activi7 ties of insurance producers or contract with the 

8 NAIC or any other entity to utilize such a database. 

9 ‘‘(b) COORDINATION WITH THE FINANCIAL INDUS10 TRY REGULATORY AUTHORITY.—The Association shall 

11 coordinate with the Financial Industry Regulatory Au12 thority in order to ease any administrative burdens that 

13 fall on persons that are members of both associations, con14 sistent with the requirements of this subtitle and the Fed15 eral securities laws. 

16 ‘‘SEC. 333. RIGHT OF ACTION. 

17 ‘‘(a) RIGHT OF ACTION.—Any person aggrieved by 

18 a decision or action of the Association may, after reason19 ably exhausting available avenues for resolution within the 

20 Association, commence a civil action in an appropriate 

21 United States district court, and obtain all appropriate re22 lief. 

23 ‘‘(b) ASSOCIATION INTERPRETATIONS.—In any such 

24 action, the court shall give appropriate weight to the Asso25 ciation’s interpretation of its bylaws and this subtitle. 


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1 ‘‘SEC. 334. DEFINITIONS. 

2 ‘‘For purposes of this subtitle, the following defini3 tions shall apply: 

4 ‘‘(1) BUSINESS ENTITY.—The term ‘business 

5 entity’ means a corporation, association, partnership, 

6 limited liability company, limited liability partner7 ship, or other legal entity. 

8 ‘‘(2) HOME STATE.—The term ‘home State’ 

9 means the State in which the insurance producer 

10 maintains its principal place of residence or business 

11 and is licensed to act as an insurance producer. 

12 ‘‘(3) INSURANCE.—The term ‘insurance’ means 

13 any product, other than title insurance or bail 

14 bonds, defined or regulated as insurance by the ap15 propriate State insurance regulatory authority. 

16 ‘‘(4) INSURANCE PRODUCER.—The term ‘insur17 ance producer’ means any insurance agent or 

18 broker, excess or surplus lines broker or agent, in19 surance consultant, limited insurance representative, 

20 and any other individual or entity that sells, solicits, 

21 or negotiates policies of insurance or offers advice, 

22 counsel, opinions or services related to insurance. 

23 ‘‘(5) PRINCIPAL PLACE OF BUSINESS.—The 

24 term ‘principal place of business’ means the State in 

25 which an insurance producer maintains the head26 quarters of the producer and, in the case of a busiVerDate Mar 15 2010 21:24 Apr 25, 2012 Jkt 019200 PO 00000 Frm 00036 Fmt 6652 Sfmt 6201 E:\BILLS\S2342.IS S2342

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1 ness entity, where the entity’s high-level officers di2 rect, control, and coordinate the business activities 

3 of the entity. 

4 ‘‘(6) PRINCIPAL PLACE OF RESIDENCE.—The 

5 term ‘principal place of residence’ means the State 

6 in which an insurance producer resides for the great7 est number of days during a calendar year. 

8 ‘‘(7) STATE.—The term ‘State’ includes any 

9 State, the District of Columbia, any territory of the 

10 United States, and Puerto Rico, Guam, American 

11 Samoa, the Trust Territory of the Pacific Islands, 

12 the Virgin Islands, and the Northern Mariana Is13 lands. 

14 ‘‘(8) STATE LAW.— 

15 ‘‘(A) IN GENERAL.—The term ‘State law’ 

16 includes all laws, decisions, rules, regulations, 

17 or other State action having the effect of law, 

18 of any State. 

19 ‘‘(B) LAWS APPLICABLE IN THE DISTRICT

20 OF COLUMBIA.—A law of the United States ap21 plicable only to or within the District of Colum22 bia shall be treated as a State law rather than 

23 a law of the United States.’’. 

24 (b) CLERICAL AMENDMENT.—The table of contents 

25 for the Gramm-Leach-Bliley Act is amended by striking 


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1 the items relating to subtitle C of title III and inserting 

2 the following new items: 

‘‘Subtitle C—National Association of Registered Agents and Brokers 

‘‘Sec. 321. National Association of Registered Agents and Brokers. 

‘‘Sec. 322. Purpose. 

‘‘Sec. 323. Membership. 

‘‘Sec. 324. Board of directors. 

‘‘Sec. 325. Officers. 

‘‘Sec. 326. Bylaws, rules, and disciplinary action. 

‘‘Sec. 327. Powers. 

‘‘Sec. 328. Report by Association. 

‘‘Sec. 329. Liability of the Association and the directors, officers, and employees of the Association. 

‘‘Sec. 330. Presidential oversight. 

‘‘Sec. 331. Relationship to State law. 

‘‘Sec. 332. Coordination with other regulators. 

‘‘Sec. 333. Right of action. 

‘‘Sec. 334. Definitions.’’. 

Æ 


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