I

103D CONGRESS

2D SESSION H. R. 3974

To provide for fair trade in insurance services, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 8, 1994

Mr. LEACH introduced the following bill; which was referred jointly to the

Committees on Energy and Commerce and Ways and Means

A BILL

To provide for fair trade in insurance services, 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 ‘‘Fair Trade in Insur5 ance Services Act of 1994’’.

6 SEC. 2. EFFECTUATING THE PRINCIPLE OF NATIONAL

7 TREATMENT FOR INSURANCE ORGANIZA8 TIONS.

9 (a) PURPOSE.—The purpose of this section is to en10 courage foreign countries to accord national treatment to
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1 United States insurance organizations that operate or

2 seek to operate in those countries.

3 (b) IDENTIFYING COUNTRIES THAT DENY NATIONAL

4 TREATMENT TO UNITED STATES INSURANCE ORGANIZA5 TIONS.—The President shall identify the extent to which

6 foreign countries deny national treatment to United States

7 insurance organizations—

8 (1) according to the most recent report under

9 section 3602 of the Omnibus Trade and Competi10 tiveness Act of 1988 (or the most recent update of

11 any such report); or

12 (2) based on more recent information that the

13 President considers to be appropriate.

14 (c) DETERMINING WHETHER DENIAL OF NATIONAL

15 TREATMENT HAS A SIGNIFICANT ADVERSE EFFECT.—

16 (1) IN GENERAL.—The President shall deter17 mine whether the denial of national treatment to

18 United States insurance organizations by a foreign

19 country identified under subsection (b) has a signifi20 cant adverse effect on such organizations.

21 (2) FACTORS TO BE CONSIDERED.—In deter22 mining whether and to what extent a foreign country

23 denies national treatment to United States insurance

24 organizations, and in determining the effect of any

25 such denial on such insurance organizations, the
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1 President shall consider appropriate factors, includ2 ing—

3 (A) the extent of United States trade with

4 and investment in the foreign country, the size

5 of the foreign country’s markets for the insur6 ance services involved, and the ability and the

7 extent to which United States insurance organi8 zations operate or seek to operate in those mar9 kets;

10 (B) the importance of operations by

11 United States insurance organizations in the

12 foreign country to the export of goods and serv13 ices by United States firms to such country;

14 (C) the extent to which the foreign country

15 provides in advance to United States insurance

16 organizations any measure of general applica17 tion that the country proposes to adopt, such as

18 regulations, guidelines or other policies regard19 ing new products, services, and markets in

20 order to allow an opportunity for such insur21 ance organizations to comment on the measure

22 and for such comments to be taken into account

23 by the foreign country;

24 (D) the extent to which the foreign coun25 try—
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1 (i) makes available, in writing, to

2 United States insurance organizations the

3 foreign country’s requirements for complet4 ing applications relating to the provision of

5 insurance services;

6 (ii) applies published, objective, stand7 ards and criteria in evaluating any such

8 applications from United States insurance

9 organizations; and

10 (iii) renders administrative decisions

11 with respect to any such application within

12 a reasonable period of time;

13 (E) the extent to which United States in14 surance organizations may conduct activities or

15 provide services in the foreign country that in16 surance organizations organized under the laws

17 of the foreign country may not conduct or pro18 vide in the foreign country; and

19 (F) the extent to which United States in20 surance organizations are affected in their oper21 ations and ability to compete on an equal basis

22 by—

23 (i) the licensing policies of the insur24 ance regulator of that country;
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1 (ii) capital requirements applicable in

2 that country with respect to insurance ac3 tivities;

4 (iii) restrictions on acquisitions or

5 joint ventures, and operations of such ac6 quisitions and joint ventures, by insurance

7 organizations in that country;

8 (iv) restrictions on the operation and

9 establishment of branches in that country;

10 and

11 (v) requirements for seeking approval

12 of rates, rules, and policy forms when in13 troducing new products, services, and pric14 ing techniques.

15 (d) PUBLICATION OF DETERMINATION.—

16 (1) PUBLICATION.—If the President determines

17 that the denial of national treatment to United

18 States insurance organizations by a foreign country

19 has a significant adverse effect on such organiza20 tions, the President—

21 (A) may, after the Trade Representative

22 has initiated negotiations in accordance with

23 subsection (g) publish that determination in the

24 Federal Register;
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1 (B) shall, not less frequently than annu2 ally, in consultation with any department or

3 agency that the President considers to be ap4 propriate, review each such determination to de5 termine whether the determination should be

6 rescinded; and

7 (C) shall inform State insurance commis8 sioners or regulatory agencies of the publication

9 of such determination.

10 (2) EXCEPTION FOR COUNTRIES WITH NA11 TIONAL TREATMENT COMMITMENTS.—Paragraph (1)

12 shall not apply to a foreign country that the Presi13 dent determines has provided the United States with

14 a binding and substantially full market access and

15 national treatment commitment in insurance serv16 ices, and adheres to that commitment in practice.

17 (e) DISCRETIONARY SANCTIONS.—

18 (1) ACTION BY THE PRESIDENT.—

19 (A) IN GENERAL.—Subject to subpara20 graph (B), the President may recommend to

21 the Secretary of the Treasury that the Sec22 retary suspend the acceptance of, or not accept,

23 a registration statement that is filed pursuant

24 to section 3 after the date of publication of a

25 determination under subsection (d)(1) by a per-
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1 son of a foreign country listed in such publica2 tion if the President determines that—

3 (i) such action would assist the

4 United States in negotiations to eliminate

5 denials of national treatment against Unit6 ed States insurance organizations;

7 (ii) negotiations undertaken pursuant

8 to subsection (g) are not likely to result in

9 an agreement that eliminates the denial of

10 national treatment; or

11 (iii) the country has not adequately

12 adhered to an agreement reached as a re13 sult of negotiations undertaken pursuant

14 to subsection (g).

15 (B) CONSISTENCY WITH BILATERAL AND

16 MULTILATERAL AGREEMENTS.—The authority

17 of the President under subparagraph (A) may

18 not be used to take actions which are inconsist19 ent with any bilateral or multilateral agreement

20 that governs insurance services that has been

21 entered into by the President and approved by

22 the Senate and House of Representatives.

23 (C) SUSPENSIONS OF FILINGS OF REG24 ISTRATIONS.—
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1 (i) IN GENERAL.—Notwithstanding

2 any other provision of law, if the President

3 recommends, pursuant to subparagraph

4 (A), that the Secretary suspend the accept5 ance of any registration of an alien insur6 ance company under section 3, the Sec7 retary shall—

8 (I) suspend the Secretary’s ac9 ceptance of such registration for a pe10 riod of 180 days; and

11 (II) at the recommendation of

12 the President, extend such suspension

13 for an additional period of 180 days.

14 (ii) TERMINATION OF SUSPENSION.—

15 The Secretary shall, on the recommenda16 tion of the President, terminate any sus17 pension in effect under clause (i).

18 (D) ALTERNATIVE ACTION.—If the Presi19 dent determines that the procedure outlined in

20 subparagraph (A) is either inappropriate or im21 practical to achieve the purpose of this section,

22 the President may take such action under other

23 provisions of law as the President considers

24 necessary and appropriate to encourage foreign

25 countries to accord national treatment to
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1 United States insurance organizations that op2 erate or seek to operate in those countries.

3 (f) EXISTING ALIEN INSURANCE ORGANIZATION AC4 TIVITY.—The authority of subsection (e) may not be exer5 cised with the respect to any registration filed by an alien

6 insurance organization which is engaged in insurance ac7 tivities within the United States as of March 8, 1994.

8 (g) NEGOTIATIONS.—

9 (1) IN GENERAL.—The Trade Representative—

10 (A) shall initiate negotiations with any for11 eign country with respect to which a determina12 tion made under subsection (c)(1) is in effect to

13 ensure that such country accords national treat14 ment to United States insurance organizations;

15 and

16 (B) may initiate negotiations with any for17 eign country that denies national treatment to

18 United States insurance organizations to ensure

19 that the foreign country accords national treat20 ment to such organizations.

21 (2) EXCEPTIONS.—Paragraph (1) shall not

22 apply with respect to any foreign country if the

23 President—

24 (A) determines that the negotiations—
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1 (i) would be unlikely to result in

2 progress toward according national treat3 ment to United States insurance organiza4 tions; or

5 (ii) would impair the economic inter6 ests of the United States; and

7 (B) submits a written notice of that deter8 mination to the Congress.

9 (h) REPORT.—

10 (1) CONTENTS OF REPORT.—Not later than

11 December 1, 1994, and biennially thereafter, the

12 President shall transmit to the Congress a report

13 that—

14 (A) specifies the foreign countries identi15 fied under subsection (b);

16 (B) if a determination has been published

17 under subsection (d)(1) with respect to the for18 eign country, provides the reasons for such de19 termination;

20 (C) if the President has not made or has

21 rescinded such a determination with respect to

22 the foreign country, provides the reasons for

23 the failure to make the determination or for the

24 rescission;
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1 (D) describes the results of any negotia2 tions conducted under subsection (g)(1) with

3 the foreign country; and

4 (E) discusses the effectiveness of this sec5 tion in achieving the purposes of the section.

6 (2) SUBMISSION OF REPORT.—The report re7 quired by paragraph (1) may be submitted as part

8 of a report or update submitted under section 3602

9 of the Omnibus Trade and Competitiveness Act of

10 1988.

11 (i) DELEGATION.—

12 (1) IN GENERAL.—The President may delegate

13 any authority of the President under this section.

14 (2) EXERCISE OF AUTHORITY.—If the Presi15 dent delegates any authority of the President under

16 this section, the designee’s authority shall be exer17 cised according to the specific direction (if any) of

18 the President.

19 (j) CONSULTATION.—In carrying out the duties

20 under this Act, the President, or the President’s designee,

21 may consult with the appropriate State insurance commis22 sioners or regulatory agencies and other entities the Presi23 dent or designee may consider appropriate.

24 (k) DEFINITIONS.—For purposes of this section, the

25 following definitions shall apply:
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1 (1) ALIEN INSURANCE ORGANIZATION.—The

2 term ‘‘alien insurance organization’’ means an insur3 ance organization which is a person of a foreign

4 country.

5 (2) INSURANCE ORGANIZATION.—The term ‘‘in6 surance organization’’ means any insurer and any

7 reinsurer.

8 (3) INSURER.—The term ‘‘insurer’’ means a

9 party to a contract of insurance who assumes the

10 risk and undertakes to indemnify the insured, or to

11 pay a certain sum on the occurrence of a specified

12 contingency.

13 (4) NATIONAL TREATMENT.—The term ‘‘na14 tional treatment’’ means, with respect to any foreign

15 country, treatment that offers United States insur16 ance organizations the same competitive opportuni17 ties (including effective market access and market

18 penetration) in such country as are available to the

19 country’s domestic insurance organizations in like

20 circumstances.

21 (5) PERSON OF A FOREIGN COUNTRY.—The

22 term ‘‘person of a foreign country’’ means—

23 (A) an entity that—

24 (i) is organized under the laws of the

25 foreign country, or
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1 (ii) has its principal place of business

2 in the foreign country;

3 (B) an individual who—

4 (i) is a citizen of the foreign country,

5 or

6 (ii) is domiciled in the foreign coun7 try; or

8 (C) any person that is directly or indirectly

9 controlled by any entity or individual described

10 in subparagraph (A) or (B).

11 (6) REINSURER.—The term ‘‘reinsurer’’ means

12 an insurer which contracts to indemnify a ceding in13 surer for all or part of a risk originally undertaken

14 by the ceding insurer.

15 (7) SECRETARY.—The term ‘‘Secretary’’ means

16 the Secretary of the Treasury.

17 (8) TRADE REPRESENTATIVE.—The term

18 ‘‘Trade Representative’’ means the United States

19 Trade Representative.

20 SEC. 3. REGISTRATION OF ALIEN INSURANCE ORGANIZA21 TIONS WITH THE SECRETARY OF THE TREAS22 URY.

23 (a) IN GENERAL.—No alien insurance organization

24 (as defined in section 2(i)(1)) may engage in insurance
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1 activities within the United States after the date of the

2 enactment of this Act unless—

3 (1) a registration statement has been filed by

4 the company with the Secretary of the Treasury in5 dicating the organization’s intention to engage in in6 surance activities within the United States; and

7 (2) applicable State insurance requirements

8 have been satisfied.

9 (b) ANNUAL REPORT.—The Secretary of the Treas10 ury shall submit an annual report to the Congress on the

11 level of alien insurance organization activity within the

12 United States.

13 SEC. 4. CONFORMING AMENDMENT.

14 (a) REPORT ON DENIAL OF NATIONAL TREATMENT

15 FOR INSURANCE ORGANIZATIONS.—Section 3602(3) of

16 the Omnibus Trade and Competitiveness Act of 1988 (22

17 U.S.C. 5352(3)) is amended by inserting ‘‘, insurance or18 ganizations,’’ after ‘‘banking organizations’’.

19 (b) REPORTS ON FOREIGN TREATMENT OF UNITED

20 STATES FINANCIAL INSTITUTIONS.—Section 3602 of the

21 Omnibus Trade and Competitiveness Act of 1988 (22

22 U.S.C. 5352) is amended—

23 (1) in the 1st sentence, by inserting ‘‘with up24 dates on significant developments every 2 years fol-
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1 lowing the study conducted in 1994,’’ before ‘‘the

2 Secretary of the Treasury’’; and

3 (2) by adding at the end the following: ‘‘For

4 purposes of this section, a foreign country denies na5 tional treatment to United States entities unless the

6 foreign country offers such entities the same com7 petitive opportunities (including effective market ac8 cess) as are available to the domestic entities of the

9 foreign country.’’.

10 (c) NEGOTIATIONS TO PROMOTE FAIR TRADE IN FI11 NANCIAL SERVICES.—Section 3603(a)(1) of the Omnibus

12 Trade and Competitiveness Act of 1988 (22 U.S.C.

13 5353(a)(1)) is amended by inserting ‘‘effective’’ before

14 ‘‘access’’.

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