Union Calendar No. 166

103D CONGRESS

1ST SESSION H. R. 1257

[Report No. 103–302, Parts I and II]

A BILL

To reconstitute the Federal Insurance Administraance, and for other purposes. information regarding the availability of insur- ance companies, and provide for public access to ity assistance available to well-capitalized insur- ing insurance in the United States, make liquid- plicable to foreign insurers and reinsurers provid- tive branch, provide for minimum standards ap- tion as an independent agency within the execuOCTOBER 28, 1993

Reported from the Committee on Energy and Commerce

to be printedWhole House on the State of the Union, and orderedwith amendments, committed to the Committee of the
IB

Union Calendar No. 166

103D CONGRESS

1ST SESSION H. R. 1257

[Report No. 103–302, Parts I and II]

To reconstitute the Federal Insurance Administration as an independent

agency within the executive branch, provide for minimum standards applicable to foreign insurers and reinsurers providing insurance in the United

States, make liquidity assistance available to well-capitalized insurance

companies, and provide for public access to information regarding the

availability of insurance, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 9, 1993

Mr. KENNEDY (for himself and Mr. GONZALEZ) introduced the following bill;

which was referred to the Committee on Banking, Finance and Urban Affairs

OCTOBER 19, 1993

Reported with amendments, referred to the Committee on Energy and Commerce for a period ending not later than November 19, 1993, for consideration of such provisions of the bill and amendment as fall within the

jurisdiction of the committee pursuant to clause 1(h), rule X

[Strike out all after the enacting clause and insert the part printed in italic]

OCTOBER 28, 1993

Additional sponsors: Mr. HINCHEY, Ms. VELA ́ZQUEZ, Mr. DIXON, Mr. FIELDS

of Louisiana, Mr. MFUME, Mr. GUTIERREZ, Ms. ESHOO, and Mr. DE LUGO

OCTOBER 28, 1993

Reported from the Committee on Energy and Commerce with amendments,

committed to the Committee of the Whole House on the State of the

Union, and ordered to be printed

[Omit the part in italic black brackets and insert the part printed in boldface roman]

[For text of introduced bill, see copy of bill as introduced on March 9, 1993]
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A BILL

To reconstitute the Federal Insurance Administration as an

independent agency within the executive branch, provide

for minimum standards applicable to foreign insurers

and reinsurers providing insurance in the United States,

make liquidity assistance available to well-capitalized insurance companies, and provide for public access to information regarding the availability of insurance, 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 ƒSECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

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

5 ‘‘Insurance Consumer Protection Act’’.

6 ƒ(b) TABLE OF CONTENTS.—

ƒSec. 1. Short title and table of contents.

ƒTITLE I—CERTIFICATION OF FOREIGN INSURERS

ƒSubtitle A—Certification of Foreign Direct Insurers

ƒSec. 101. Requirement for conducting direct insurance business.

ƒSec. 102. Application.

ƒSec. 103. Certification procedure.

ƒSec. 104. Requirements for foreign direct insurers.

ƒSec. 105. Financial statements.

ƒSec. 106. Authority to establish risk-based capital standards.

ƒSubtitle B—Certification of Foreign Reinsurers

ƒSec. 121. Requirement for claiming credit for reinsurance.

ƒSec. 122. Application.

ƒSec. 123. Certification procedure.

ƒSec. 124. Requirements for foreign reinsurers.

ƒSec. 125. Financial statements.

ƒSec. 126. Authority to establish risk-based capital standards.

ƒSubtitle C—Enforcement

ƒSec. 141. Examinations of foreign insurers.

ƒSec. 142. Termination and suspension of certification.

ƒSec. 143. Cease-and-desist orders.
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ƒSec. 144. Actions by State insurance regulators to enforce requirements applicable to foreign insurers.

ƒSec. 145. Criminal penalties.

ƒSec. 146. Notification to State insurance regulators and coordination with foreign insurance regulators.

ƒSec. 147. National insurance intelligence database.

ƒSubtitle D—General Provisions

ƒSec. 161. Transfer of information with State insurance regulators.

ƒSec. 162. National Advisory Council of State Insurance Regulators.

ƒSec. 163. GAO study of accounting principles.

ƒSec. 164. Fees.

ƒSec. 165. Forms.

ƒSec. 166. Determination of qualified financial institutions and control.

ƒSec. 167. Definitions.

ƒSec. 168. Relation to State laws.

ƒSec. 169. Effective dates.

ƒTITLE II—DISCLOSURE OF INSURANCE AVAILABILITY AND

INSURER INVESTMENT INFORMATION

ƒSec. 201. Short title.

ƒSec. 202. Findings and purposes.

ƒSec. 203. Establishment of general requirements to submit information.

ƒSec. 204. Reporting of noncommercial insurance information.

ƒSec. 205. Study of commercial insurance for residential properties and small

businesses.

ƒSec. 206. Reporting of bid, performance, and payment bonds for small businesses.

ƒSec. 207. Reporting of rural insurance information.

ƒSec. 208. Waiver of reporting requirements.

ƒSec. 209. Reporting by private mortgage insurers.

ƒSec. 210. Use of data contractor and statistical agents.

ƒSec. 211. Reporting of information regarding investments by insurers.

ƒSec. 212. Submission of information to Secretary and maintenance of information.

ƒSec. 213. Compilation of aggregate information.

ƒSec. 214. Availability and access system.

ƒSec. 215. Designations.

ƒSec. 216. Improved methods and reporting on basis of other areas.

ƒSec. 217. Annual reporting period.

ƒSec. 218. Disclosures by insurers to applicants and policyholders.

ƒSec. 219. Enforcement.

ƒSec. 220. Reports.

ƒSec. 221. Task force on agency appointments.

ƒSec. 222. Studies.

ƒSec. 223. Exemption and relation to State laws.

ƒSec. 224. Regulations.

ƒSec. 225. Definitions.

ƒSec. 226. Effective date.
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1 ƒTITLE I—CERTIFICATION OF

2 FOREIGN INSURERS

3 ƒSubtitle A—Certification of

4 Foreign Direct Insurers

5 ƒSEC. 101. REQUIREMENT FOR CONDUCTING DIRECT IN6 SURANCE BUSINESS.

7 ƒNo foreign insurer may engage in the business of in8 surance in any State by accepting or renewing United

9 States direct written insurance obligations after the date

10 provided in section 169(c) unless the foreign insurer is cer11 tified under this subtitle by the Secretary of the Treasury

12 as a certified foreign direct insurer. No person may assist

13 or facilitate, in any State, the acceptance or renewal of

14 United States direct written insurance obligations with a

15 foreign insurer unless the foreign insurer is so certified.

16 ƒSEC. 102. APPLICATION.

17 ƒThe Secretary shall provide for a foreign insurer to

18 apply, in the form and manner determined by the Sec19 retary, for certification under this subtitle as a certified for20 eign direct insurer.

21 ƒSEC. 103. CERTIFICATION PROCEDURE.

22 ƒ(a) IN GENERAL.—The Secretary may certify a for23 eign insurer as a certified foreign direct insurer for pur24 poses of this title only if—
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1 ƒ(1) the foreign insurer submits an application

2 under section 102 containing such information as the

3 Secretary may require to determine whether the for4 eign insurer complies with the standards established

5 under section 104, together with an application fee in

6 the amount determined under section 164(a);

7 ƒ(2) the Secretary determines that the foreign

8 insurer complies with the requirements under section

9 104; and

10 ƒ(3) the Secretary determines that the foreign

11 insurer has complied with the requirements under sec12 tion 105.

13 ƒ(b) REQUIREMENTS FOR FOREIGN DIRECT INSURERS

14 NOT SEEKING CERTIFICATION.—The Secretary may reduce

15 or waive the requirements under sections 104 and 105 as

16 the Secretary determines appropriate, with respect to any

17 foreign direct insurer that submits to the Secretary, before

18 the date provided in section 169(c), written notice that the

19 foreign insurer does not intend to apply for certification

20 under this subtitle, will not violate the prohibitions under

21 section 101, and will comply with any requirements pursu22 ant to this subsection. In making any such determinations,

23 the Secretary shall consider the adequacy of insurance regu24 lation in the country of domicile of the foreign insurer and
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1 the needs and protections of United States policyholders,

2 creditors, and the general public.

3 ƒSEC. 104. REQUIREMENTS FOR FOREIGN DIRECT INSUR4 ERS.

5 ƒ(a) IN GENERAL.—Each foreign direct insurer shall

6 comply with the following requirements:

7 ƒ(1) MINIMUM NET WORTH AND RISK-BASED

8 CAPITAL STANDARDS.—The foreign insurer shall have

9 a net worth in an amount not less than $15,000,000

10 (or an aggregate amount of not less than

11 $10,000,000,000, in the case of a group of incor12 porated insurers under common administration), or

13 such higher amount as the Secretary may require

14 based on the amount of business transacted by the for15 eign insurer and the aggregate amount of the United

16 States direct written insurance obligations of the for17 eign insurer and shall comply with any risk-based

18 capital standards established by the Secretary under

19 section 106. The Secretary shall determine the net

20 worth of a foreign insurer and may adjust the value

21 of any assets and liabilities of an insurer, for pur22 poses of this paragraph, in accordance with the ac23 counting standards established by the Secretary pur24 suant to section 105(d).
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1 ƒ(2) TRUST FUND.—The foreign insurer shall es2 tablish and, at all times, maintain at a qualified fi3 nancial institution in the United States an irrev4 ocable trust, which shall meet the following require5 ments:

6 ƒ(A) AVAILABILITY OF PROCEEDS.—The

7 trust instrument shall provide that contested

8 claims shall be valid and enforceable upon the

9 final order of any court of competent jurisdiction

10 in the United States. Legal title to assets of the

11 trust shall be vested in the trustees of the trust

12 and all assets shall be available to meet the Unit13 ed States direct written insurance obligations of

14 the insurer, notwithstanding any other specified

15 use of the trust. The trust shall remain in effect

16 for such time as the insurer has outstanding ob17 ligations due under policies subject to the trust.

18 ƒ(B) BALANCE.—Except as provided in

19 subparagraph (C), the trust fund shall have a

20 balance, at all times, of cash, readily marketable

21 securities, and letters of credit, acceptable in the

22 determination of the Secretary, in an amount

23 not less than—

24 ƒ(i) for a single insurer, the greater

25 of—
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1 ƒ(I) $2,500,000; or

2 ƒ(II) the lesser of (a) the aggre3 gate amount of the United States di4 rect written insurance obligations of

5 the insurer, or (b) $10,000,000;

6 ƒ(ii) for an insurer that is a group in7 cluding incorporated and individual unin8 corporated underwriters, the sum of—

9 ƒ(I) $50,000,000; and

10 ƒ(II) the aggregate amount of the

11 United States direct written insurance

12 obligations of the insurer plus an

13 amount equal to all other liabilities se14 cured by the trust; and

15 ƒ(iii) for an insurer that is a group of

16 incorporated insurers under common ad17 ministration, the sum of—

18 ƒ(I) $50,000,000; and

19 ƒ(II) the aggregate amount of the

20 United States direct written insurance

21 obligations pursuant to insurance con22 tracts subscribed to by members of the

23 group and issued by or through each

24 member of the group.
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1 ƒ(C) UNSAFE FINANCIAL CONDITIONS.—The

2 Secretary may increase the minimum balance

3 required to be maintained under subparagraph

4 (B) by an insurer, on a case-by-case basis, if the

5 Secretary determines that such insurer is operat6 ing in a manner likely to result in an unsafe or

7 unsound financial condition.

8 The Secretary may develop and require the use of

9 standard forms, agreements, and contracts for use in

10 establishing trusts under this paragraph. The trust

11 agreement shall require the qualified financial insti12 tution to serve at all times as trustee and shall pro13 vide that the Secretary shall have access to such books

14 and records regarding the trust fund as may be nec15 essary to conduct audits required under section

16 141(c). Notwithstanding any Federal or State law, if

17 the insurer is placed in supervision, rehabilitation, or

18 liquidation, or any equivalent status by the State or

19 country of its domicile, or the Secretary determines

20 pursuant to regulations issued by the Secretary that

21 the condition of the insurer is such that the further

22 transaction of business by the insurer will be hazard23 ous to United States policyholders or creditors, or to

24 the public, then the Secretary shall have the sole au25 thority for distributing the proceeds of any trust fund
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1 under this paragraph for payment of the valid claims

2 of the United States policyholders of the insurer and

3 other claimants under such policies. The trustees of

4 the trust shall submit a report in writing to the Sec5 retary annually, not later than the date established by

6 the Secretary by regulation. The report shall state the

7 balance of the trust, list the investments of the trust

8 for the 12-month period for which the report is made,

9 and certify the date of the termination of the trust

10 with respect to new business (if planned) or certify

11 that the trust will not expire before the date occurring

12 12 months after the expiration of the 12-month period

13 for which the report is made.

14 ƒ(3) AGENT FOR SERVICE OF PROCESS.—The

15 foreign insurer shall appoint and maintain, in the

16 form and manner required by the Secretary, an agent

17 in the United States upon whom process may be

18 served in any action, suit, or proceeding.

19 ƒ(4) JURISDICTION OF COURTS.—The foreign in20 surer shall agree to submit to the jurisdiction of any

21 court of the United States or of any State, of com22 petent jurisdiction, and to be fully bound by its deci23 sion.

24 ƒ(5) REGULATION BY DOMICILE.—The foreign

25 insurer shall annually submit to the Secretary a cer-
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1 tificate of compliance, certificate of good standing, or

2 equivalent documentation (as determined by the Sec3 retary) properly attested by the foreign insurance reg4 ulator for the domicile of the insurer, evidencing au5 thority under the laws of the domicile of the insurer

6 to engage in the business of insurance in such domi7 cile.

8 ƒ(6) BIOGRAPHICAL INFORMATION.—The foreign

9 insurer shall annually submit to the Secretary, in the

10 form and manner determined by the Secretary—

11 ƒ(A) biographical information on all senior

12 officers and directors of the insurer that dem13 onstrates a level of competency, experience, and

14 integrity sufficient to indicate that permitting

15 the insurer to conduct business in the United

16 States would not be contrary to the interests of

17 United States policyholders, creditors, or the gen18 eral public; and

19 ƒ(B) biographical, management, and oper20 ational information, as the Secretary shall pro21 vide, on any persons that control the insurer.

22 ƒ(7) INSURANCE EXPERIENCE.—The foreign in23 surer shall—

24 ƒ(A) have been actively and continuously

25 engaged in the business of insurance as a direct
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1 insurer for a period of not less than 3 years end2 ing upon the submission of an application under

3 section 102;

4 ƒ(B) be a wholly owned subsidiary of an

5 insurer actively and continuously engaged in the

6 business of insurance as a direct insurer for a

7 period of not less than 3 years ending upon the

8 submission of an application under section 102;

9 or

10 ƒ(C) be the continuing corporation result11 ing from a merger or consolidation of insurers,

12 at least one of which has been actively and con13 tinuously engaged in the business of insurance as

14 a direct insurer for a period of not less than 3

15 years ending upon the submission of an applica16 tion under section 102.

17 ƒ(8) OTHER.—The foreign insurer shall meet

18 any other requirements relating to the solvency or ca19 pacity, or safety and soundness of the business prac20 tices of the insurer, that are established by the Sec21 retary as the Secretary may determine are reasonably

22 necessary to protect the interests of United States pol23 icyholders, creditors, or the general public.

24 ƒ(b) WAIVER.—The Secretary may reduce or waive

25 any of the requirements under paragraphs (3) through (8)
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1 of subsection (a) with respect to a foreign insurer if the

2 Secretary determines on a case-by-case basis that the for3 eign insurer has demonstrated, to the satisfaction of the Sec4 retary, experience, competence, and capacity to safely and

5 soundly engage in the business of insurance in the United

6 States.

7 ƒSEC. 105. FINANCIAL STATEMENTS.

8 ƒ(a) REQUIREMENT.—

9 ƒ(1) FINANCIAL STATEMENTS SUBMITTED TO

10 FOREIGN REGULATORS.—Each foreign direct insurer

11 shall—

12 ƒ(A) upon application under section 102

13 for certification as a certified foreign direct in14 surer, and

15 ƒ(B) in the case of a certified foreign direct

16 insurer, on an annual basis, for purposes of re17 newing certification,

18 submit to the Secretary the financial statements of the

19 insurer, and of any persons that control the insurer,

20 that are required to be submitted to the foreign insur21 ance regulators for the insurer.

22 ƒ(2) INDEPENDENT AUDIT.—Each financial

23 statement submitted to the Secretary under para24 graph (1) shall include an audit conducted by a inde25 pendent certified public accountant or other qualified
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1 independent auditor in accordance with generally ac2 cepted auditing standards or the auditing standards

3 of the applicable country (if the Secretary determines

4 such standards are comparable). The audit shall in5 clude a certification by the accountant or auditor of

6 the amount of all loss reserves of the foreign direct in7 surer.

8 ƒ(b) ADDITIONAL INFORMATION.—The Secretary may

9 at any time require any certified foreign direct insurer or

10 foreign direct insurer applying for certification, to submit

11 to the Secretary, in addition to the information submitted

12 under subsection (a), any information that the Secretary

13 considers reasonable and necessary to determine the finan14 cial condition of the insurer.

15 ƒ(c) ACCOUNTING STANDARDS.—The Secretary shall

16 evaluate and adjust any financial statements and informa17 tion submitted under this section that are not prepared in

18 accordance with the accounting standards established under

19 subsection (d) as may be necessary to conform to such ac20 counting standards.

21 ƒ(d) ESTABLISHMENT OF STANDARDS.—

22 ƒ(1) IN GENERAL.—The Secretary shall establish

23 accounting standards for determining the net worth of

24 foreign direct insurers and the compliance of such in-
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1 surers with any risk-based capital standards estab2 lished under section 106.

3 ƒ(2) CONSIDERATION OF ESTABLISHED AC4 COUNTING PRINCIPLES.—In establishing the account5 ing standards, the Secretary shall take into consider6 ation (A) generally accepted accounting principles,

7 (B) United States statutory accounting principles,

8 (C) the results of the study under section 163 and the

9 recommendations of the Comptroller General con10 tained in the report under such section, and (D) the

11 specific characteristics of the insurance business and

12 reinsurers.

13 ƒSEC. 106. AUTHORITY TO ESTABLISH RISK-BASED CAPITAL

14 STANDARDS.

15 ƒ(a) AUTHORITY.—The Secretary may, by regulation,

16 establish risk-based capital standards under this section re17 quiring a foreign direct insurer to have a net worth appro18 priate to the underwriting, financial, investment, and other

19 risk assumed by the insurer (as provided under subsection

20 (b)(1)), and may require, for certification as a certified for21 eign direct insurer, that a foreign direct insurer comply

22 with such standards.

23 ƒ(b) CONTENT.—

24 ƒ(1) IN GENERAL.—Any risk-based capital

25 standards established under this section shall require
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1 a foreign direct insurer to maintain an amount of

2 capital that is sufficient, as determined by the Sec3 retary, for the foreign insurer to maintain minimum

4 capital amounts taking into account the nature and

5 type of risks underwritten by the insurer, the pre6 mium volume of risks underwritten by the insurer,

7 the composition, quality, duration, and liquidity of

8 the insurer’s investment portfolio, and the adequacy

9 of the capital reserves of the insurer, and such other

10 risks as the Secretary considers appropriate.

11 ƒ(2) CAPITAL LEVELS.—Any risk-based capital

12 standards established under this section may include

13 various capital levels designed to identify the serious14 ness of any capital inadequacies of a foreign insurer.

15 ƒ(3) ENFORCEMENT.—The Secretary may pro16 vide that if the amount of capital maintained by a

17 foreign insurer does not meet or exceed the amount re18 quired to be maintained under the various risk-based

19 capital standards, the Secretary may take actions

20 under subtitle C to enforce such requirements and

21 may take other actions as the Secretary considers ap22 propriate to facilitate compliance with such require23 ments.
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1 ƒSubtitle B—Certification of

2 Foreign Reinsurers

3 ƒSEC. 121. REQUIREMENT FOR CLAIMING CREDIT FOR RE4 INSURANCE.

5 ƒNo United States insurer may claim reinsurance ob6 tained from a foreign reinsurer after the date provided in

7 section 169(c) as an asset or deduction from liability for

8 purposes of any financial statement (including financial

9 statements required under this title) unless the foreign rein10 surer is certified under this subtitle by the Secretary as a

11 certified foreign reinsurer.

12 ƒSEC. 122. APPLICATION.

13 ƒThe Secretary shall provide for a foreign reinsurer

14 to apply, in the form and manner determined by the Sec15 retary, for certification under this subtitle as a certified for16 eign reinsurer.

17 ƒSEC. 123. CERTIFICATION PROCEDURE.

18 ƒ(a) IN GENERAL.—The Secretary may certify a for19 eign reinsurer as a certified foreign reinsurer for purposes

20 of this title only if—

21 ƒ(1) the foreign reinsurer submits an applica22 tion under section 122 containing such information

23 as the Secretary may require to determine whether the

24 foreign insurer complies with the standards estab-
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1 lished under section 124, together with an application

2 fee in the amount determined under section 164(a);

3 ƒ(2) the Secretary determines that the foreign

4 insurer complies with the requirements under section

5 124; and

6 ƒ(3) the Secretary determines that the foreign

7 insurer has complied with the requirements under sec8 tion 125.

9 ƒ(b) REQUIREMENTS FOR FOREIGN REINSURERS NOT

10 SEEKING CERTIFICATION.—The Secretary may reduce or

11 waive the requirements under sections 124 and 125 as the

12 Secretary determines appropriate, with respect to any for13 eign reinsurer that submits to the Secretary, before the date

14 provided in section 169(c), written notice that the foreign

15 reinsurer does not intend to apply for certification under

16 this subtitle and will comply with any requirements pursu17 ant to this subsection. In making any such determinations,

18 the Secretary shall consider the United States reinsurance

19 obligations of the foreign reinsurer, the adequacy of insur20 ance regulation in the country of domicile of the foreign

21 reinsurer, and the needs and protections of United States

22 policyholders, creditors, and the general public.

23 ƒSEC. 124. REQUIREMENTS FOR FOREIGN REINSURERS.

24 ƒ(a) IN GENERAL.—Each foreign reinsurer shall com25 ply with the following requirements:
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1 ƒ(1) MINIMUM NET WORTH AND RISK-BASED

2 CAPITAL STANDARDS.—The foreign reinsurer shall

3 have a net worth in an amount not less than

4 $20,000,000 (or an aggregate amount of not less than

5 $10,000,000,000, in the case of a group of incor6 porated reinsurers under common administration), or

7 such higher amount as the Secretary may require

8 based on the amount of business transacted by the for9 eign reinsurer and the value of the insurance ceded to

10 the foreign reinsurer and shall comply with any risk11 based capital standards established by the Secretary

12 under section 126. The Secretary shall determine the

13 net worth of a foreign reinsurer and may adjust the

14 value of any assets and liabilities of a reinsurer, for

15 purposes of this paragraph, in accordance with the

16 accounting standards established by the Secretary

17 pursuant to section 125(d).

18 ƒ(2) POLICYHOLDER SECURITY.—The foreign re19 insurer shall secure the interests of United States pol20 icyholders by compliance with at least 1 of the follow21 ing subparagraphs:

22 ƒ(A) TRUST FUND.—The foreign reinsurer

23 shall establish and, at all times, maintain at a

24 qualified financial institution in the United
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1 States an irrevocable trust, which shall meet the

2 following requirements:

3 ƒ(i) AVAILABILITY OF PROCEEDS.—

4 The trust instrument shall provide that con5 tested claims shall be valid and enforceable

6 upon the final order of any court of com7 petent jurisdiction in the United States.

8 Legal title to assets of the trust shall be vest9 ed in the trustees of the trust and all assets

10 shall be available to meet the United States

11 reinsurance obligations of the reinsurer,

12 notwithstanding any other specified use of

13 the trust. The trust shall remain in effect

14 for such time as the insurer has outstanding

15 obligations due under reinsurance obliga16 tions subject to the trust.

17 ƒ(ii) BALANCE.—Except as provided

18 in subparagraph (C), the trust fund shall

19 have a balance, at all times, of cash, readily

20 marketable securities, and letters of credit,

21 acceptable in the determination of the Sec22 retary, in an amount not less than—

23 ƒ(I) for a single assuming in24 surer, $5,000,000;
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1 ƒ(II) for an insurer that is a

2 group including incorporated and in3 dividual unincorporated underwriters,

4 the sum of $100,000,000 and the aggre5 gate amount of the United States rein6 surance obligations of the insurer, plus

7 an amount equal to all other liabilities

8 secured by the trust; and

9 ƒ(III) for an insurer that is a

10 group of incorporated insurers under

11 common administration, the sum of

12 $100,000,000 and the aggregate

13 amount of the United States reinsur14 ance obligations pursuant to reinsur15 ance contracts subscribed to by mem16 bers of the group and issued by or

17 through each member of the group.

18 ƒ(iii) UNSAFE FINANCIAL CONDI19 TIONS.—The Secretary may increase the

20 minimum balance required to be main21 tained under subparagraph (B) by a rein22 surer, on a case-by-case basis, if the Sec23 retary determines that the reinsurer is oper24 ating in a manner likely to result in an un25 safe or unsound financial condition.
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1 The Secretary may develop and require the use

2 of standard forms, agreements, and contracts for

3 use in establishing trusts under this paragraph.

4 The trust agreement shall require the qualified

5 financial institution to serve at all times as

6 trustee and shall provide that the Secretary shall

7 have access to such books and records regarding

8 the trust fund as may be necessary to conduct

9 audits required under section 141(c). Notwith10 standing any Federal or State law, if the rein11 surer is placed in supervision, rehabilitation, or

12 liquidation, or any equivalent status by the

13 State or country of its domicile, or the Secretary

14 determines pursuant to regulations issued by the

15 Secretary that the condition of the reinsurer is

16 such that the further transaction of business by

17 the reinsurer will be hazardous to the interests of

18 United States policyholders or creditors, or to the

19 public, then the Secretary shall have the sole au20 thority for distributing the proceeds of any trust

21 fund under this subparagraph for payment of

22 valid claims of the United States reinsurance ob23 ligations of the reinsurer and other claimants

24 under such policies. The trustees of the trust

25 shall submit a report in writing to the Secretary
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1 annually, not later than the date established by

2 the Secretary by regulation. The report shall

3 state the balance of the trust, list the investments

4 of the trust for the 12-month period for which the

5 report is made, and certify the date of the termi6 nation of the trust with respect to new business

7 (if planned) or certify that the trust will not ex8 pire before the date occurring 12 months after

9 the expiration of the 12-month period for which

10 the report is made.

11 ƒ(B) OTHER SECURITY.—The foreign rein12 surer shall fund all United States reinsurance

13 obligations of the reinsurer in the form of—

14 ƒ(i) cash under the control of the

15 ceding United States insurer;

16 ƒ(ii) a clean, irrevocable, uncondi17 tional, and automatically renewable letter

18 of credit issued by a qualified financial in19 stitution and held by the ceding insurer; or

20 ƒ(iii) any other form of funding that

21 the Secretary determines is appropriate.

22 ƒ(3) AGENT FOR SERVICE OF PROCESS.—The

23 foreign reinsurer shall appoint and maintain, in the

24 form and manner required by the Secretary, an agent
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1 in the United States upon whom process may be

2 served in any action, suit, or proceeding.

3 ƒ(4) JURISDICTION OF COURTS.—

4 ƒ(A) IN GENERAL.—The foreign reinsurer

5 shall agree to submit to the jurisdiction of any

6 court of the United States or of any State, of

7 competent jurisdiction, and to be fully bound by

8 its decision.

9 ƒ(B) ARBITRATION.—The provisions of sub10 paragraph (A) may not be construed to annul,

11 alter, or affect any obligation of the parties to a

12 reinsurance agreement to arbitrate or otherwise

13 resolve their disputes that is established by such

14 an agreement.

15 ƒ(5) REGULATION BY DOMICILE.—The foreign

16 reinsurer shall annually submit to the Secretary a

17 certificate of compliance, certificate of good standing,

18 or equivalent documentation (as determined by the

19 Secretary) properly attested by the foreign insurance

20 regulator for the domicile of the reinsurer, evidencing

21 authority under the laws of the domicile of the rein22 surer to engage in the business of reinsurance in such

23 domicile.
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1 ƒ(6) BIOGRAPHICAL INFORMATION.—The foreign

2 reinsurer shall annually submit to the Secretary, in

3 the form and manner determined by the Secretary—

4 ƒ(A) biographical information on all senior

5 officers and directors of the reinsurer that dem6 onstrates a level of competency, experience, and

7 integrity sufficient to indicate that permitting

8 the reinsurer to conduct business in the United

9 States would not be contrary to the interests of

10 United States cedants, policyholders, creditors,

11 or the general public; and

12 ƒ(B) biographical, management, and oper13 ational information, as the Secretary shall pro14 vide, on any persons that control the reinsurer.

15 ƒ(7) INSURANCE EXPERIENCE.—The foreign re16 insurer shall—

17 ƒ(A) have been actively and continuously

18 engaged in the business of insurance as a rein19 surer for a period of not less than 3 years ending

20 upon the submission of an application under sec21 tion 122;

22 ƒ(B) be a wholly owned subsidiary of an

23 insurer and continuously engaged in the business

24 of insurance as a reinsurer for a period of not
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1 less than 3 years ending upon the submission of

2 an application under section 122; or

3 ƒ(C) be the continuing corporation result4 ing from a merger or consolidation of insurers,

5 at least one of which has been actively and con6 tinuously engaged in the business of insurance as

7 a reinsurer for a period of not less than 3 years

8 ending upon the submission of an application

9 under section 122.

10 ƒ(8) OTHER.—The foreign reinsurer shall meet

11 any other requirements relating to the solvency or ca12 pacity, or safety and soundness of the business prac13 tices of the reinsurer, that are established by the Sec14 retary as the Secretary may determine are reasonably

15 necessary to protect the interest of United States pol16 icyholders, creditors, and the general public.

17 ƒ(b) WAIVER.—The Secretary may reduce or waive

18 any of the requirements under paragraphs (3) through (8)

19 of subsection (a) with respect to a foreign reinsurer if the

20 Secretary determines on a case-by-case basis that the for21 eign reinsurer has demonstrated, to the satisfaction of the

22 Secretary, experience, competence, and capacity to safely

23 and soundly engage in the business of reinsurance in the

24 United States.
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1 ƒSEC. 125. FINANCIAL STATEMENTS.

2 ƒ(a) REQUIREMENT.—

3 ƒ(1) FINANCIAL STATEMENTS SUBMITTED TO

4 FOREIGN REGULATORS.—Each foreign reinsurer

5 shall—

6 ƒ(A) upon application under section 122

7 for certification as a certified foreign reinsurer,

8 and

9 ƒ(B) in the case of a certified foreign rein10 surer, on an annual basis, for purposes of renew11 ing certification,

12 submit to the Secretary the financial statements of the

13 reinsurer, and of any persons that control the rein14 surer, that are required to be submitted to the foreign

15 insurance regulators for the reinsurer.

16 ƒ(2) INDEPENDENT AUDIT.—Each financial

17 statement submitted to the Secretary under para18 graph (1) shall include an audit conducted by a inde19 pendent certified public accountant or other qualified

20 independent auditor in accordance with generally ac21 cepted auditing standards or the auditing standards

22 of the applicable country (if the Secretary determines

23 such standards are comparable). The audit shall in24 clude a certification by the accountant or auditor of

25 the amount of all loss reserves of the foreign reinsurer.
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1 ƒ(b) ADDITIONAL INFORMATION.—The Secretary may

2 at any time require any certified foreign reinsurer or for3 eign reinsurer applying for certification, to submit to the

4 Secretary, in addition to the information submitted under

5 subsection (a), any information that the Secretary considers

6 reasonable and necessary to determine the financial condi7 tion of the reinsurer.

8 ƒ(c) ACCOUNTING STANDARDS.—The Secretary shall

9 evaluate and adjust any financial statements and informa10 tion submitted under this section that are not prepared in

11 accordance with the accounting standards established under

12 subsection (d) as may be necessary to conform to such ac13 counting standards.

14 ƒ(d) ESTABLISHMENT OF STANDARDS.—

15 ƒ(1) IN GENERAL.—The Secretary shall establish

16 accounting standards for determining the net worth of

17 foreign reinsurers and the compliance of such reinsur18 ers with any risk-based capital standards established

19 under section 126.

20 ƒ(2) CONSIDERATION OF ESTABLISHED AC21 COUNTING PRINCIPLES.—In establishing the account22 ing standards, the Secretary shall take into consider23 ation (A) generally accepted accounting principles,

24 (B) United States statutory accounting principles,

25 (C) the results of the study under section 163 and the
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1 recommendations of the Comptroller General con2 tained in the report under such section, and (D) the

3 specific characteristics of the insurance business and

4 reinsurers.

5 ƒSEC. 126. AUTHORITY TO ESTABLISH RISK-BASED CAPITAL

6 STANDARDS.

7 ƒ(a) AUTHORITY.—The Secretary may, by regulation,

8 establish risk-based capital standards under this section re9 quiring a foreign reinsurer to have a net worth appropriate

10 to the underwriting, financial, investment, and other risk

11 assumed by the insurer (as provided under subsection

12 (b)(1)), and may require, for certification as a certified for13 eign reinsurer, that a foreign reinsurer comply with such

14 standards.

15 ƒ(b) CONTENT.—

16 ƒ(1) IN GENERAL.—Any risk-based capital

17 standards established under this section shall require

18 a foreign reinsurer to maintain an amount of capital

19 that is sufficient, as determined by the Secretary, for

20 the foreign reinsurer to maintain minimum capital

21 amounts taking into account the nature and type of

22 risks assumed by the insurer, the premium volume of

23 risks assumed by the reinsurer, the composition, qual24 ity, duration, and liquidity of the reinsurer’s invest25 ment portfolio, and the adequacy of the capital re-
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1 serves of the reinsurer, and such other risks as the

2 Secretary considers appropriate.

3 ƒ(2) CAPITAL LEVELS.—Any risk-based capital

4 standards established under this section may include

5 various capital levels designed to identify the serious6 ness of any capital inadequacies of a foreign rein7 surer.

8 ƒ(3) ENFORCEMENT.—The Secretary may pro9 vide that if the amount of capital maintained by a

10 foreign reinsurer does not meet or exceed the amount

11 required to be maintained under the various risk12 based capital standards, the Secretary may take ac13 tions under subtitle C to enforce such requirements

14 and may take other actions as the Secretary considers

15 appropriate to facilitate compliance with such re16 quirements.

17 ƒSubtitle C—Enforcement

18 ƒSEC. 141. EXAMINATIONS OF FOREIGN INSURERS.

19 ƒ(a) IN GENERAL.—The Secretary shall establish

20 standards under this section for examinations of foreign in21 surers to determine their financial condition.

22 ƒ(b) TIMING.—The Secretary—

23 ƒ(1) shall conduct an examination under this

24 section of each foreign insurer applying for certifi25 cation under section 102 or 122; and
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1 ƒ(2) may conduct an examination of a foreign

2 insurer at any time the Secretary considers an exam3 ination reasonable and necessary to determine the fi4 nancial condition of the insurer.

5 ƒ(c) AUDITS OF TRUST FUNDS.—At any time the Sec6 retary considers an audit reasonable and necessary to deter7 mine the financial condition of the trust fund established

8 pursuant to section 104(2) or 124(2) by a foreign insurer,

9 the Secretary may—

10 ƒ(1) conduct an audit of the trust fund; or

11 ƒ(2) require the insurer to provide for an audit

12 of the trust fund, conducted by a independent certified

13 public accountant or other qualified independent

14 auditor in accordance with the accounting standards

15 established under section 105(d) or 125(d), as appli16 cable, and to submit the results of the audit to the

17 Secretary.

18 ƒ(d) ACCESS.—Each foreign insurer examined pursu19 ant to this section shall provide the Secretary access to any

20 books and records of the insurer for purpose of conducting

21 any examination or audit under this section.

22 ƒSEC. 142. TERMINATION AND SUSPENSION OF CERTIFI23 CATION.

24 ƒ(a) TERMINATION OF CERTIFICATION.—

25 ƒ(1) VOLUNTARY TERMINATION.—
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1 ƒ(A) NOTICE.—Any foreign insurer may

2 terminate the insurer’s status as a certified for3 eign insurer if such foreign insurer provides

4 written notice to the Secretary of the insurer’s

5 intent to terminate such status not less than 90

6 days before the effective date of such termination.

7 ƒ(B) CESSATION OF BUSINESS.—With re8 spect to foreign insurers that terminate their cer9 tified status pursuant to this paragraph, the Sec10 retary shall issue regulations providing for—

11 ƒ(i) the termination, in an orderly

12 and appropriate manner, of the activities of

13 such insurers relating to the conducting of

14 the business of foreign direct insurance or

15 foreign reinsurance; and

16 ƒ(ii) the manner and timing for such

17 insurers to obtain access to the proceeds of

18 the trust fund of the insurer under section

19 104(2) or section 124(2), as applicable.

20 ƒ(2) INVOLUNTARY TERMINATION.—

21 ƒ(A) GROUNDS.—The Secretary may take

22 action under this paragraph to terminate the

23 status of a foreign insurer if the Secretary deter24 mines that—
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1 ƒ(i) a certified foreign insurer or the

2 directors, officers, managers, or trustees of a

3 certified foreign insurer have engaged or are

4 engaging in unsafe or unsound practices in

5 conducting the business of the foreign in6 surer;

7 ƒ(ii) a certified foreign insurer is in

8 an unsafe or unsound condition to continue

9 operations as a certified foreign insurer; or

10 ƒ(iii) a certified foreign insurer or the

11 directors or trustees of a certified foreign in12 surer have violated any applicable law, reg13 ulation, order, condition imposed in writing

14 by the Secretary in connection with the cer15 tification of the foreign insurer as a cer16 tified foreign insurer, or any written agree17 ment entered into between the certified for18 eign insurer and the Secretary.

19 ƒ(B) NOTICE TO APPROPRIATE STATE IN20 SURANCE REGULATORS.—Upon any determina21 tion by the Secretary that the grounds exist to

22 take action under this paragraph, the Secretary

23 shall notify each appropriate State insurance

24 regulator of the determination and the facts and

25 circumstances on which such determination is
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1 based, and consult with the regulator regarding

2 the action proposed to be taken.

3 ƒ(C) NOTICE TO FOREIGN INSURER.—Upon

4 any determination by the Secretary to take ac5 tion under this paragraph, the Secretary shall—

6 ƒ(i) serve written notice to the foreign

7 insurer of the Secretary’s intention to ter8 minate the certified status of the foreign in9 surer;

10 ƒ(ii) provide the foreign insurer with

11 a statement of the charges on the basis of

12 which the determination to terminate such

13 insurer’s certified status was made; and

14 ƒ(iii) notify the foreign insurer of the

15 date (not less than 30 days after notice

16 under this subparagraph) and place for a

17 hearing before the Secretary (or any person

18 designated by the Secretary) with respect to

19 the termination of the foreign insurer’s cer20 tified status.

21 ƒ(D) ISSUANCE OF ORDER.—If, on the basis

22 of the evidence presented at a hearing before the

23 Secretary (or any person designated by the Sec24 retary for such purpose) and the written findings

25 of the Secretary (or such person) with respect to
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1 such evidence (which shall be conclusive), the

2 Secretary finds that any unsafe or unsound

3 practice or condition or any violation specified

4 in the notice to an foreign insurer under sub5 paragraph (C) has been established, the Sec6 retary may issue an order terminating the cer7 tified status of such foreign insurer effective as of

8 a date subsequent to such finding. In any such

9 hearing, all issues shall be determined on the

10 record subject to the requirements of section 554

11 of title 5, United States Code.

12 ƒ(E) APPEARANCE AND CONSENT TO TER13 MINATION.—Unless the foreign insurer appears

14 at the hearing by a duly authorized representa15 tive, the insurer shall be deemed to have con16 sented to the termination of its status as a cer17 tified foreign insurer and the Secretary may

18 issue an order terminating such status.

19 ƒ(F) JUDICIAL REVIEW.—Any foreign in20 surer whose certified status has been terminated

21 by order of the Secretary under this paragraph

22 shall have the right of judicial review of such

23 order only to the same extent as provided for the

24 review of orders under section 143(f).
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1 ƒ(G) PUBLICATION OF NOTICE OF TERMI2 NATION.—The Secretary may publish notice of

3 termination under this paragraph and the for4 eign insurer shall give notice of such termination

5 to each of its policyholders and cedants at the

6 last address of record on the books of the foreign

7 insurer, in such manner and at such time as the

8 Secretary may consider to be necessary and may

9 order for the protection of policyholders and

10 cedants.

11 ƒ(b) TEMPORARY SUSPENSION OF CERTIFICATION.—

12 ƒ(1) IN GENERAL.—The Secretary may issue a

13 temporary order suspending the certified status of the

14 foreign insurer if, after consultation with the appro15 priate State insurance regulators, the Secretary initi16 ates a termination proceeding under subsection (a)(2)

17 and finds with respect to a certified foreign insurer

18 that—

19 ƒ(A) such foreign insurer (or any of its di20 rectors, officers, managers, or trustees) is engag21 ing in an unsafe or unsound practice in con22 ducting the business of the foreign insurer;

23 ƒ(B) such foreign insurer is in an unsafe or

24 unsound condition to continue operating as a

25 certified foreign insurer; or
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1 ƒ(C) such foreign insurer (or any of its di2 rectors, officers, managers, or trustees) has vio3 lated any applicable law, rule, regulation, or

4 order, or any condition imposed in writing by

5 the Secretary, or any written agreement entered

6 into with the Secretary,

7 ƒ(2) EFFECTIVE PERIOD.—Any order issued

8 under paragraph (1) shall become effective not earlier

9 than 10 days from the date of service upon the foreign

10 insurer and, unless set aside, limited, or suspended by

11 a court in proceedings authorized hereunder, such

12 temporary order shall remain effective and enforceable

13 until an order of the Secretary under subsection

14 (a)(2)(D) becomes final or until the Secretary dis15 misses the proceedings under subsection (a)(2).

16 ƒ(3) JUDICIAL REVIEW.—Before the expiration

17 of the 10-day period beginning on the date any tem18 porary order has been served upon a foreign insurer

19 under paragraph (1), such foreign insurer may apply

20 to the United States District Court for the District of

21 Columbia for an injunction setting aside, limiting, or

22 suspending the enforcement, operation, or effectiveness

23 of such order, and such court shall have jurisdiction

24 to issue such injunction.
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1 ƒ(4) CONTINUATION OF APPLICABILITY OF RE2 QUIREMENTS.—A foreign insurer for which a tem3 porary order has been issued under this subsection

4 shall continue to be subject to the requirements of this

5 title applicable to foreign insurers and certified for6 eign insurers and the Secretary shall have the same

7 powers and rights with respect to such foreign insurer

8 as in the case of a certified foreign insurer, subject to

9 the administrative proceedings as provided in this

10 title.

11 ƒ(5) PUBLICATION OF ORDER.—A foreign in12 surer for which a temporary order has been issued

13 under this subsection shall give notice of the order to

14 each of its policyholders and cedants in such manner

15 and at such times as the Secretary may find to be

16 necessary and may order for the protection of the pol17 icyholders and cedants. If the Secretary determines

18 that the foreign insurer has not substantially com19 plied with the notice to policyholders and cedants re20 quired by the Secretary, the Secretary may provide

21 such notice in such manner as the Secretary may find

22 to be necessary and appropriate.

23 ƒ(c) FINAL DECISIONS TO TERMINATE CERTIFI24 CATION.—The Secretary shall make, and may not delegate,

25 any decision to—
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1 ƒ(1) issue a temporary order terminating certifi2 cation of a foreign insurer; or

3 ƒ(2) issue a final order terminating certification

4 of a foreign insurer.

5 ƒSEC. 143. CEASE-AND-DESIST ORDERS.

6 ƒ(a) CEASE-AND-DESIST ORDERS.—

7 ƒ(1) GROUNDS FOR ISSUANCE.—The Secretary

8 may issue and serve upon a foreign insurer or an in9 surer-affiliated party a notice of charges under this

10 subsection if, in the determination of the Secretary—

11 ƒ(A) the foreign insurer or insurer-affili12 ated party is in an unsafe or unsound condition;

13 ƒ(B) the foreign insurer or insurer-affili14 ated party is engaging or has engaged, or the

15 Secretary has reasonable cause to believe that the

16 foreign insurer or insurer-affiliated party is

17 about to engage, in an unsafe or unsound prac18 tice in conducting the business of such foreign

19 insurer; or

20 ƒ(C) the foreign insurer or insurer-affili21 ated party is violating or has violated, or the

22 Secretary has reasonable cause to believe that the

23 foreign insurer or insurer-affiliated party is

24 about to violate, a law, rule, or regulation, or

25 any condition imposed in writing by the Sec-
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1 retary or any written agreement entered into

2 with the Secretary.

3 ƒ(2) CONTENTS OF NOTICE OF CHARGES.—The

4 notice shall contain a statement of the facts constitut5 ing the unsafe or unsound condition, the unsafe or

6 unsound practice or practices, or the alleged violation

7 or violations, and shall fix a time and place at which

8 a hearing will be held to determine whether an order

9 to cease and desist therefrom should issue against the

10 foreign insurer or insurer-affiliated party.

11 ƒ(3) HEARING AND FAILURE TO APPEAR.—Such

12 hearing shall be fixed for a date not earlier than 30

13 days nor later than 60 days after service of such no14 tice unless an earlier or a later date is set by the Sec15 retary at the request of any party so served. Unless

16 the party or parties so served appears at the hearing

17 personally or by a duly authorized representative, the

18 party shall be deemed to have consented to the issu19 ance of the cease-and-desist order under paragraph

20 (4).

21 ƒ(4) ISSUANCE OF ORDER.—In the event of con22 sent under paragraph (3) or if, upon the record made

23 at any such hearing, the Secretary finds that any un24 safe or unsound condition, unsafe or unsound prac25 tice, or violation specified in the notice of charges has
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1 been established, the Secretary may issue and serve

2 upon the foreign insurer or insurer-affiliated party

3 an order to cease and desist from any such violation

4 or practice. Such order may, by provisions which

5 may be mandatory or otherwise, require the foreign

6 insurer or insurer-affiliated party to cease and desist

7 from the same, and, further, to take affirmative action

8 as provided in subsection (c) to correct the conditions

9 resulting from any such condition, practice, or viola10 tion.

11 ƒ(5) EFFECTIVE DATE.—A cease-and-desist

12 order under this subsection shall become effective upon

13 the date specified in the order or, if no date is speci14 fied, upon the expiration of the 30-day period begin15 ning upon service of the order upon the foreign in16 surer or other person concerned and shall remain ef17 fective and enforceable as provided therein, except to

18 such extent as it is stayed, modified, terminated, or

19 set aside by action of the Secretary or a reviewing

20 court.

21 ƒ(b) TEMPORARY CEASE-AND-DESIST ORDERS.—

22 ƒ(1) GROUNDS FOR ISSUANCE.—Whenever the

23 Secretary determines that the unsafe or unsound con24 dition, the unsafe or unsound practice or practices, or

25 the violation or threatened violation specified in the
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1 notice of charges served upon a foreign insurer or in2 surer-affiliated party pursuant to subsection (a)(1),

3 or the continuation thereof, is likely—

4 ƒ(A) to cause insolvency or significant dis5 sipation of assets or earnings of the foreign in6 surer, or

7 ƒ(B) to weaken the condition of the foreign

8 insurer or otherwise prejudice the interests of its

9 policyholders or cedants prior to the completion

10 of the proceedings conducted pursuant to sub11 section (a),

12 the Secretary may issue a temporary order requiring

13 the foreign insurer or insurer-affiliated party to cease

14 and desist from any such violation or practice and to

15 take affirmative action to prevent or remedy such in16 solvency, dissipation, condition, practice, violation, or

17 prejudice pending completion of such proceedings.

18 ƒ(2) EFFECTIVE DATE.—An order under this

19 subsection shall become effective upon service upon the

20 foreign insurer or such party participating in the

21 conduct of the affairs of the foreign insurer and, un22 less set aside, limited, or suspended by a court in pro23 ceedings authorized by paragraph (3), shall remain

24 effective and enforceable pending the completion of the

25 administrative proceedings pursuant to such notice
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1 and until such time as the Secretary dismisses the

2 charges specified in such notice, or if a cease-and-de3 sist order is issued against the foreign insurer or such

4 party, until the effective date of such order.

5 ƒ(3) JUDICIAL REVIEW.—Within 10 days after a

6 foreign insurer or insurer-affiliated party has been

7 served with a temporary cease-and-desist order under

8 this subsection, the foreign insurer or such party may

9 apply to the United States District Court for the Dis10 trict of Columbia for an injunction setting aside, lim11 iting, or suspending the enforcement, operation, or ef12 fectiveness of such order pending the completion of the

13 administrative proceedings pursuant to the notice of

14 charges served upon the foreign insurer or such party

15 under subsection (a)(1), and such court shall have ju16 risdiction to issue such injunction.

17 ƒ(4) INCOMPLETE OR INACCURATE RECORDS.—

18 ƒ(A) TEMPORARY ORDER.—If a notice of

19 charges served under subsection (a)(1) specifies,

20 on the basis of particular facts and cir21 cumstances, that a foreign insurer’s books and

22 records are so incomplete or inaccurate that the

23 Secretary is unable, through the normal super24 visory process, to determine the financial condi25 tion of the foreign insurer or the details or pur-
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1 pose of any transaction or transactions that may

2 have a material effect on the financial condition

3 of the foreign insurer, the Secretary may issue a

4 temporary order requiring—

5 ƒ(i) the cessation of any activity or

6 practice which gave rise, whether in whole

7 or in part, to the incomplete or inaccurate

8 state of the books or records; or

9 ƒ(ii) affirmative action to restore such

10 books or records to a complete and accurate

11 state, until the completion of the proceed12 ings initiated under subsection (a)(1).

13 ƒ(B) EFFECTIVE PERIOD.—Any temporary

14 order issued under subparagraph (A)—

15 ƒ(i) shall become effective upon service;

16 and

17 ƒ(ii) unless set aside, limited, or sus18 pended by a court in proceedings under

19 paragraph (3), shall remain in effect and

20 enforceable until the earlier of—

21 ƒ(I) the completion of the pro22 ceeding initiated under subsection

23 (a)(1) in connection with the notice of

24 charges; or
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1 ƒ(II) the date that the Secretary

2 determines, by examination or other3 wise, that the foreign insurer’s books

4 and records are accurate and reflect

5 the financial condition of the foreign

6 insurer.

7 ƒ(5) INJUNCTION.—In the case of violation or

8 threatened violation of, or failure to obey, a tem9 porary cease-and-desist order issued pursuant to

10 paragraph (1), the Secretary may apply to the

11 United States District Court for the District of Co12 lumbia for an injunction to enforce such order. If the

13 court determines that there has been such violation or

14 threatened violation or failure to obey, it shall be the

15 duty of the court to issue such injunction.

16 ƒ(c) AFFIRMATIVE ACTION TO CORRECT CONDITIONS

17 RESULTING FROM VIOLATIONS OR PRACTICES.—The au18 thority to issue orders under subsections (a) and (b) that

19 requires a foreign insurer or insurer-affiliated party to take

20 affirmative action to correct or remedy any unsafe or un21 sound condition or conditions resulting from any practice

22 or violation, with respect to which such order is issued, in23 cludes the authority to require such foreign insurer or in24 surer-affiliated party to—
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1 ƒ(1) make restitution or provide reimbursement,

2 indemnification, or guarantee against loss;

3 ƒ(2) rescind agreements or contracts;

4 ƒ(3) employ qualified officers or employees (who

5 may be subject to approval by the Secretary at the di6 rection of the Secretary); and

7 ƒ(4) take such other action as the Secretary de8 termines to be appropriate.

9 ƒ(d) AUTHORITY TO LIMIT ACTIVITIES.—The author10 ity to issue orders under subsections (a) and (b) includes

11 the authority to place limitations on the activities or func12 tions of a foreign insurer or insurer-affiliated party.

13 ƒ(e) STANDARDS FOR HEARINGS.—

14 ƒ(1) VENUE.—Any hearing provided for in this

15 section shall be held in the judicial district of the

16 United States District Court for the District of Co17 lumbia and shall be conducted in accordance with the

18 provisions of chapter 5 of title 5 of the United States

19 Code.

20 ƒ(2) ISSUANCE OF ORDER.—After such hearing,

21 and within 90 days after the Secretary has notified

22 the parties that the case has been submitted to the

23 Secretary for final decision, the Secretary shall render

24 the decision (which shall include findings of fact upon

25 which its decision is predicated) and shall issue and
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1 serve upon each party to the proceeding an order or

2 orders consistent with the provisions of this section.

3 ƒ(3) MODIFICATION.—Judicial review of any

4 cease and desist order (other than a temporary cease

5 and desist order) shall be exclusively as provided in

6 subsection (f). Unless a petition for review is timely

7 filed as provided in subsection (f)(1) and thereafter

8 until the record in the proceeding has been filed as so

9 provided, the Secretary may at any time, modify, ter10 minate, or set aside any such order upon such notice

11 and in such manner as the Secretary considers prop12 er. Upon such filing of the record, the Secretary may

13 modify, terminate, or set aside any such order with

14 permission of the court.

15 ƒ(f) JUDICIAL REVIEW.—

16 ƒ(1) COMMENCEMENT.—Any party to any pro17 ceeding under this section may obtain a review of any

18 order served pursuant to this section (other than a

19 temporary cease and desist order issued with the con20 sent, whether actual or deemed, of the foreign insurer

21 or insurer-affiliated party concerned) by the filing in

22 the United States Court of Appeals for the District of

23 Columbia Circuit, within 30 days after the date of

24 service of such order, a written petition praying that

25 the order be modified, terminated, or set aside. The
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1 clerk of the court shall transmit a copy of such peti2 tion to the Secretary, and thereupon the Secretary

3 shall file in the court the record in the proceeding, as

4 provided in section 2112 of title 28 of the United

5 States Code.

6 ƒ(2) JURISDICTION.—Upon the filing of such pe7 tition, such court shall have jurisdiction, which upon

8 the filing of the record shall (except as provided in the

9 last sentence of subsection (e)(3)) be exclusive, to af10 firm, modify, terminate, or set aside, in whole or in

11 part, the order of the Secretary.

12 ƒ(3) REVIEW.—Review of such proceedings shall

13 be had as provided in chapter 7 of title 5 of the

14 United States Code.

15 ƒ(4) FINAL JUDGMENT.—The judgment and de16 cree of the court shall be final, except that the same

17 shall be subject to review by the Supreme Court upon

18 certiorari, as provided in section 1254 of title 28 of

19 the United States Code.

20 ƒ(5) NO AUTOMATIC STAY.—The commencement

21 of proceedings for judicial review under this sub22 section shall not, unless specifically ordered by the

23 court, operate as a stay of any order issued by the

24 Secretary.

25 ƒ(g) ENFORCEMENT AND JURISDICTION.—
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1 ƒ(1) ENFORCEMENT.—The Secretary may (in

2 the discretion of the Secretary) apply to any United

3 States district court, or the United States court of

4 any territory, within the jurisdiction of which the for5 eign insurer transacts business, for the enforcement of

6 any effective and outstanding notice or order issued

7 under this section. Such courts shall have jurisdiction

8 and power to order and require compliance herewith.

9 ƒ(2) JURISDICTION.—Except as otherwise pro10 vided in this section, no court shall have jurisdiction

11 to affect by injunction or otherwise the issuance or en12 forcement of any notice or order under this section,

13 or to review, modify, suspend, terminate, or set aside

14 any such notice or order.

15 ƒ(h) CIVIL MONETARY PENALTY.—

16 ƒ(1) FIRST TIER.—Any foreign insurer which,

17 and any insurer-affiliated party who—

18 ƒ(A) violates any provision of this title or

19 any regulation issued pursuant to this title,

20 ƒ(B) violates any final order or temporary

21 order issued pursuant to subsection (a) or (b),

22 ƒ(C) violates any condition imposed in

23 writing by the Secretary in connection with the

24 certification of any foreign insurer as a certified

25 foreign insurer, or
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1 ƒ(D) violates any written agreement be2 tween such foreign insurer and the Secretary,

3 shall forfeit and pay a civil penalty of not more than

4 $50,000 for each day during which such violation

5 continues.

6 ƒ(2) SECOND TIER.—Notwithstanding para7 graph (1), any foreign insurer which, and any in8 surer-affiliated party who—

9 ƒ(A)(i) commits any violation described in

10 any subparagraph of paragraph (1),

11 ƒ(ii) recklessly engages in an unsafe or un12 sound practice in conducting the affairs of such

13 foreign insurer, or

14 ƒ(iii) breaches any fiduciary duty, and

15 ƒ(B) which violation, practice, or breach—

16 ƒ(i) is part of a pattern of misconduct;

17 ƒ(ii) causes or is likely to cause more

18 than a minimal loss to such foreign insurer;

19 or

20 ƒ(iii) results in pecuniary gain or

21 other benefit to such party,

22 shall forfeit and pay a civil penalty of not more than

23 $100,000 for each day during which such violation,

24 practice, or breach continues.
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1 ƒ(3) THIRD TIER.—Notwithstanding paragraphs

2 (1) and (2), any foreign insurer which, and any in3 surer-affiliated party who—

4 ƒ(A) knowingly—

5 ƒ(i) commits any violation described

6 in any subparagraph of paragraph (1),

7 ƒ(ii) engages in any unsafe or un8 sound practice in conducting the affairs of

9 such foreign insurer, or

10 ƒ(iii) breaches any fiduciary duty,

11 and

12 ƒ(B) knowingly or recklessly causes a sub13 stantial loss to such foreign insurer or a substan14 tial pecuniary gain or other benefit to such

15 party by reason of such violation, practice, or

16 breach,

17 shall forfeit and pay a civil penalty in an amount

18 not to exceed the applicable maximum amount deter19 mined under paragraph (4) for each day during

20 which such violation, practice, or breach continues.

21 ƒ(4) MAXIMUM AMOUNTS OF PENALTIES FOR

22 ANY VIOLATION DESCRIBED IN PARAGRAPH (3).—The

23 maximum daily amount of any civil penalty which

24 may be assessed pursuant to paragraph (3) for any
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1 violation, practice, or breach described in such sub2 paragraph is—

3 ƒ(A) in the case of any person other than

4 a foreign insurer, an amount to not exceed

5 $500,000; and

6 ƒ(B) in the case of any foreign insurer, an

7 amount not to exceed the lesser of—

8 ƒ(i) $1,000,000; or

9 ƒ(ii) 1 percent of the total assets of

10 such insurer.

11 ƒ(5) ASSESSMENT.—

12 ƒ(A) WRITTEN NOTICE.—Any penalty im13 posed under paragraph (1), (2), or (3) may be

14 assessed and collected by the Secretary by writ15 ten notice.

16 ƒ(B) FINALITY OF ASSESSMENT.—If, with

17 respect to any assessment under subparagraph

18 (A), a hearing is not requested pursuant to para19 graph (8) within the period of time allowed

20 under such paragraph, the assessment shall con21 stitute a final and unappealable order.

22 ƒ(6) AUTHORITY TO MODIFY OR REMIT PEN23 ALTY.—The Secretary may compromise, modify, or

24 remit any penalty that the Secretary may assess or

25 had already assessed under paragraph (1), (2), or (3).
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1 ƒ(7) MITIGATING FACTORS.—In determining the

2 amount of any penalty imposed under paragraph (1),

3 (2), or (3), the Secretary shall take into account the

4 appropriateness of the penalty with respect to—

5 ƒ(A) the size of financial resources and

6 good faith of the foreign insurer or other person

7 charged;

8 ƒ(B) the gravity of the violation;

9 ƒ(C) the history of previous violations; and

10 ƒ(D) such other matters as justice may re11 quire.

12 ƒ(8) HEARING.—The foreign insurer or other

13 person against whom any penalty is assessed under

14 this subsection shall be afforded an agency hearing if

15 such insurer or person submits a request for such

16 hearing within 20 days after the issuance of the no17 tice of assessment.

18 ƒ(9) COLLECTION.—

19 ƒ(A) REFERRAL.—If any foreign insurer or

20 other person fails to pay an assessment after any

21 penalty assessed under this subsection has be22 come final, the Secretary shall recover the

23 amount assessed by action in the appropriate

24 United States district court.
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1 ƒ(B) APPROPRIATENESS OF PENALTY NOT

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

4 of the penalty shall not be subject to review.

5 ƒ(10) DISBURSEMENT.—All penalties collected

6 under authority of this subsection shall be paid to the

7 Secretary and shall be available to the Secretary, in

8 such amounts and to such extent as are or have been

9 provided in appropriation Acts, to carry out this

10 title.

11 ƒ(11) REGULATIONS.—The Secretary shall pre12 scribe regulations establishing such procedures as may

13 be necessary to carry out this subsection.

14 ƒ(i) NOTICE UNDER THIS SECTION AFTER SEPARA15 TION FROM SERVICE.—The resignation, termination of em16 ployment or participation, or separation of an insurer-af17 filiated party (including a separation caused by the closing

18 of the foreign insurer) shall not affect the jurisdiction and

19 authority of the Secretary to issue any notice and proceed

20 under this section against any such party, if such notice

21 is served before the end of the 6-year period beginning on

22 the date such party ceased to be such a party with respect

23 to such foreign insurer (whether such date occurs before, on,

24 or after the date of the enactment of this Act).

25 ƒ(j) PREJUDGMENT ATTACHMENT.—
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1 ƒ(1) IN GENERAL.—In any action brought by

2 the Secretary pursuant to this section, or in actions

3 brought in aid of, or to enforce an order in, any ad4 ministrative or other civil action for monetary dam5 ages, restitution, or civil monetary penalties brought

6 by the Secretary, the court may, upon application of

7 the Secretary, issue a restraining order that—

8 ƒ(A) prohibits any person subject to the

9 proceeding from withdrawing, transferring, re10 moving, dissipating, or disposing of any funds,

11 assets or other property; and

12 ƒ(B) appoints a temporary receiver to ad13 minister the restraining order.

14 ƒ(2) STANDARD.—A permanent or temporary

15 injunction or restraining order shall be granted with16 out bond upon a proper showing that monetary dam17 ages, restitution, or civil monetary penalties, as

18 sought by the Secretary, is appropriate.

19 ƒ(k) SERVICE.—Any service required or authorized to

20 be made by the Secretary under this section may be made

21 by registered mail, or in such other manner reasonably cal22 culated to give actual notice as the Secretary may by regu23 lation or otherwise provide. Copies of any notice or order

24 served by the Secretary upon any foreign insurer or any

25 insurer-affiliated party, pursuant to the provisions of this
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1 section, shall also be sent to the appropriate State insurance

2 regulator.

3 ƒ(l) NOTICE TO STATE REGULATORS.—In connection

4 with any proceeding under subsection (a) or (b)(1) involv5 ing a foreign insurer or any insurer-affiliated party, the

6 Secretary shall provide the appropriate State insurance

7 regulator with notice of the Secretary’s intent to institute

8 such a proceeding and the grounds therefore. No foreign in9 surer or other party who is the subject of any notice or order

10 issued by the Secretary under this section shall have stand11 ing to raise the requirements of this subsection as ground

12 for attacking the validity of any such notice or order.

13 ƒ(m) OATHS AND SUBPOENAS.—

14 ƒ(1) AUTHORITY.—In the course of or in connec15 tion with any proceeding under this section, the Sec16 retary (or any designated representative thereof, in17 cluding any person designated to conduct any hearing

18 under this section) shall have the power—

19 ƒ(A) to administer oaths and affirmations;

20 ƒ(B) to take or cause to be taken deposi21 tions; and

22 ƒ(C) to issue, revoke, quash, or modify sub23 poenas and subpoenas duces tecum.
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1 The Secretary may make rules and regulations with

2 respect to any such proceedings, claims, examina3 tions, or investigations.

4 ƒ(2) WITNESSES AND DOCUMENTS.—The attend5 ance of witnesses and the production of documents

6 provided for in this subsection may be required from

7 any place in any State or in any territory or other

8 place subject to the jurisdiction of the United States

9 at any designated place where such proceeding is

10 being conducted.

11 ƒ(3) ENFORCEMENT.—The Secretary or any

12 party to proceedings under this section may apply to

13 the United States District Court for the District of

14 Columbia, or the United States district court for the

15 judicial district or the United States court in any ter16 ritory in which such proceeding is being conducted, or

17 where the witness resides or carries on business, for

18 enforcement of any subpoena or subpoena duces tecum

19 issued pursuant to this subsection, and such courts

20 shall have jurisdiction and power to order and re21 quire compliance therewith.

22 ƒ(4) FEES AND EXPENSES.—Witnesses subpoe23 naed under this subsection shall be paid the same fees

24 and mileage that are paid witnesses in the district

25 courts of the United States. Any court having juris-
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1 diction of any proceeding instituted under this section

2 by an foreign insurer or a director or officer thereof,

3 may allow to any such party such reasonable expenses

4 and attorneys’ fees as it deems just and proper, and

5 such expenses and fees shall be paid by the foreign in6 surer or from its assets.

7 ƒ(5) MISDEMEANOR.—Any person who willfully

8 shall fail or refuse to attend and testify or to answer

9 any lawful inquiry or to produce books, papers, cor10 respondence, memoranda, contracts, agreements, or

11 other records, if in such person’s power so to do, in

12 obedience to the subpoena of the Secretary, shall be

13 guilty of a misdemeanor and, upon conviction, shall

14 be subject to a fine of not more than $1,000 or to im15 prisonment for a term of not more than 1 year or

16 both.

17 ƒ(n) ACTS OUTSIDE THE UNITED STATES.—An act

18 or practice outside the United States on the part of a for19 eign insurer or any officer, director, employee, or agent

20 thereof may not constitute the basis for any action by any

21 officer or agency of the United States under this section,

22 unless—

23 ƒ(1) such officer or agency alleges a belief that

24 such act or practice has been, is, or is likely to be a

25 cause of or carried on in connection with or in fur-
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1 therance of an act or practice within any one or more

2 States which, in and of itself, would constitute an ap3 propriate basis for action by a Federal officer or

4 agency under this section; or

5 ƒ(2) the alleged act or practice is one which, if

6 proven, would, in the judgment of the Secretary, ad7 versely affect the United States policyholders or

8 cedants of the insurer.

9 ƒ(o) PUBLIC DISCLOSURES OF FINAL ORDERS AND

10 AGREEMENTS.—

11 ƒ(1) IN GENERAL.—The Secretary shall publish

12 and make available to the public on a monthly

13 basis—

14 ƒ(A) any written agreement or other writ15 ten statement for which a violation may be en16 forced by the Secretary, unless the Secretary (in

17 the discretion of the Secretary) determines that

18 publication would be contrary to the public in19 terest;

20 ƒ(B) any final order issued with respect to

21 any administrative enforcement proceeding initi22 ated by the Secretary under this section; and

23 ƒ(C) any modification to or termination of

24 any order or agreement made public pursuant to

25 this paragraph.
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1 ƒ(2) HEARINGS.—All hearings on the record

2 with respect to any notice of charges issued by the

3 Secretary shall be open to the public, unless the Sec4 retary (in the discretion of the Secretary) determines

5 that holding an open hearing would be contrary to

6 the public interest.

7 ƒ(3) REPORTS TO CONGRESS.—The Secretary

8 shall prepare a written report as a part of each deter9 mination not to hold a public hearing pursuant to

10 paragraph (2) or not to publish a document pursuant

11 to paragraph (1)(A). At the end of each calendar

12 quarter, the Secretary shall submit all such reports to

13 the Congress.

14 ƒ(4) TRANSCRIPT OF HEARING.—The Secretary

15 shall prepare a transcript that includes all testimony

16 and other documentary evidence for all hearings com17 menced pursuant to subsection (e). A transcript of

18 public hearings shall be made available to the public

19 pursuant to section 552 of title 5, United States Code.

20 ƒ(5) DELAY OF PUBLICATION UNDER EXCEP21 TIONAL CIRCUMSTANCES.—If the Secretary makes a

22 determination in writing that the publication of a

23 final order pursuant to paragraph (1)(B) would seri24 ously threaten the safety and soundness of a foreign
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1 insurer, the Secretary may delay the publication of

2 the document for a reasonable time.

3 ƒ(6) RETENTION OF DOCUMENTS.—The Sec4 retary shall keep and maintain a record, for a period

5 of at least 6 years, of all documents described in

6 paragraph (1) and all informal enforcement agree7 ments and other supervisory actions and supporting

8 documents issued with respect to or in connection

9 with any administrative enforcement proceeding ini10 tiated by the Secretary under this section.

11 ƒSEC. 144. ACTIONS BY STATE INSURANCE REGULATORS TO

12 ENFORCE REQUIREMENTS APPLICABLE TO

13 FOREIGN INSURERS.

14 ƒ(a) IN GENERAL.—Subject to the provisions of this

15 section, any appropriate State insurance regulator may

16 bring a civil action in a Federal or State court of competent

17 jurisdiction, on behalf of the Secretary, against any foreign

18 insurer that commits any action that would make the for19 eign insurer subject to a civil monetary penalty under sec20 tion 143(h). The court shall have the jurisdiction to enjoin

21 such action and apply the appropriate civil monetary pen22 alty under section 143(h).

23 ƒ(b) NOTICE TO SECRETARY.—A State insurance reg24 ulator may bring an action under this section only if the

25 State insurance regulator notifies the Secretary in writing,
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1 not less than 30 days before the commencement of the ac2 tion, of the regulator’s intent to bring the action, of the

3 identities of the foreign insurer or persons to be named as

4 defendants to the action, and of all information the regu5 lator possesses regarding the activity that is the subject of

6 the action that may materially affect the Secretary’s deci7 sion to initiate a proceeding to impose a civil monetary

8 penalty under section 143(h) against the prospective defend9 ants. Any notice or information received by the Secretary

10 pursuant to this subsection shall remain confidential and

11 shall not be disclosed to any foreign insurer or person to

12 be named as a defendant to the action.

13 ƒ(c) NOTICE BY SECRETARY OF INTENDED ACTION.—

14 The Secretary shall notify a State insurance regulator pro15 viding notice under subsection (b) of whether the Secretary

16 intends to initiate a proceeding to impose a civil monetary

17 penalty under section 143(h) against the prospective defend18 ants. Notice under this subsection shall be provided, in writ19 ing, not later than the expiration of the 30-day period be20 ginning on the date that the Secretary receives the written

21 notice under subsection (b).

22 ƒ(d) REQUIREMENTS FOR ACTION BY STATE INSUR23 ANCE REGULATOR.—A State insurance regulator may

24 bring an action under this section only—
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1 ƒ(1) after receipt of notice under subsection (c)

2 that the Secretary does not intend to initiate a pro3 ceeding to impose a civil monetary penalty under sec4 tion 143(h) against the prospective defendants;

5 ƒ(2) if, upon the expiration of the period re6 ferred to in subsection (c), the Secretary has not pro7 vided the notice required under subsection (c); or

8 ƒ(3) if the Secretary provides notice under sub9 section (c) that the Secretary intends to initiate a

10 proceeding to impose a civil monetary penalty under

11 section 143(h) against the prospective defendants, but

12 upon the expiration of the 90-day period beginning

13 on the date such notice is sent the Secretary has not

14 initiated such a proceeding.

15 A notice by the Secretary under paragraph (1), absence of

16 notice by the Secretary under paragraph (2), or failure by

17 the Secretary to initiate a proceeding under paragraph (3),

18 shall not be admissible as evidence of the liability or non19 liability of a defendant in any civil proceeding commenced

20 by a State insurance regulator pursuant to this section. A

21 matter considered by or in the possession of the Secretary

22 shall not be discoverable in any civil proceeding commenced

23 by a State insurance regulator pursuant to this section.

24 ƒ(e) PROHIBITION OF SETTLEMENT WITHOUT SEC25 RETARY’S CONSENT.—No settlement agreement with regard
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1 to any action under this section may be entered into or

2 agreed to by any State insurance regulator who brought the

3 action on behalf of the Secretary without the prior written

4 consent of the Secretary.

5 ƒ(f) SHARE OF PENALTY.—

6 ƒ(1) STATE ACTIONS.—In any action brought

7 under this section, the court shall distribute 50 per8 cent of any civil monetary penalty imposed to the

9 State insurance regulator who brought the action and

10 50 percent to the Secretary.

11 ƒ(2) CIVIL MONETARY PENALTIES.—If a State

12 insurance regulator furnishes the Secretary with no13 tice and information pursuant to subsection (b) and

14 such notice and information is a contributing factor

15 in imposing a civil monetary penalty under section

16 143(h), then the court shall distribute to the State in17 surance regulator the greater of (A) one-third of the

18 amount of the civil monetary penalty imposed, or (B)

19 the costs of the investigation conducted by the State

20 insurance regulator.

21 ƒSEC. 145. CRIMINAL PENALTIES.

22 ƒ(a) SUBMISSION OF FALSE AND MISLEADING INFOR23 MATION.—Whoever knowingly submits information re24 quired under this title to the Secretary that is false and
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1 misleading shall be fined under title 18, United States Code,

2 or imprisoned not more than 30 years, or both.

3 ƒ(b) FALSE REPRESENTATION OF CERTIFICATION.—

4 ƒ(1) IN GENERAL.—Section 709 of title 18,

5 United States Code, is amended by inserting after the

6 undesignated paragraph relating to the Overseas Pri7 vate Investment Corporation the following new para8 graph:

9 ƒ‘‘Whoever falsely advertises or represents, or publishes

10 or displays any sign, symbol, or advertisement reasonably

11 calculated to convey the impression that a foreign insurer

12 that is not a certified foreign insurer under title I of the

13 Insurance Consumer Protection Act is such a certified for14 eign insurer; or’’.

15 ƒ(2) EFFECTIVE DATE.—This subsection shall

16 take effect upon the expiration of the 18-month period

17 beginning upon the date of the enactment of this Act.

18 ƒSEC. 146. NOTIFICATION TO STATE INSURANCE REGU19 LATORS AND COORDINATION WITH FOREIGN

20 INSURANCE REGULATORS.

21 ƒ(a) STATE INSURANCE REGULATORS.—

22 ƒ(1) NOTICE.—Subject to any other require23 ments of this title, the Secretary shall notify each ap24 propriate State insurance regulator before examining

25 any foreign insurer under this subtitle, terminating
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1 or suspending the certification of any certified foreign

2 insurer under this subtitle, issuing any order or tak3 ing any other enforcement action authorized against

4 any foreign insurer or insurer-affiliated party pursu5 ant to this subtitle, or imposing any civil monetary

6 penalty or commencing any criminal action pursuant

7 to this subtitle and the amendment made by this sub8 title.

9 ƒ(2) EFFECT OF REQUIREMENT.—No foreign in10 surer or other party who is the subject of any notice

11 or order issued by the Secretary pursuant to sub12 section shall have standing to raise the requirements

13 of this subsection as ground for attacking the validity

14 of any such notice or order.

15 ƒ(b) FOREIGN INSURANCE REGULATORS.—

16 ƒ(1) REQUESTING ASSISTANCE FROM FOREIGN

17 INSURANCE REGULATORS.—In conducting any inves18 tigation, examination, or enforcement action under

19 this title, the Secretary may—

20 ƒ(A) request the assistance of any foreign

21 insurance regulator; and

22 ƒ(B) maintain an office outside the United

23 States.

24 ƒ(2) PROVIDING ASSISTANCE TO FOREIGN INSUR25 ANCE REGULATORS.—
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1 ƒ(A) IN GENERAL.—The Secretary may, at

2 the request of any foreign insurance regulator,

3 assist such regulator if such regulator states that

4 the requesting regulator is conducting an inves5 tigation to determine whether any person has

6 violated, is violating, or is about to violate any

7 law or regulation relating to insurance or rein8 surance matters administered or enforced by the

9 requesting regulator.

10 ƒ(B) INVESTIGATION BY SECRETARY.—The

11 Secretary may, in the discretion of the Secretary,

12 investigate and collect information and evidence

13 pertinent to a request for assistance under sub14 paragraph (A). Any such investigation shall

15 comply with the laws of the United States and

16 the policies and procedures of the Secretary.

17 ƒ(C) FACTORS TO CONSIDER.—In deciding

18 whether to provide assistance under this para19 graph, the Secretary shall consider—

20 ƒ(i) whether the requesting regulator

21 has agreed to provide reciprocal assistance

22 with respect to insurance and reinsurance

23 matters within the jurisdiction of the Sec24 retary; and
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1 ƒ(ii) whether compliance with the re2 quest would prejudice the public interest of

3 the United States.

4 ƒ(3) RULE OF CONSTRUCTION.—Paragraphs (1)

5 and (2) shall not be construed to limit the authority

6 of the Secretary to provide or receive assistance or in7 formation to or from any foreign authority with re8 spect to any matter.

9 ƒSEC. 147. NATIONAL INSURANCE INTELLIGENCE

10 DATABASE.

11 ƒ(a) IN GENERAL.—The Secretary shall collect infor12 mation regarding individuals and other persons that have

13 engaged in any activity in violation of any Federal or State

14 law, regulation, or order relating to insurance or reinsur15 ance activities. The Secretary shall establish a computer16 based database of such information and shall regularly up17 date the database.

18 ƒ(b) LAW ENFORCEMENT ACCESS.—The Secretary

19 shall make information from the database under this section

20 available to appropriate Federal and State law enforcement

21 and regulatory agencies upon request.

22 ƒ(c) CONFIDENTIALITY.—Except as provided in sub23 section (b), notwithstanding any other law, regulation, or24 dinance, any agreement, any judgment or order of any

25 court, tribunal, or other officer, or any other legal process,
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1 the Secretary may not disclose any information from the

2 database under this section.

3 ƒSubtitle D—General Provisions

4 ƒSEC. 161. TRANSFER OF INFORMATION WITH STATE IN5 SURANCE REGULATORS.

6 ƒThe Secretary shall provide to a State insurance reg7 ulator any application submitted under section 102 or 122

8 by a foreign insurer, any financial statement or other infor9 mation submitted under section 105 or 125 by a foreign

10 insurer, and any other information submitted to the Sec11 retary under this title by a foreign insurer, if such informa12 tion is requested by such State insurance regulator for such

13 insurer.

14 ƒSEC. 162. NATIONAL ADVISORY COUNCIL OF STATE INSUR15 ANCE REGULATORS.

16 ƒ(a) ESTABLISHMENT.—The Secretary shall establish

17 an advisory council to be known as the National Advisory

18 Council of State Insurance Regulators.

19 ƒ(b) DUTIES.—The National Advisory Council of

20 State Insurance Regulators shall advise the Secretary on

21 activities with respect to the requirements for foreign insur22 ers under this title, certification of foreign insurers under

23 this title, standards of such certification, and any other ac24 tivities of the Secretary under this title. The Advisory Coun25 cil may submit such advice and recommendations to the
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1 Secretary in writing and the Secretary shall respond, in

2 writing, to any such advice, and shall include in any such

3 response an explanation of any actions taken with respect

4 to the advice and any reasons for not following any rec5 ommendations of the Advisory Council that were not adopt6 ed by the Secretary.

7 ƒ(c) MEMBERSHIP.—

8 ƒ(1) NUMBER AND APPOINTMENT.—The Na9 tional Advisory Council of State Insurance Regu10 lators shall be composed of 10 members appointed by

11 the Secretary subject to the following requirements:

12 ƒ(A) STATE INSURANCE REGULATORS.—

13 The members shall be the individuals serving as

14 the heads, members of the governing bodies, or

15 the designees of such individuals, of the State in16 surance regulators of 10 different States.

17 ƒ(B) DIVERSITY AMONG STATE POPU18 LATION.—In appointing the membership of the

19 Advisory Council, the Secretary shall provide

20 that the States represented by members shall dif21 fer widely, with respect to each other, in popu22 lation.

23 ƒ(C) GEOGRAPHICAL DIVERSITY.—In ap24 pointing the membership of the Advisory Coun25 cil, the Secretary shall provide that the States
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1 represented by members include States from the

2 various regions of the United States.

3 ƒ(2) TERMS.—

4 ƒ(A) IN GENERAL.—Each member shall be

5 appointed for a term of 2 years, except as pro6 vided in subparagraphs (B) and (C).

7 ƒ(B) TERMS OF INITIAL APPOINTEES.—As

8 designated by the Secretary at the time of ap9 pointment, of the members first appointed, 5

10 shall be appointed for terms of 1 year.

11 ƒ(C) VACANCIES.—If, before the expiration

12 of the term of a member of the Advisory Council,

13 such member no longer serves as a State insur14 ance regulator, the Secretary shall appoint a

15 successor who shall meet the requirements of this

16 subsection to serve for the remainder of that

17 term. A member may serve after the expiration

18 of that member’s term until a successor has taken

19 office.

20 ƒ(d) MEETINGS.—The National Advisory Council of

21 State Insurance Regulators shall meet not less frequently

22 than once each calendar quarter of each year.

23 ƒ(e) PERMANENT STATUS.—Section 14(a)(2)(B) of the

24 Federal Advisory Committee Act (5 U.S.C. App.; relating

25 to the termination of advisory committees) shall not apply
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1 to the National Advisory Council of State Insurance Regu2 lators.

3 ƒSEC. 163. GAO STUDY OF ACCOUNTING PRINCIPLES.

4 ƒ(a) STUDY.—The Comptroller General of the United

5 States shall conduct a study of the applicability and appro6 priateness of generally accepted accounting principles and

7 United States statutory accounting principles for use in

8 evaluating the financial statements required to be submitted

9 under sections 105 and 125 by foreign insurers. The study

10 shall be designed to determine what accounting principles

11 are most appropriate to the businesses of insurance and re12 insurance, taking into consideration the characteristics of

13 such businesses and insurers and reinsurers.

14 ƒ(b) REPORT.—The Comptroller General shall submit

15 a report to the Committee on Banking, Finance and Urban

16 Affairs of the House of Representatives and the Committee

17 on Banking, Housing, and Urban Affairs of the Senate, not

18 later than the expiration of the 12-month period beginning

19 on the date of the enactment of this Act on the results of

20 the study. The report shall include a determination of the

21 accounting principles most appropriate for use in evaluat22 ing financial statements under sections 105 and 125, the

23 extent of the applicability of such principles for use in such

24 financial statements, identification and analysis of any

25 benefits and problems in using such principles for such pur-
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1 poses, and any recommendations of the Comptroller General

2 regarding the establishment of separate or different stand3 ards or principles for such use.

4 ƒSEC. 164. FEES.

5 ƒ(a) APPLICATION FEES FOR CERTIFICATION.—The

6 Secretary may assess and collect a reasonable application

7 fee from foreign insurers applying under section 102 or 122

8 for certification, to cover any costs of the application proce9 dure and reviewing applications.

10 ƒ(b) REGULATORY FEES.—

11 ƒ(1) IN GENERAL.—The Secretary shall, in ac12 cordance with this subsection, assess and collect regu13 latory fees from certified foreign insurers to cover the

14 costs incurred by the Secretary related to certifying

15 and examining foreign insurers under the provisions

16 of this title.

17 ƒ(2) AMOUNT OF FEES.—Fees under this sub18 section may be assessed and collected from any cer19 tified foreign insurer in an amount reasonably based

20 on the proportion of the activities of the Secretary re21 ferred to in paragraph (1) that relate to such foreign

22 insurer.

23 ƒSEC. 165. FORMS.

24 ƒThe Secretary may prescribe the form or forms in

25 which any information required under any application,
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1 statement, report, or other documentation required under

2 this title (or any regulation or order issued pursuant to

3 this title) shall be submitted to the Secretary, the content

4 of such information, and the standards, procedures, and

5 manner of any certification, authentication, or verification

6 to be followed in preparing and submitting such informa7 tion.

8 ƒSEC. 166. DETERMINATION OF QUALIFIED FINANCIAL IN9 STITUTIONS AND CONTROL.

10 ƒ(a) QUALIFIED FINANCIAL INSTITUTIONS.—For pur11 poses of this title, a qualified financial institution shall be

12 an insured depository institution (as such term is defined

13 in section 3(c) of the Federal Deposit Insurance Act) that

14 is adequately capitalized (for purposes of section 38 of such

15 Act), including a United States branch of a foreign bank,

16 and has been determined by the Secretary to meet such ad17 ditional standards of financial condition and standing as

18 the Secretary considers necessary and appropriate for pur19 poses of this title.

20 ƒ(b) CONTROL.—For purposes of this title, a person

21 shall be considered to have control with respect to another

22 person if—

23 ƒ(1) such person directly, indirectly, or acting

24 through 1 or more other persons, owns, controls, or
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1 has the power to vote 25 percent or more of any class

2 of voting securities of such other person;

3 ƒ(2) such person controls, in any manner, the

4 election of a majority of the directors or trustees of

5 such other person; or

6 ƒ(3) the Secretary makes a determination on the

7 record, after notice and opportunity for a hearing,

8 that such person directly or indirectly exercises a con9 trolling influence over the management or policies of

10 such other person; except that, in making any such

11 determination, control shall be presumed to exist if

12 such person directly, indirectly, or acting through 1

13 or more other persons, owns, controls, or has the

14 power to vote 10 percent or more of any class of vot15 ing securities of such other person.

16 ƒSEC. 167. DEFINITIONS.

17 ƒFor purposes of this title:

18 ƒ(1) APPROPRIATE STATE INSURANCE REGU19 LATOR.—The term ‘‘appropriate State insurance reg20 ulator’’ means, with respect to a foreign insurer, the

21 State insurance regulator for any State in which the

22 foreign insurer does a substantial amount of business,

23 as determined by the Secretary.
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1 ƒ(2) CERTIFIED FOREIGN DIRECT INSURER.—

2 The term ‘‘certified foreign direct insurer’’ means a

3 foreign insurer certified under subtitle A.

4 ƒ(3) CERTIFIED FOREIGN INSURER.—The term

5 ‘‘certified foreign insurer’’ means a certified foreign

6 direct insurer or a certified foreign reinsurer.

7 ƒ(4) CERTIFIED FOREIGN REINSURER.—The

8 term ‘‘certified foreign reinsurer’’ means foreign rein9 surer certified under subtitle B.

10 ƒ(5) FOREIGN DIRECT INSURER.—The term

11 ‘‘foreign direct insurer’’ means a foreign insurer that

12 has outstanding United States direct written insur13 ance obligations (not including obligations for life in14 surance or health insurance).

15 ƒ(6) FOREIGN INSURANCE REGULATOR.—The

16 term ‘‘foreign insurance regulator’’ means the agency

17 having principal insurance regulatory authority in

18 any country other than the United States.

19 ƒ(7) FOREIGN INSURER.—The term ‘‘foreign in20 surer’’ means an insurer or reinsurer other than—

21 ƒ(A) an insurer or reinsurer organized

22 under the laws of any State; or

23 ƒ(B) the United States branch of a foreign

24 insurer.
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1 The term includes insurers and reinsurers doing busi2 ness as single insurers, groups including individual

3 unincorporated underwriters, and groups of incor4 porated insurers under common administration.

5 ƒ(8) FOREIGN REINSURER.—The term ‘‘foreign

6 reinsurer’’ means a foreign insurer that insures any

7 portion of risks undertaken by a United States in8 surer (not including risks covered by life insurance or

9 health insurance).

10 ƒ(9) HEALTH INSURANCE.—The term ‘‘health

11 insurance’’ means any health insurance, accident and

12 health insurance, accident and sickness or disability

13 insurance contract or certificate of insurance, whether

14 issued on a group or individual basis, that pays bene15 fits to an insured who becomes ill, injured, or disabled

16 or who receives any medical or dental treatment or

17 therapy covered by the terms of the contract, except

18 contracts or certificates that (A) provide such benefits

19 for illness or injury that results from the liability of

20 another, (B) pay benefits as the result of an occupa21 tional injury or disease covered by a contract of work22 ers’ compensation and employers’ liability insurance,

23 or (C) are issued by a mandatory State pooling plan

24 or any agency or program established or required by

25 the Federal Government.
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1 ƒ(10) INSURER-AFFILIATED PARTY.—The term

2 ‘‘insurer affiliated party’’ means—

3 ƒ(A) any director, officer, employee, or con4 trolling stockholder of, or agent for, a foreign in5 surer;

6 ƒ(B) any shareholder, consultant, joint ven7 ture partner, and any other person as deter8 mined by the Secretary (by regulation or case9 by-case) who participates in the conduct of the

10 affairs of a foreign insurer; and

11 ƒ(C) any independent contractor (including

12 any attorney, appraiser, actuary, or accountant)

13 who knowingly or recklessly participates in—

14 ƒ(i) any violation of any law or regu15 lation,

16 ƒ(ii) any breach of fiduciary duty, or

17 ƒ(iii) any unsafe or unsound practice,

18 which caused or is likely to cause more than a

19 minimal financial loss to, or a significant ad20 verse affect on, the foreign insurer.

21 ƒ(11) LETTER OF CREDIT.—The term ‘‘letter of

22 credit’’ means a clean irrevocable letter of credit is23 sued or confirmed by a qualified financial institution,

24 in a form prescribed by the Secretary.
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1 ƒ(12) LIFE INSURANCE.—The term ‘‘life insur2 ance’’ means any contract or certificate of insurance,

3 whether issued on a group or individual basis, that

4 is designed primarily to pay benefits to or on behalf

5 of a beneficiary as the result of the death of an indi6 vidual. The term includes contracts that may also

7 pay benefits, in addition to death benefits, in the form

8 of surrender values, premium deferral in the event of

9 a disability, or income payments prior to the death

10 of the insured. The term also includes any annuity or

11 other contract or certificate of insurance, whether is12 sued on a group or individual basis, that pays an in13 come benefit for the life of 1 or more persons or for

14 a specified period of time (including single lump-sum

15 payments), including annuity contracts and certifi16 cates under group annuity contracts in the form of

17 guaranteed investment contracts, deposit administra18 tion contracts, unallocated funding agreements, allo19 cated funding agreements, structured settlement agree20 ments, lottery contracts, and any immediate or de21 ferred annuity contracts.

22 ƒ(13) READILY MARKETABLE SECURITIES.—The

23 term ‘‘readily marketable securities’’ means securities

24 registered for trading on a national securities ex25 change in accordance with section 12 of the Securities
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1 Exchange Act of 1934 and any other securities ap2 proved by the Secretary.

3 ƒ(14) SECRETARY.—The term ‘‘Secretary’’

4 means the Secretary of the Treasury.

5 ƒ(15) STATE.—The term ‘‘State’’ means the

6 States of the United States, the District of Columbia,

7 the Commonwealth of Puerto Rico, Guam, the Virgin

8 Islands, and American Samoa.

9 ƒ(16) STATE INSURANCE REGULATOR.—The

10 term ‘‘State insurance regulator’’ means the agency

11 having principal insurance regulatory authority in a

12 State.

13 ƒ(17) UNITED STATES BRANCH OF FOREIGN IN14 SURER.—The term ‘‘United States branch of foreign

15 insurer’’ means the business unit through which in16 surance business is transacted within the United

17 States by a foreign insurer, whose assets and

18 liabilities pertaining to such business are within the

19 United States, and that has been issued a certificate

20 of authority to transact insurance by 1 or more

21 States.

22 ƒ(18) UNITED STATES DIRECT WRITTEN INSUR23 ANCE OBLIGATIONS.—The term ‘‘United States direct

24 written insurance obligations’’ means obligations of a

25 direct insurer under a contract of insurance for direct
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1 risk in any State (not including risks covered by life

2 insurance or health insurance), including incurred

3 but not reported claims.

4 ƒ(19) UNITED STATES INSURER.—The term

5 ‘‘United States insurer’’ means an insurer or rein6 surer licensed by a State insurance regulator.

7 ƒ(20) UNITED STATES REINSURANCE OBLIGA8 TIONS.—The term ‘‘United States reinsurance obliga9 tions’’ means obligations (not including obligations

10 for life insurance or health insurance) under any re11 insurance contracts to United States insurers for re12 ported claims, incurred but not reported claims, un13 earned premiums, losses and loss adjustment expense,

14 and aggregate reserves.

15 ƒSEC. 168. RELATION TO STATE LAWS.

16 ƒThis title may not be construed to preempt the law

17 of any State, except to the extent that such laws are incon18 sistent with the provisions of this title, and then only to

19 the extent of such inconsistency. The Secretary is authorized

20 to determine whether such inconsistencies exist. The Sec21 retary may not determine that any State law is inconsist22 ent with any provision of this title if the law imposes re23 quirements that are in addition to the requirements under

24 this title and such requirements do not conflict with the

25 requirements under this title.
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1 ƒSEC. 169. EFFECTIVE DATES.

2 ƒ(a) ISSUANCE OF REGULATIONS.—The Secretary

3 shall issue any regulations necessary to carry out this title

4 (including regulations establishing standards or require5 ments for applications under sections 102 and 122, for for6 eign insurers under sections 104 and 124, for accounting

7 under sections 105 and 125, for examination under section

8 141, for termination and suspension of certification under

9 section 142, for cease-and-desist orders under section 143,

10 and for qualified financial institutions under section 166)

11 not later than the expiration of the 18-month period begin12 ning on the date of the enactment of this Act.

13 ƒ(b) CERTIFICATION.—Not later than the expiration

14 of the 24-month period beginning on the date of the enact15 ment of this Act, the Secretary shall commence certifying

16 foreign insurers as certified foreign direct insurers and cer17 tified foreign reinsurers under subtitles A and B, respec18 tively.

19 ƒ(c) REQUIREMENTS FOR CONDUCTING DIRECT IN20 SURANCE AND REINSURANCE BUSINESS.—The date referred

21 to in sections 101 and 121 (relating to requirements for

22 foreign insurers to conduct direct insurance business or to

23 claim credit for reinsurance) shall be the date of the expira24 tion of the 30-month period beginning on the date of the

25 enactment of this Act.
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1 ƒTITLE II—DISCLOSURE OF IN2 SURANCE AVAILABILITY AND

3 INSURER INVESTMENT IN4 FORMATION

5 ƒSEC. 201. SHORT TITLE.

6 ƒThis title may be cited as the ‘‘Insurance Disclosure

7 Act’’.

8 ƒSEC. 202. FINDINGS AND PURPOSES.

9 ƒ(a) FINDINGS.—The Congress finds that—

10 ƒ(1) there are disparities in insurance coverage

11 provided by some insurers between areas of different

12 incomes and racial composition;

13 ƒ(2) such disparities in affordability and avail14 ability of insurance severely limit the ability of quali15 fied consumers to obtain credit for home, business,

16 and automobile purchases; and

17 ƒ(3) the lack of affordable and adequate commer18 cial insurance for small businesses severely curtails

19 the establishment and growth of such businesses.

20 ƒ(b) PURPOSES.—The purposes of this title are—

21 ƒ(1) to establish a nationwide database for de22 termining the availability, affordability, and ade23 quacy of insurance coverage for consumers and small

24 businesses;
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1 ƒ(2) to facilitate the enforcement of Federal and

2 State laws that prohibit illegally discriminatory in3 surance practices; and

4 ƒ(3) to determine whether the extent and charac5 teristics of insurance availability, affordability, and

6 coverage require public officials to take any actions

7 (A) to remedy redlining or other illegally or unfairly

8 discriminatory insurance practices, or (B) regarding

9 areas underserved by insurers.

10 ƒ(c) CONSTRUCTION.—Nothing in this title is intended

11 to, nor shall it be construed to, encourage unsound under12 writing practices.

13 ƒSEC. 203. ESTABLISHMENT OF GENERAL REQUIREMENTS

14 TO SUBMIT INFORMATION.

15 ƒ(a) IN GENERAL.—The Secretary of Housing and

16 Urban Development shall, by regulation, establish require17 ments for insurers to compile and submit information to

18 the Secretary for each annual reporting period, in accord19 ance with this title.

20 ƒ(b) CONSULTATION.—In establishing the require21 ments for the submission of information under this title,

22 the Secretary shall consult with Federal agencies having ap23 propriate expertise, the National Association of Insurance

24 Commissioners, State insurance regulators, statistical

25 agents, representatives of small businesses, representatives
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1 of insurance agents (including minority insurance agents),

2 representatives of property and casualty insurers, and com3 munity, consumer, and civil rights organizations, as appro4 priate.

5 ƒSEC. 204. REPORTING OF NONCOMMERCIAL INSURANCE

6 INFORMATION.

7 ƒ(a) IN GENERAL.—The requirements established pur8 suant to section 203 to carry out this section shall—

9 ƒ(1) be designed to ensure that information is

10 submitted and compiled under this section as may be

11 necessary to permit analysis and comparison of—

12 ƒ(A) the availability and affordability of

13 insurance coverage and the quality or type of in14 surance coverage, by MSA and applicable region

15 and race and gender of policyholders; and

16 ƒ(B) the location of the principal place of

17 business of insurance agents and the race of such

18 agents, and the location of the principal place of

19 business of insurance agents terminated and the

20 race of such agents, by MSA and applicable re21 gion; and

22 ƒ(2) specify the data elements required to be re23 ported under this section and require uniformity in

24 the definitions of the data elements.

25 ƒ(b) DESIGNATED INSURERS.—
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1 ƒ(1) AGGREGATE INFORMATION.—The regula2 tions issued under section 203 shall require that each

3 designated insurer for a designated line of insurance

4 under subparagraph (A) or (B) of section 215(c)(1)

5 compile and submit to the Secretary, for each annual

6 reporting period—

7 ƒ(A) the total number of policies issued in

8 such line, total exposures covered by such poli9 cies, and total amount of premiums for such

10 policies, by designated line and by designated

11 MSA and applicable region in which the insured

12 risk is located;

13 ƒ(B) the total number of cancellations and

14 nonrenewals (expressed in terms of policies or ex15 posures, as determined by the Secretary), by des16 ignated line and by designated MSA and appli17 cable region in which the insured risk is located;

18 ƒ(C) the total number and racial character19 istics of—

20 ƒ(i) licensed agents of such insurer

21 selling insurance in the designated line, by

22 designated MSA and applicable region in

23 which the agent’s principal place of business

24 is located; and
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1 ƒ(ii) such agents who were terminated

2 by the insurer, by designated MSA and ap3 plicable region in which the agent’s prin4 cipal place of business was located; and

5 ƒ(D) for such designated line of insurance,

6 information that will enable the Secretary to as7 sess the aggregate loss experience for the insurer,

8 by designated MSA and applicable region in

9 which the insured risk is located.

10 ƒ(2) SPECIFICATION OF INFORMATION FOR ITEM11 IZED DISCLOSURE.—

12 ƒ(A) IN GENERAL.—The regulations issued

13 under section 203 regarding annual reporting

14 requirements for designated insurers for a des15 ignated line of insurance under subparagraph

16 (A) or (B) of section 215(c)(1) shall, with respect

17 to policies issued under the designated line or ex18 posure units covered by such policies, as deter19 mined by the Secretary—

20 ƒ(i) specify the data elements that

21 shall be submitted;

22 ƒ(ii) provide for the submission of in23 formation on an individual insurer basis;

24 ƒ(iii) provide for the submission of the

25 information with the least burden on insur-
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1 ers, particularly small insurers, and insur2 ance agents;

3 ƒ(iv) take into account existing statis4 tical reporting systems in the insurance in5 dustry;

6 ƒ(v) require reporting by MSA and

7 applicable region in which the insured risk

8 is located;

9 ƒ(vi) provide for the submission of in10 formation that identifies the designated

11 line, and subline or coverage type;

12 ƒ(vii) provide for the submission of in13 formation that distinguishes policies written

14 in a residual market from policies written

15 in the voluntary market;

16 ƒ(viii) specify—

17 ƒ(I) whether information shall be

18 submitted on the basis of policy or ex19 posure unit; and

20 ƒ(II) whether information, when

21 submitted, shall be aggregated by like

22 policyholders with like policies, except

23 that the Secretary shall not permit

24 such aggregation if it will adversely af-
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1 fect the accuracy of the information re2 ported;

3 ƒ(ix) provide for the submission of in4 formation regarding the number of cancella5 tions and nonrenewals of policies under the

6 designated line by MSA and applicable re7 gion in which the insured risk is located, by

8 race and gender of the policyholder (if

9 known to the insurer), and by whether the

10 policy was issued in a voluntary or residual

11 market; and

12 ƒ(x) provide for the submission of in13 formation on the racial characteristics and

14 gender of policyholders at the level of detail

15 comparable to that required by the Home

16 Mortgage Disclosure Act of 1975 (and the

17 regulations issued thereunder).

18 ƒ(B) RULES REGARDING OBTAINING RACIAL

19 INFORMATION.—With respect to the information

20 specified in subparagraph (A)(x), applicants for,

21 and policyholders of, insurance may be asked

22 their racial characteristics only in writing. Any

23 such written question shall clearly indicate that

24 a response to the question is voluntary on the

25 part of the applicant or policyholder, but encour-
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1 aged, and that the information is being requested

2 by the Federal Government to monitor the avail3 ability and affordability of insurance. If an ap4 plicant for, or policyholder of, insurance declines

5 to provide such information, the agent or insurer

6 for such insurance may provide such informa7 tion.

8 ƒ(3) RULE FOR REPORTING BY DESIGNATED IN9 SURERS.—A designated insurer for a designated line

10 shall submit—

11 ƒ(A) information required under subpara12 graphs (A), (B), and (D) of paragraph (1) and

13 information required pursuant to paragraph (2),

14 for risks insured under such line that are located

15 within each designated MSA any part of which

16 is located in a State for which the insurer is des17 ignated; and

18 ƒ(B) information required under para19 graph (1)(C) for agents within such designated

20 MSA’s.

21 ƒ(c) NONDESIGNATED INSURERS.—The regulations is22 sued under section 203 shall require each insurer that issues

23 an insurance policy in a designated line of insurance under

24 subparagraph (A) or (B) of section 215(c)(1) that covers

25 an insured risk located in a designated MSA and which
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1 is not a designated insurer for the line in any State in

2 which any part of such MSA is located, to compile and sub3 mit to the Secretary, for each annual reporting period—

4 ƒ(1) the total number of policies issued in such

5 line,

6 ƒ(2) the total exposures covered by such policies,

7 and

8 ƒ(3) the total amount of premiums for such poli9 cies,

10 by designated MSA and applicable region in which the in11 sured risk is located.

12 ƒSEC. 205. STUDY OF COMMERCIAL INSURANCE FOR RESI13 DENTIAL PROPERTIES AND SMALL BUSI14 NESSES.

15 ƒ(a) IN GENERAL.—The Secretary shall conduct a

16 study to determine the availability, affordability, and qual17 ity or types of commercial insurance coverage for residen18 tial properties and small businesses, in urban areas.

19 ƒ(b) SUBMISSION OF INFORMATION.—To acquire in20 formation for the study under this section, the Secretary

21 shall, by regulation, establish requirements for insurers pro22 viding commercial insurance for residential properties and

23 small businesses to compile and submit to the Secretary on

24 an annual basis information regarding such insurance, as

25 follows:
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1 ƒ(1) MSA’S.—The Secretary shall carry out the

2 study only with respect to the 25 MSA’s having the

3 largest populations, as determined by the Secretary

4 and specified in the regulations under this section.

5 ƒ(2) INSURERS.—For each of the MSA’s speci6 fied pursuant to paragraph (1), the Secretary shall

7 designate the insurers required to submit the informa8 tion. The Secretary shall designate a sufficient num9 ber of insurers to provide a representative sample of

10 the insurers providing such insurance in each such

11 MSA.

12 ƒ(3) LINES OF INSURANCE.—The Secretary shall

13 require the submission of information regarding such

14 lines, sublines, or coverage types of commercial insur15 ance as the Secretary determines are necessary or im16 portant with respect to establishing, operating, or

17 maintaining residential properties and each type of

18 small business selected under paragraph (4), and

19 shall require submission of such information by such

20 lines, sublines, or coverage types.

21 ƒ(4) SMALL BUSINESSES.—For purposes of

22 paragraph (3), the Secretary shall determine the types

23 of businesses that are typically small businesses and

24 shall select a representative sample of such types.
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1 ƒ(5) DATA ELEMENTS.—The Secretary shall

2 identify the data elements required to be submitted.

3 ƒ(6) SUBMISSION BY LOCATION.—The Secretary

4 shall require the information to be submitted by des5 ignated MSA and applicable region in which the in6 sured risk is located.

7 ƒ(7) SUBMISSION BY INSURER.—The Secretary

8 shall require the submission of information on an in9 dividual insurer basis and shall specify whether in10 formation, when submitted, shall be aggregated by like

11 policies, except that the Secretary shall not permit

12 such aggregation if it will adversely affect the accu13 racy of the information reported.

14 ƒ(8) SUNSET.—The Secretary shall require the

15 submission of information under this section only for

16 each of the first 5 annual reporting periods beginning

17 more than 36 months after the date of the enactment

18 of this Act.

19 ƒ(c) CONSIDERATIONS.—In establishing the require20 ments for submission of information under this section, the

21 Secretary shall—

22 ƒ(1) take into consideration the administrative,

23 paperwork, and other burdens on insurers and insur24 ance agents involved in complying with the require25 ments of this section;
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1 ƒ(2) minimize the burdens imposed by such re2 quirements with respect to such insurers and agents;

3 and

4 ƒ(3) take into consideration existing statistical

5 reporting systems in the insurance industry.

6 ƒ(d) REPORT.—Not later than 6 months after the expi7 ration of the 5-year period referred to in subsection (b)(8),

8 the Secretary shall submit a report to the Congress describ9 ing the information submitted under the study conducted

10 under this section and any findings of the Secretary from

11 the study regarding disparities in the availability, afford12 ability, and quality or types of commercial insurance cov13 erage for residential properties and small businesses, in

14 urban areas.

15 ƒSEC. 206. REPORTING OF BID, PERFORMANCE, AND PAY16 MENT BONDS FOR SMALL BUSINESSES.

17 ƒ(a) IN GENERAL.—The Secretary shall by regulation

18 establish requirements in accordance with section 203 for

19 insurers to compile and submit to the Secretary, for each

20 annual reporting period, information regarding bid, per21 formance, and payment bonds for small businesses, by lines

22 designated under subparagraph (C) of section 215(c)(1),

23 that is similar to the information required to be submitted

24 under section 204.
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1 ƒ(b) CONTENTS.—The regulations under this section

2 shall provide for—

3 ƒ(1) designation of insurers required to submit

4 the information, pursuant to standards comparable to

5 the standards for designation under section 215(b),

6 and submission of the information on an individual

7 insurer basis;

8 ƒ(2) identification of data elements required to

9 be submitted;

10 ƒ(3) the information to be submitted by des11 ignated MSA and applicable region;

12 ƒ(4) the information to be submitted in a man13 ner similar to that required for information submit14 ted under section 204;

15 ƒ(5) an appropriate definition of small busi16 nesses; and

17 ƒ(6) the information to be submitted for each

18 annual reporting period.

19 ƒSEC. 207. REPORTING OF RURAL INSURANCE INFORMA20 TION.

21 ƒ(a) IN GENERAL.—The Secretary shall, by regula22 tion, establish requirements for insurers to annually com23 pile and submit to the Secretary information concerning

24 the availability, affordability, and quality or type of insur-
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1 ance in designated rural areas in the lines designated under

2 subparagraphs (A) and (B) of section 215(c)(1).

3 ƒ(b) CONTENT.—The regulations under this section

4 shall provide that—

5 ƒ(1) the information to be compiled and submit6 ted under this section by designated insurers and in7 surers that are not designated insurers shall be of

8 such types, data elements, and specificity that is as

9 identical as possible to the types, data elements, and

10 specificity of information required under this title of

11 designated and nondesignated insurers, respectively,

12 for designated MSA’s and shall be subject to the pro13 visions of section 204(b)(2)(B); and

14 ƒ(2) the information compiled and submitted

15 under this section shall be compiled and submitted on

16 the basis of each 5-digit zip code in which the insured

17 risks are located, rather than on the basis of des18 ignated MSA and applicable region (as otherwise re19 quired in this title).

20 ƒ(c) DESIGNATION OF RURAL AREAS.—For purposes

21 of this section, the term ‘‘designated rural area’’ means the

22 following:

23 ƒ(1) FIRST 5 YEARS.—With respect to the first

24 5 annual reporting periods to which the reporting re25 quirements under this section apply, any of the 50
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1 rural areas designated by the Secretary and specified

2 in regulations issued pursuant to section 224, which

3 shall not be amended or revised after issuance. The

4 Secretary shall (to the extent possible) designate 1

5 rural area under this paragraph in each State of the

6 United States.

7 ƒ(2) AFTER FIRST 5 YEARS.—With respect to

8 annual reporting periods thereafter, a rural area for

9 which a designation made by the Secretary under this

10 paragraph is in effect, pursuant to the following re11 quirements:

12 ƒ(A) The designations shall be made for

13 each of the successive 5-year periods at the time

14 provided in subparagraph (C), and the first such

15 period shall be the 5-year period beginning upon

16 the commencement of the 6th annual reporting

17 period to which the reporting requirements under

18 this title apply.

19 ƒ(B) The Secretary shall designate 50 rural

20 areas as designated rural areas for each such 5-

21 year period and shall designate such rural areas

22 based upon the information and recommenda23 tions made in the report under section 220(b) re24 lating to the period.
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1 ƒ(C) The Secretary shall make the designa2 tion of rural areas for an ensuing 5-year period

3 by regulations issued—

4 ƒ(i) not later than the date occurring

5 12 months before the commencement of the

6 5-year period; and

7 ƒ(ii) not later than 6 months after the

8 submission to the Secretary of the report

9 under section 220(b) relating to such period.

10 ƒ(D) The designations for a 5-year period

11 shall take effect upon the commencement of the

12 first annual reporting period of the 5-year pe13 riod that begins at least 12 months after the is14 suance of the regulations making such designa15 tions, and shall remain in effect until the expira16 tion of the 5-year period.

17 Notwithstanding any other provision of this section, the des18 ignation of a rural area shall remain in effect until a suc19 ceeding designation of rural areas under paragraph (2)

20 takes effect.

21 ƒSEC. 208. WAIVER OF REPORTING REQUIREMENTS.

22 ƒ(a) WAIVER FOR STATES COLLECTING EQUIVALENT

23 INFORMATION.—

24 ƒ(1) AUTHORITY.—Subject to the requirements

25 under this section, the Secretary shall provide, by reg-
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1 ulation, for the waiver of the applicability of the pro2 visions of sections 204, 205, and 207 for each insurer

3 transacting business within a State referred to in

4 paragraph (2), but only with respect to information

5 required to be submitted under such sections that re6 lates to agents or insured risks located in the State.

7 ƒ(2) REQUIREMENTS.—The Secretary may make

8 a waiver pursuant to paragraph (1) only with respect

9 to a State that the Secretary determines has in effect

10 a law or other requirement that—

11 ƒ(A) requires insurers to submit to the

12 State information that is at least the same or

13 equivalent to the information that is required to

14 be submitted to the Secretary pursuant to sec15 tions 204, 205, and 207;

16 ƒ(B) provides for adequate enforcement of

17 such law or other requirements;

18 ƒ(C) provides for the same annual report19 ing period used by the Secretary under this title

20 and for submission of the information to the Sec21 retary in a timely fashion, as determined by the

22 Secretary; and

23 ƒ(D) provides that, to the extent statistical

24 agents are permitted to submit information to

25 the State on behalf of insurers, such agents are
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1 subject to the same or equivalent requirements as

2 provided under section 210(b).

3 ƒ(3) DURATION.—A waiver pursuant to para4 graph (1) may remain in effect only during the pe5 riod for which the State law or other requirement re6 quired under paragraph (2) remains in effect.

7 ƒ(b) MULTIPLE-STATE MSA’S.—In the case of any

8 designated MSA that contains area within (1) any State

9 for which a waiver has been made pursuant to subsection

10 (a), and (2) any State for which such a waiver has not

11 been made, the provisions of this title requiring submission

12 of information to the Secretary regarding such MSA shall

13 be considered to apply only to the portion of such MSA that

14 is located within the State for which such a waiver has not

15 been made.

16 ƒ(c) AUTHORITY FOR SECRETARY TO OBTAIN INFOR17 MATION DIRECTLY FROM INSURERS.—If the State for

18 which a waiver has been made pursuant to subsection (a)

19 does not submit to the Secretary the information required

20 under subsection (a)(2)(A) or submits information that is

21 not complete, the Secretary shall require the insurers

22 transacting business within the State to submit such infor23 mation directly to the Secretary.
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1 ƒSEC. 209. REPORTING BY PRIVATE MORTGAGE INSURERS.

2 ƒ(a) HMDA REPORTING.—On an annual basis, the

3 Financial Institutions Examination Council shall deter4 mine the extent to which each insurer providing private

5 mortgage insurance is making available to the public and

6 submitting to the appropriate agency information regard7 ing such insurance that is equivalent to the information

8 regarding mortgages required to be reported under the

9 Home Mortgage Disclosure Act of 1975.

10 ƒ(b) REPORTING UNDER THIS TITLE.—

11 ƒ(1) CERTIFICATION OF NONCOMPLIANCE.—If,

12 for any annual period referred to in subsection (a),

13 such Council determines that any insurer providing

14 private mortgage insurance is not making available

15 to the public or submitting the information referred

16 to in subsection (a) or that the information made

17 available or submitted is not equivalent information

18 as described in subsection (a), then the Council shall

19 notify the insurer of such noncompliance. If, after the

20 expiration of a reasonable period of time, the insurer

21 has not remedied such noncompliance to the satisfac22 tion of the Council, then the Council shall imme23 diately certify such noncompliance to the Secretary.

24 ƒ(2) REQUIREMENT.—Upon the receipt of a cer25 tification under paragraph (1), the Secretary shall,

26 by regulation, require such insurer to submit to the
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1 Secretary information regarding such insurance that

2 complies with the provisions of section 204 that are

3 applicable to such insurance. Such regulations shall

4 be issued not later than 6 months after receipt of such

5 certification and shall apply to the first succeeding

6 annual reporting period that begins at least 6 months

7 after issuance of such regulations and to each annual

8 reporting period thereafter.

9 ƒSEC. 210. USE OF DATA CONTRACTOR AND STATISTICAL

10 AGENTS.

11 ƒ(a) DATA COLLECTION CONTRACTOR.—The Secretary

12 may contract with a data collection contractor to collect the

13 information required to be maintained and submitted

14 under sections 204, 205, 207, 208, 209(b), and 211 if the

15 contractor agrees to collect the information pursuant to the

16 terms and conditions of such sections and this title and the

17 regulations issued thereunder. Information submitted to

18 such contractor shall be available to the public to the same

19 extent as if the information were submitted directly to the

20 Secretary.

21 ƒ(b) USE OF STATISTICAL AGENTS.—

22 ƒ(1) IN GENERAL.—The Secretary shall provide,

23 by regulation, that insurers may submit any infor24 mation required under sections 204, 205, 207, and
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1 209(b) through statistical agents acting on behalf of

2 more than one insurer.

3 ƒ(2) PROTECTIONS.—The regulations issued

4 under this subsection shall permit submission of in5 formation through a statistical agent only if the Sec6 retary determines that—

7 ƒ(A) the statistical agent has adequate pro8 cedures to protect the integrity of the informa9 tion submitted;

10 ƒ(B) the statistical agent has a statistical

11 plan and format for submitting the information

12 that meets the requirements of this title;

13 ƒ(C) the statistical agent has procedures in

14 place that ensure that information reported

15 under the statistical plan in connection with re16 porting under this title and submitted to the Sec17 retary is not subject to any adjustment by the

18 statistical agent or an insurer for reasons other

19 than technical accuracy and conformance to the

20 statistical plan;

21 ƒ(D) the information of an insurer is not

22 subject to review by any other insurer before

23 being made available to the public; and
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1 ƒ(E) acceptance of the information through

2 the statistical agent will not adversely affect the

3 accuracy of the information reported.

4 ƒ(3) DISCONTINUANCE OF ACCEPTANCE OF IN5 FORMATION.—The Secretary may discontinue accept6 ing information reported through a statistical agent

7 pursuant to this subsection if the Secretary deter8 mines that the requirements for such reporting are no

9 longer met or that continued acceptance of such infor10 mation is contrary to the goal of ensuring the accu11 racy of the information reported.

12 ƒ(4) GAO AUDITS.—The Comptroller General

13 shall, at the request of the Secretary, audit informa14 tion collection and submission performed under this

15 subsection by data collection contractors or statistical

16 agents to ensure that the integrity of the information

17 collected and submitted is protected. In determining

18 whether to request an audit of a statistical agent, the

19 Secretary shall consider the sufficiency (for purposes

20 of this title) of audits of the statistical agent con21 ducted in connection with State insurance regulation.

22 ƒ(5) LIABILITY.—Notwithstanding any use of a

23 statistical agent as authorized under this subsection,

24 an insurer using such an agent shall be responsible

25 for compliance with the requirements under this title.
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1 ƒSEC. 211. REPORTING OF INFORMATION REGARDING IN2 VESTMENTS BY INSURERS.

3 ƒ(a) IN GENERAL.—The Secretary of Housing and

4 Urban Development shall, by regulation, require that each

5 designated insurer that makes a designated investment in

6 a property or business located in a designated MSA shall

7 compile and submit to the Secretary for each annual report8 ing period, the following information:

9 ƒ(1) DIRECT LOANS.—

10 ƒ(A) COMMERCIAL REAL ESTATE LOANS.—

11 The total number of loans for the purchase of

12 commercial real estate made by the designated

13 insurer, the aggregate amount of such loans, and

14 the amount of each such loan, by designated

15 MSA and applicable region in which the real es16 tate for which the loan was made is located.

17 ƒ(B) SINGLE-FAMILY MORTGAGES.—The

18 total number of mortgage loans for the purchase

19 of 1- to 4-family dwellings made by the des20 ignated insurer, the aggregate amount of such

21 loans, and the amount of each such loan, by des22 ignated MSA and applicable region in which the

23 dwelling for which the loan was made is located,

24 which information shall be disaggregated by ra25 cial characteristics, income level, and gender of

26 the borrower under the loan.
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1 ƒ(C) COMMERCIAL AND INDUSTRIAL

2 LOANS.—The total number of commercial and

3 industrial loans made by the designated insurer,

4 the aggregate amount of such loans, and the

5 amount of each such loan, by designated MSA

6 and applicable region in which the property or

7 business involved in the loan is located, which

8 information shall be disaggregated by the size of

9 business of the borrower under the loan and by

10 the ownership characteristic of the business,

11 which shall be classified as either minority12 owned, women-owned, or otherwise-owned.

13 ƒ(2) LOAN PURCHASES.—

14 ƒ(A) COMMERCIAL REAL ESTATE LOANS.—

15 The total number of loans for the purchase of

16 commercial real estate purchased by the des17 ignated insurer, the aggregate amount of such

18 loans, and the amount of each such loan, by des19 ignated MSA and applicable region in which the

20 real estate for which the loan was made is lo21 cated.

22 ƒ(B) SINGLE-FAMILY MORTGAGES.—The

23 total number of mortgage loans for the purchase

24 of 1- to 4-family dwellings purchased by the des25 ignated insurer, the aggregate amount of such
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1 loans, and the amount of each such loan, by des2 ignated MSA and applicable region in which the

3 dwelling for which the loan was made is located,

4 which information shall be disaggregated by ra5 cial characteristics, income level, and gender of

6 the borrower under the loan.

7 ƒ(C) COMMERCIAL AND INDUSTRIAL

8 LOANS.—The total number of commercial and

9 industrial loans purchased by the designated in10 surer, the aggregate amount of such loans, and

11 the amount of each such loan, by designated

12 MSA and applicable region in which the prop13 erty or business involved in the loan is located,

14 which information shall be disaggregated by the

15 size of business of the borrower under the loan

16 and by the ownership characteristic of the busi17 ness, which shall be classified as either minority18 owned, women-owned, or otherwise-owned.

19 ƒ(3) OTHER INVESTMENTS.—For such other in20 vestments made by the designated insurer, as the Sec21 retary may designate pursuant to subsection (b), the

22 total number of such investments, the aggregate

23 amount of such investments, and the amount of each

24 such investment, by designated MSA and applicable

25 region in which the property or business involved in
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1 the investment is located, as determined by the Sec2 retary, which information shall be disaggregated by

3 the size of business of the borrower under the loan and

4 by the ownership characteristic of the business, which

5 shall be classified as either minority-owned, women6 owned, or otherwise-owned.

7 ƒ(b) DESIGNATION OF OTHER INVESTMENTS.—

8 ƒ(1) IN GENERAL.—For purposes of subsection

9 (a)(3), the Secretary may designate activities and in10 vestments other than the investments described in

11 paragraphs (1) and (2) of subsection (a) for which

12 designated insurers shall compile and submit infor13 mation under this section.

14 ƒ(2) REQUIREMENT.—In making designations

15 under this subsection, the Secretary shall designate

16 (A) activities and investments that significantly bene17 fit low- and moderate-income families and persons,

18 small businesses in distressed communities, or

19 minority- or women-owned businesses, and (B) activi20 ties and investments that contribute to the creation of

21 jobs and economic development of distressed commu22 nities.

23 ƒ(3) CONSIDERATIONS.—The Secretary shall

24 specifically consider for designation under this sub25 section investments in community development finan-
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1 cial institutions, community development corpora2 tions, State-issued bonds, and securities backed by

3 State development funds.

4 ƒ(c) SIZE OF BUSINESS.—The Secretary shall, by reg5 ulation, establish various categories of the sizes of busi6 nesses, for purposes of disaggregating information under

7 paragraphs (1)(C), (2)(C), and (3) of subsection (a) by var8 ious sizes of businesses.

9 ƒSEC. 212. SUBMISSION OF INFORMATION TO SECRETARY

10 AND MAINTENANCE OF INFORMATION.

11 ƒ(a) PERIOD OF MAINTENANCE.—Each insurer re12 quired by this title to compile and submit information to

13 the Secretary shall maintain such information for the 3-

14 year period beginning upon the conclusion of the annual

15 reporting period to which such information relates. The

16 Secretary shall maintain any information submitted to the

17 Secretary for such period as the Secretary considers appro18 priate and feasible to carry out the purposes of this title

19 and to allow for historical analysis and comparison of the

20 information.

21 ƒ(b) SUBMISSION.—The Secretary shall issue regula22 tions prescribing a standard schedule (taking into consider23 ation the provisions of section 214(a)), format, and method

24 for submitting information under this title to the Secretary.

25 The format and method of submitting the information shall
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1 facilitate and encourage the submission in a form readable

2 by a computer. Any insurer submitting information to the

3 Secretary may submit in writing to the Secretary any ad4 ditional information or explanations that the insurer con5 siders relevant to the decision by the insurer to sell insur6 ance.

7 ƒSEC. 213. COMPILATION OF AGGREGATE INFORMATION.

8 ƒ(a) INSURANCE INFORMATION.—For each annual re9 porting period, the Secretary shall—

10 ƒ(1) compile, for each designated MSA, by des11 ignated line (and if such information is submitted, by

12 subline or coverage type)—

13 ƒ(A) information submitted under sections

14 204, 205, 208, and 209(b) and loss ratios (if the

15 submission of loss information is required), ag16 gregated by applicable region for all insurers

17 submitting such information; and

18 ƒ(B) such information and loss ratios (if

19 the submission of loss information is required),

20 aggregated by applicable region for each such in21 surer; and

22 ƒ(2) produce tables based on information sub23 mitted under sections 204, 205, 208, and 209(b) for

24 each designated MSA, by insurer and for all insurers,
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1 by designated line (and if such information is sub2 mitted, by subline or coverage type), indicating—

3 ƒ(A) insurance underwriting patterns ag4 gregated for the applicable regions within the

5 MSA, grouped according to location, age of prop6 erty, income level, and racial characteristics of

7 neighborhoods; and

8 ƒ(B) loss ratios based on the information

9 obtained pursuant to sections 204, 205, 208, and

10 209(b) (if the submission of loss information is

11 required), aggregated for the applicable regions

12 within the MSA, grouped according to location,

13 age of property, income level, and racial charac14 teristics of neighborhoods.

15 ƒ(b) AGENT INFORMATION.—For each annual report16 ing period and for each designated MSA, the Secretary shall

17 compile, by designated line, the information submitted

18 under section 204(b)(1)(C)—

19 ƒ(1) by designated insurer by applicable region;

20 ƒ(2) by designated insurer aggregated for the ap21 plicable regions within the designated MSA, grouped

22 according to location, age of property, income level,

23 and racial characteristics; and

24 ƒ(3) for all designated insurers that have sub25 mitted such information for the designated MSA, ag-
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1 gregated for the applicable regions within the des2 ignated MSA, grouped according to location, age of

3 property, income level, and racial characteristics.

4 ƒ(c) RURAL INSURANCE INFORMATION.—For each an5 nual reporting period, the Secretary shall—

6 ƒ(1) compile for each applicable 5-digit zip code,

7 by designated line (and if such information is sub8 mitted, by subline or coverage type)—

9 ƒ(A) information regarding insurance in

10 rural areas submitted under sections 207 and

11 208 and loss ratios, for all insurers for which

12 such information is submitted; and

13 ƒ(B) such information and loss ratios, for

14 each such insurer; and

15 ƒ(2) produce tables for each 5-digit zip code

16 based on information regarding insurance in rural

17 areas submitted under sections 207 and 208, by in18 surer and for all such insurers for which information

19 is submitted under such sections, by designated line

20 (and if such information is submitted, by subline or

21 coverage type), indicating—

22 ƒ(A) insurance underwriting patterns, ag23 gregated by zip codes, grouped according to loca24 tion, age of property, income level, and racial
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1 characteristics of neighborhoods (where such de2 mographic information is available); and

3 ƒ(B) loss ratios, based on the information

4 obtained pursuant to sections 207 and 208, ag5 gregated by zip codes, grouped according to loca6 tion, age of property, income level, and racial

7 characteristics of neighborhoods (where such de8 mographic information is available).

9 ƒ(d) INVESTMENT INFORMATION.—For each annual

10 reporting period, the Secretary shall—

11 ƒ(1) compile the information submitted under

12 section 211, for each designated MSA—

13 ƒ(A) aggregated by applicable region for all

14 insurers, by designated investment; and

15 ƒ(B) aggregated by applicable region for

16 each insurer, by designated investment; and

17 ƒ(2) produce tables for each designated MSA, for

18 each insurer and for all insurers, indicating patterns

19 of designated investments, which shall be aggregated

20 by applicable region, grouped according to racial

21 characteristics, income level, and gender of the bor22 rower or size of business of the borrower and owner23 ship characteristic of the business, as applicable.

24 ƒSEC. 214. AVAILABILITY AND ACCESS SYSTEM.

25 ƒ(a) AVAILABILITY TO PUBLIC.—
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1 ƒ(1) IN GENERAL.—The Secretary shall main2 tain and make available to the public, in accordance

3 with the requirements of this section, any information

4 submitted to the Secretary under this title and any

5 information compiled by the Secretary under this

6 title.

7 ƒ(2) TIMING.—The Secretary shall make such

8 information publicly available on a timetable deter9 mined by the Secretary, but not later than 9 months

10 after the conclusion of the annual reporting period to

11 which the information relates, except that such infor12 mation shall not be made available to the public until

13 it is available in its entirety unless not all the infor14 mation required to be reported is available by such

15 date.

16 ƒ(b) PUBLIC ACCESS SYSTEM.—

17 ƒ(1) IMPLEMENTATION.—The Secretary shall

18 implement a system to facilitate access to any infor19 mation required to be made available to the public

20 under this title.

21 ƒ(2) BASES OF AVAILABILITY.—The system shall

22 provide access in the following manners:

23 ƒ(A) ACCESS TO ITEMIZED INFORMA24 TION.—To information submitted under sections

25 204, 205, 207, 208, 209(b), and 211 on the basis
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1 of the insurer submitting the information, on the

2 basis of designated MSA and applicable region

3 (or in the case of rural information submitted

4 under section 207 or 208, on the basis of 5-digit

5 zip code), and on any other basis the Secretary

6 considers feasible and appropriate.

7 ƒ(B) ACCESS TO AGGREGATE INFORMA8 TION.—To aggregate information compiled under

9 section 213, on the basis of (i) the insurer sub10 mitting the information, and (ii) designated

11 MSA and applicable region (or in the case of

12 rural information submitted under section 207

13 or 208, on the basis of 5-digit zip code), and on

14 any other basis the Secretary considers feasible

15 and appropriate.

16 ƒ(3) METHOD.—The access system shall include

17 a toll-free telephone number that can be used by the

18 public to request such information and the address at

19 which a written request for such information may be

20 submitted.

21 ƒ(4) FORM.—The Secretary shall, by regulation,

22 establish the forms in which such information may be

23 furnished by the Secretary. Such forms shall include

24 written statements, forms readable by widely used

25 personal computers, and, if feasible, on-line access for
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1 personal computers. The Secretary shall provide the

2 information available under this section in any such

3 form requested by the person requesting the informa4 tion, except that the Secretary may charge a fee for

5 providing such information, which may not exceed

6 the amount, determined by the Secretary, that is

7 equal to the cost of reproducing the information.

8 ƒ(5) ANALYSIS SOFTWARE.—The Secretary shall

9 make available to the public software that can be used

10 on a personal computer to analyze the information

11 provided under this section. The software shall be ca12 pable of analyzing the information by insurer, des13 ignated line, race, gender, MSA, and applicable re14 gion. It shall also contain data compiled by the Sec15 retary for each MSA and applicable region on income

16 levels, age of property, and racial characteristics that

17 can be used to evaluate the information provided

18 under this title by insurers. The software and any ac19 companying data shall be made available to the pub20 lic without charge, except for an amount, determined

21 by the Secretary, which shall not exceed the actual

22 cost of reproducing the software and the accompany23 ing data.

24 ƒ(c) PROTECTIONS REGARDING LOSS INFORMA25 TION.—
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1 ƒ(1) PROHIBITION OF DISCLOSURE OF LOSS IN2 FORMATION.—Notwithstanding any other provision of

3 this title, the Secretary may not make available to the

4 public or otherwise disclose any information submit5 ted under this title regarding the amount or number

6 of claims paid by any insurer, the amount of losses

7 of any insurer, or the loss experience for any insurer,

8 except (A) in the form of a loss ratio (expressing the

9 relationship of claims paid to premiums) made avail10 able or disclosed in compliance with the provisions of

11 paragraph (2), or (B) as provided in paragraph (3).

12 ƒ(2) PROTECTION OF IDENTITY OF INSURER.—

13 In making available to the public or otherwise disclos14 ing a loss ratio for an insurer—

15 ƒ(A) the Secretary may not identify the in16 surer to which the loss ratio relates; and

17 ƒ(B) the Secretary may disclose the loss

18 ratio only in a manner that does not allow any

19 party to determine the identity of the specific in20 surer to which the loss ratio relates, except par21 ties having access to information under para22 graph (3).

23 ƒ(3) CONFIDENTIALITY OF INFORMATION DIS24 CLOSED TO GOVERNMENTAL AGENCIES.—The Sec25 retary may make information referred to in para-
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1 graph (1) and the identity of the specific insurer to

2 which such information relates available to any Fed3 eral entity and any State agency responsible for regu4 lating insurance in a State and may otherwise dis5 close such information to any such entity or agency,

6 but only to the extent such entity or agency agrees not

7 to make any such information available or disclose

8 such information to any other person.

9 ƒSEC. 215. DESIGNATIONS.

10 ƒ(a) DESIGNATION OF MSA’S.—For purposes of this

11 title, the term ‘‘designated MSA’’ means the following

12 MSA’s:

13 ƒ(1) FIRST 5 YEARS.—With respect to the first

14 5 annual reporting periods to which the reporting re15 quirements under this title apply (pursuant to section

16 226), any of the 150 MSA’s selected as follows:

17 ƒ(A) The Secretary shall select the 50

18 MSA’s having the largest populations, as deter19 mined by the Secretary and specified in regula20 tions issued pursuant to section 224, which shall

21 not be amended or revised after issuance.

22 ƒ(B) The Secretary shall select 100 addi23 tional MSA’s, on a basis that provides for (i) ge24 ographic diversity among the designated MSA’s
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1 under this paragraph, and (ii) diversity in size

2 of the populations among such MSA’s.

3 ƒ(2) AFTER FIRST 5 YEARS.—With respect to

4 annual reporting periods thereafter, an MSA for

5 which a designation under this paragraph is in effect,

6 pursuant to the following requirements:

7 ƒ(A) The designations shall be made for

8 each of the successive 5-year periods at the time

9 provided in subparagraph (C), and the first such

10 period shall be the 5-year period beginning upon

11 the commencement of the 6th annual reporting

12 period to which the reporting requirements under

13 this title apply.

14 ƒ(B) The Secretary shall designate not less

15 than 150 MSA’s as designated MSA’s for each

16 such 5-year period and shall designate such

17 MSA’s based upon the information and rec18 ommendations made in the report under section

19 220(b) relating to the period.

20 ƒ(C) The Secretary shall make the designa21 tion of MSA’s for an ensuing 5-year period by

22 regulations issued—

23 ƒ(i) not later than the date occurring

24 12 months before the commencement of the

25 5-year period; and
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1 ƒ(ii) not later than 6 months after the

2 submission to the Secretary of the report

3 under section 220(b) relating to such period.

4 ƒ(D) The designations for a 5-year period

5 shall take effect upon the commencement of the

6 first annual reporting period of the 5-year pe7 riod that begins at least 12 months after the is8 suance of the regulations making such designa9 tions, and shall remain in effect until the expira10 tion of the 5-year period.

11 Notwithstanding any other provision of this section, the des12 ignation of an MSA shall remain in effect until a succeed13 ing designation of MSA’s under paragraph (2) takes effect.

14 ƒ(b) DESIGNATION OF INSURERS.—The Secretary

15 shall designate, for each designated line and each State, in16 surers doing business in the lines as designated insurers in

17 the State for purposes of this title, subject to the following

18 requirements:

19 ƒ(1) HIGHEST AGGREGATE PREMIUM VOLUME.—

20 ƒ(A) GENERAL RULE.—For a State, the

21 Secretary shall designate, for each designated

22 line, each of the insurers and insurer groups in23 cluded in the class established under this para24 graph for the State.
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1 ƒ(B) DETERMINATION.—In the State, the

2 Secretary shall rank the insurers and insurer

3 groups in each designated line from the insurer

4 or group having the largest aggregate premium

5 volume in the State for such line to the insurer

6 or group having the smallest such aggregate pre7 mium volume and shall include in the class for

8 the State only (i) the insurer or group of the

9 highest rank, and (ii) each insurer or group of

10 successively lower rank if the inclusion of such

11 insurer or group in the class does not result in

12 the sum of such aggregate premium volumes for

13 insurers and groups in the class exceeding 80

14 percent of the total aggregate premium volume in

15 the State for the line, and (iii) the first such suc16 cessively lower ranked insurer or insurer group

17 whose inclusion in the class results in such sum

18 exceeding 80 percent of the total aggregate pre19 mium volume in the State for the line.

20 ƒ(2) MINIMUM AGGREGATE PREMIUM VOLUME.—

21 For a State, the Secretary shall designate, for each

22 designated line, each insurer and insurer group not

23 designated pursuant to paragraph (1) whose premium

24 volume in the State for the designated line exceeds 1
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1 percent of the total aggregate premium volume in the

2 State for the line.

3 ƒ(3) FAIR PLANS AND JOINT UNDERWRITING AS4 SOCIATIONS.—For a State, the Secretary shall des5 ignate, for each designated line—

6 ƒ(A) each statewide plan under part A of

7 title XII of the National Housing Act to assure

8 fair access to insurance requirements, and

9 ƒ(B) each joint underwriting association,

10 that provides insurance under such line.

11 ƒ(4) DURATION.—The Secretary shall designate

12 insurers under this subsection once every 5 years.

13 Each insurer designated shall be a designated insurer

14 for each of the first 5 successive annual reporting pe15 riods commencing after such designation.

16 ƒ(c) DESIGNATION OF LINES OF INSURANCE.—

17 ƒ(1) IN GENERAL.—The Secretary shall, by reg18 ulation, designate lines of insurance as designated

19 lines for purposes of this title, as follows:

20 ƒ(A) AUTOMOBILE.—The Secretary shall

21 designate private passenger automobile insurance

22 and shall also designate any sublines and cov23 erage types of private passenger automobile in24 surance that the Secretary considers appropriate

25 to determine and compare the availability, af-
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1 fordability, and type of coverage in such line

2 among applicable regions.

3 ƒ(B) NONCOMMERCIAL INSURANCE FOR

4 RESIDENTIAL PROPERTY.—The Secretary shall

5 designate homeowners insurance and dwelling

6 fire and allied lines, and shall distinguish the

7 coverage types in such lines by the perils covered

8 and by market or replacement value. For pur9 poses of this title, homeowners insurance shall

10 not include any renters coverage or coverage for

11 the personal property of a condominium owner.

12 ƒ(C) BID, PERFORMANCE, AND PAYMENT

13 BONDS FOR SMALL BUSINESSES.—The Secretary

14 shall designate lines, and any sublines and cov15 erage types, of bid, performance, and payment

16 bonds for small businesses, for which reporting is

17 required pursuant to section 206, that the Sec18 retary considers appropriate to determine and

19 compare the availability, affordability, and qual20 ity or type of coverage in bid, performance, and

21 payment bonds for small businesses among ap22 plicable regions.

23 ƒ(2) REPORT.—At any time the Secretary deter24 mines that any line of insurance not described in

25 paragraph (1) should be a designated line because
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1 disparities in coverage provided under such line exist

2 among geographic areas having different income levels

3 or racial composition, the Secretary shall submit a

4 report recommending designating such line of insur5 ance as a designated line for purposes of this title to

6 the Committee on Banking, Finance and Urban Af7 fairs of the House of Representatives and the appro8 priate Committees of the Senate.

9 ƒ(3) DURATION.—

10 ƒ(A) IN GENERAL.—Except as provided in

11 subparagraph (B), the Secretary shall make the

12 designations under this subsection once every 5

13 years, by regulation, and each line and subline

14 or coverage type designated under such regula15 tions shall be designated for each of the first 5

16 successive annual reporting periods occurring

17 after issuance of the regulations.

18 ƒ(B) ALTERATION.—During any 5-year pe19 riod referred to in subparagraph (A) in which

20 designations are in effect, the Secretary may

21 amend or revise the designated lines, sublines,

22 and coverage types only by regulation and only

23 in accordance with the requirements of this sub24 section. Such regulations amending or revising

25 designations shall apply only to annual report-
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1 ing periods beginning after the expiration of the

2 6-month period beginning on the date of issuance

3 of the regulations.

4 ƒ(d) TIMING OF DESIGNATIONS.—The Secretary shall

5 make the designations required by subsections (b)(4) and

6 (c)(3)(A) and notify interested parties during the 6-month

7 period ending 6 months before the commencement of the

8 first annual reporting period to which such designations

9 apply.

10 ƒ(e) OBTAINING INFORMATION.—The Secretary may

11 require insurers to submit to the Secretary such informa12 tion as the Secretary considers necessary to make designa13 tions specifically required under this title. The Secretary

14 may not require insurers to submit any information under

15 this subsection that relates to any line of insurance not spe16 cifically authorized to be designated pursuant to this title

17 or that is to be used solely for the purpose of a report under

18 subsection (c)(2).

19 ƒSEC. 216. IMPROVED METHODS AND REPORTING ON BASIS

20 OF OTHER AREAS.

21 ƒ(a) DEVELOPMENT OF IMPROVED METHODS.—The

22 Secretary shall develop, or assist in the improvement of,

23 methods of matching addresses and applicable regions to fa24 cilitate compliance by insurers, in as economical a manner

25 as possible, with the requirements of this title. The Sec-
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1 retary shall allow insurers, or statistical agents acting on

2 behalf of insurers, to match addresses and applicable re3 gions through the use of 9-digit zip codes if the Secretary

4 determines that such use will substantially reduce the cost

5 and burden to insurers of such matching without signifi6 cant adverse impact on the reliability of the matching.

7 ƒ(b) ADDRESS CONVERSION SOFTWARE.—The Sec8 retary shall make available, to any insurer required to pro9 vide information to the Secretary under this title, computer

10 software that can be used to convert addresses to applicable

11 regions within designated MSA’s. The software shall be

12 made available in forms that provide such conversion for

13 designated MSA’s on a nationwide basis and on a State14 by-State basis. The software shall be made available not less

15 than 6-months before the first annual reporting period to

16 which the reporting requirements under this title apply

17 (pursuant to section 226) and shall be updated annually.

18 The software shall be made available without charge, except

19 for an amount, determined by the Secretary, which shall

20 not exceed the actual cost of reproducing the software.

21 ƒ(c) CONVERTIBILITY.—

22 ƒ(1) AUTHORITY.—The Secretary may, by regu23 lation, provide for insurers to comply with the re24 quirements under sections 204, 205, 209(b), and 211

25 by reporting the information required under such sec-
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1 tions on the basis of geographical location other than

2 MSA and applicable region, but only if the Secretary

3 determines that information reported on such other

4 basis is convertible to the basis of MSA and applica5 ble region and such conversion does not affect the ac6 curacy of the information.

7 ƒ(2) LIMITATION.—With respect to any informa8 tion submitted on the basis of geographical location

9 other than designated MSA and applicable region

10 pursuant to paragraph (1), the Secretary may dis11 close the information only on the basis of designated

12 MSA and applicable region.

13 ƒSEC. 217. ANNUAL REPORTING PERIOD.

14 ƒ(a) IN GENERAL.—For purposes of this title, the an15 nual reporting periods shall be the 12-month periods com16 mencing in each calendar year on the same day, which shall

17 be selected under subsection (b) by the Secretary.

18 ƒ(b) SELECTION.—Not later than the expiration of the

19 6-month period beginning on the date of the enactment of

20 this Act, the Secretary shall, by regulation, select a day of

21 the year upon which all annual reporting periods shall

22 commence. In determining such day, the Secretary shall

23 consider the reporting periods used for purposes of State

24 and other insurance statistical reporting systems, in order

25 to minimize the burdens on insurers.
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1 ƒSEC. 218. DISCLOSURES BY INSURERS TO APPLICANTS

2 AND POLICYHOLDERS.

3 ƒ(a) IN GENERAL.—The Secretary shall, by regula4 tion, require the following disclosures:

5 ƒ(1) APPLICANTS.—Each insurer that, through

6 the insurer, or an agent or broker, declines a written

7 application or written request to issue an insurance

8 policy under a designated line shall provide to the ap9 plicant at the time of such declination, through such

10 insurer, agent, or broker, one of the following:

11 ƒ(A) A written explanation of the specific

12 reasons for the declination.

13 ƒ(B) Written notice that (i) the applicant

14 may submit to the insurer, agent, or broker,

15 within 90 days of such notice, a written request

16 for a written explanation of the reasons for the

17 declination, and (ii) pursuant to such a request,

18 an explanation shall be provided to the appli19 cant within 21 days after receipt of such request.

20 If an insurer, agent, or broker making a declination

21 receives a written request referred to in subparagraph

22 (B) within such 90-day period, the insurer, agent, or

23 broker shall provide a written explanation referred to

24 in such subparagraph within such 21-day period.

25 ƒ(2) POLICYHOLDERS.—Each insurer that can26 cels or refuses to renew an insurance policy under a
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1 designated line shall provide to the policyholder, in

2 writing and within an appropriate period of time as

3 determined by the Secretary, the reasons for canceling

4 or refusing to renew the policy.

5 ƒ(b) MODEL ACTS.—In issuing regulations under sub6 section (a), the Secretary shall consider relevant portions

7 of model acts developed by the National Association of In8 surance Commissioners.

9 ƒ(c) PREEMPTION.—Subsection (a) shall not be con10 strued to annul, alter, or effect, or exempt any insurer,

11 agent, or broker subject to the provisions of subsection (a)

12 from complying with any laws or requirements of any State

13 with respect to notifying insurance applicants or policy14 holders of the reasons for declination or cancellation of, or

15 refusal to renew insurance, except to the extent that such

16 laws or requirements are inconsistent with subsection (a)

17 (or the regulations issued thereunder) and then only to the

18 extent of such inconsistency. The Secretary is authorized to

19 determine whether such inconsistencies exist and to resolve

20 issues regarding such inconsistencies. The Secretary may

21 not provide that any State law or requirement is inconsist22 ent with subsection (a) if it imposes requirements equiva23 lent to the requirements under such subsection or require24 ments that are more stringent or comprehensive, in the de25 termination of the Secretary.
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1 ƒ(d) IMMUNITY.—In issuing regulations under sub2 section (a), the Secretary shall specifically consider the ne3 cessity of providing insurers, agents, and brokers immunity

4 solely for the act of conveying or communicating the reasons

5 for a declination or cancellation of, or refusal to renew in6 surance on behalf of a principal making such decision. The

7 Secretary may provide for immunity under the regulations

8 issued under subsection (a) if the Secretary determines that

9 such a provision is necessary and in the public interest,

10 except that the Secretary may not provide immunity for

11 any conduct that is negligent, reckless, or willful.

12 ƒ(e) ENFORCEMENT.—The Secretary may authorize

13 the States to enforce the requirements under regulations is14 sued under subsection (a).

15 ƒSEC. 219. ENFORCEMENT.

16 ƒ(a) CIVIL PENALTIES.—Any insurer who is deter17 mined by the Secretary, after providing opportunity for a

18 hearing on the record, to have violated any requirement

19 pursuant to this title shall be subject to a civil penalty of

20 not to exceed $5,000 for each day during which such viola21 tion continues.

22 ƒ(b) INJUNCTION.—The Secretary may bring an ac23 tion in an appropriate United States district court for ap24 propriate declaratory and injunctive relief against any in-
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1 surer who violates the requirements referred to in subsection

2 (a).

3 ƒ(c) INSURER LIABILITY.—An insurer shall be respon4 sible under subsections (a) and (b) for any violation of a

5 statistical agent acting on behalf of the insurer.

6 ƒSEC. 220. REPORTS.

7 ƒ(a) ANNUAL REPORT.—The Secretary shall annually

8 report to the Committee on Banking, Finance and Urban

9 Affairs of the House of Representatives and the appropriate

10 Committees of the Senate on the implementation of this title

11 and shall make recommendations to such Committees on

12 such additional legislation as the Secretary deems appro13 priate to carry out this title. The Secretary shall include

14 in each annual report a description of any complaints or

15 problems resulting from the implementation of this title, of

16 which the Secretary has knowledge, made by (or on behalf

17 of) insurance policyholders that concern the disclosure of

18 information regarding policyholders and any recommenda19 tions for addressing such problems. Each report shall spe20 cifically address whether granting property and casualty

21 insurance powers to other financial intermediaries would

22 significantly reduce redlining and other discriminatory in23 surance practices and the Secretary shall consult with the

24 appropriate financial institution regulators regarding such

25 issues in preparing the report.
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1 ƒ(b) GAO REPORTS.—

2 ƒ(1) IN GENERAL.—The Comptroller General of

3 the United States shall submit a report under this

4 subsection to the Secretary and the Congress for each

5 5-year period referred to in sections 207(c)(2) and

6 215(a)(2), which contains information to be used by

7 the Secretary in implementing this title during such

8 period.

9 ƒ(2) TIMING.—The report under this subsection

10 for each such 5-year period shall be submitted not

11 later than the date occurring 18 months before the

12 commencement of the period to which the report re13 lates.

14 ƒ(3) CONTENTS.—A report under this subsection

15 shall include the following information:

16 ƒ(A) An analysis of the adequacy of the im17 plementation of this title and any recommenda18 tions of the Comptroller General for improving

19 the implementation.

20 ƒ(B) The costs to the Federal Government,

21 insurers, and consumers of implementing and

22 complying with this title.

23 ƒ(C) Any beneficial or harmful effects re24 sulting from the requirements of this title.
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1 ƒ(D) An analysis of whether, considering

2 the purposes of this title, insurers are required

3 by this title (or by implementing regulations) to

4 submit appropriate information.

5 ƒ(E) An analysis of whether sufficient evi6 dence exists of patterns of disparities in the

7 availability, affordability, and quality or type of

8 insurance coverage to warrant continued appli9 cability of the requirements of this title.

10 ƒ(F) An analysis of whether the group of

11 designated MSA’s in effect at the time of the re12 port are appropriate for purposes of this title.

13 ƒ(G) Specific recommendations, for use by

14 the Secretary in designating MSA’s for the 5-

15 year period for which the report is made, with

16 regard to—

17 ƒ(i) the characteristics of MSA’s that

18 should be included in the group of des19 ignated MSA’s;

20 ƒ(ii) the number of MSA’s that should

21 be included in the group;

22 ƒ(iii) the number of MSA’s having

23 each particular characteristic that should be

24 included in the group; and
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1 ƒ(iv) the characteristics of MSA’s, and

2 number of MSA’s having each such char3 acteristic, that should be removed from the

4 group of designated MSA’s in effect at the

5 time of the report.

6 ƒ(H) With respect only to the first report

7 required under this subsection, recommendations

8 of whether the study conducted under section 205

9 should be continued beyond the date in section

10 205(b)(8) and, if so, whether the requirements re11 garding the submission of information under the

12 study should be expanded or changed with re13 spect to insurers, MSA’s, lines, sublines or cov14 erage types of insurance, and types of small

15 businesses, or whether the study should be al16 lowed to terminate under law.

17 ƒ(I) An analysis of whether the group of

18 designated rural areas in effect at the time of the

19 report are appropriate for purposes of this title.

20 ƒ(J) Specific recommendations, for use by

21 the Secretary in designating rural areas for pur22 poses of section 207 for the 5-year period for

23 which the report is made, with regard to—
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1 ƒ(i) the characteristics of rural areas

2 that should be included in the group of des3 ignated rural areas under such section;

4 ƒ(ii) the number of rural areas having

5 each particular characteristic that should be

6 included in the group; and

7 ƒ(iii) the characteristics of rural areas,

8 and number of rural areas having each such

9 characteristic, that should be removed from

10 the group of designated rural areas in effect

11 at the time of the report.

12 ƒ(K) Any other information or rec13 ommendations relating to the requirements or

14 implementation of this title that the Comptroller

15 General considers appropriate.

16 ƒ(4) CONSULTATION.—In preparing each report

17 under this subsection, the Comptroller General shall

18 consult with Federal agencies having appropriate ex19 pertise, the National Association of Insurance Com20 missioners, State insurance regulators, statistical

21 agents, representatives of small businesses, representa22 tives of insurance agents (including minority insur23 ance agents) and property and casualty insurers, and

24 community, consumer, and civil rights organizations.
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1 ƒSEC. 221. TASK FORCE ON AGENCY APPOINTMENTS.

2 ƒ(a) ESTABLISHMENT.—Not later than 90 days after

3 the date of the enactment of this Act, the Secretary shall

4 establish a task force on insurance agency appointments.

5 The task force shall—

6 ƒ(1) consist of representatives of appropriate

7 Federal agencies, property and casualty insurance

8 agents, including specifically minority insurance

9 agents, property and casualty insurers, State insur10 ance regulators, and community, consumer, and civil

11 rights organizations;

12 ƒ(2) have a significant representation from mi13 nority insurance agents; and

14 ƒ(3) be chaired by the Secretary or the Sec15 retary’s designee.

16 ƒ(b) FUNCTION.— The task force shall—

17 ƒ(1) review the problems inner city and minor18 ity agents may have in receiving appointments to

19 represent property and casualty insurers and consider

20 the effects such problems have on the availability, af21 fordability, and quality or type of insurance, espe22 cially in underserved areas;

23 ƒ(2) review the practices of insurers in termi24 nating agents and consider the effects such practices

25 have on the availability, affordability, and quality or
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1 type of insurance, especially in underserved areas;

2 and

3 ƒ(3) recommend solutions to improve the ability

4 of inner city and minority insurance agents to mar5 ket property and casualty insurance products, includ6 ing steps property and casualty insurers should take

7 to increase their appointments of such agents.

8 ƒ(c) REPORT AND TERMINATION.—The task force shall

9 report to the Committee on Banking, Finance and Urban

10 Affairs of the House of Representatives and the appropriate

11 Committees of the Senate its findings under paragraphs (1)

12 and (2) of subsection (b) and its recommendations under

13 paragraph (3) of subsection (b) not later than 2 years after

14 the date of the enactment of this Act. The task force shall

15 terminate when the report is submitted to the Committees.

16 ƒSEC. 222. STUDIES.

17 ƒ(a) STUDY OF INSURANCE PRESCREENING.—

18 ƒ(1) IN GENERAL.—The Secretary shall conduct

19 a study to determine the feasibility and utility of re20 quiring insurers to report information with respect to

21 the characteristics of applicants for insurance and

22 reasons for rejection of applicants. The study shall ex23 amine the extent to which—

24 ƒ(A) oral applications or representations

25 are used by insurers and agents in making deter-
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1 minations regarding whether or not to insure a

2 prospective insured;

3 ƒ(B) written applications are used by in4 surers and agents in making determinations re5 garding whether or not to insure a prospective

6 insured;

7 ƒ(C) written applications are submitted

8 after the insurer or agent has already made a

9 determination to provide insurance to a prospec10 tive insured or has determined that the prospec11 tive insured is eligible for insurance; and

12 ƒ(D) prospective insureds are discouraged

13 from submitting applications for insurance

14 based, in whole or in part, on—

15 ƒ(i) the location of the risk to be in16 sured;

17 ƒ(ii) the racial characteristics of the

18 prospective insured;

19 ƒ(iii) the racial composition of the

20 neighborhood in which the risk to be insured

21 is located; and

22 ƒ(iv) in the case of residential prop23 erty insurance, the age and value of the risk

24 to be insured.
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1 ƒ(2) REPORT.—The Secretary shall report the

2 results of the study under paragraph (1) to the Com3 mittee on Banking, Finance and Urban Affairs of the

4 House of Representatives and the appropriate Com5 mittees of the Senate not later than 2 years after the

6 date of the enactment of this Act. The report shall in7 clude recommendations of the Secretary (A) with re8 spect to requiring insurers to report on the disposi9 tion of oral and written applications for insurance,

10 and (B) for any legislation that the Secretary consid11 ers appropriate regarding the issues described in the

12 report.

13 ƒ(b) STUDY OF INSURER ACTIONS TO MEET INSUR14 ANCE NEEDS OF CERTAIN NEIGHBORHOODS.—The Sec15 retary shall conduct a study of various practices, actions,

16 and methods undertaken by insurers to meet the property

17 and casualty insurance needs of residents of low- and mod18 erate-income neighborhoods, minority neighborhoods, and

19 small businesses located in such neighborhoods. The Sec20 retary shall report the results of the study, including any

21 recommendations, to the Committee on Banking, Finance

22 and Urban Affairs of the House of Representatives and the

23 appropriate Committees of the Senate not later than 2 years

24 after the date of the enactment of this Act.

25 ƒ(c) STUDY OF DISPARATE CLAIMS TREATMENT.—
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1 ƒ(1) IN GENERAL.—The Secretary shall conduct

2 a study to determine whether, and the extent to

3 which, insurers engage in disparate treatment in han4 dling claims of policyholders under designated lines of

5 insurance based on the race, gender, and income level

6 of the policyholder, and on the racial characteristics

7 and income levels of the area in which the insured

8 risk is located. In conducting the study, the Secretary

9 shall specifically consider whether residents of low-in10 come neighborhoods or areas and minority neighbor11 hoods or areas are more likely than residents of other

12 areas to have their claims contested or their insurance

13 coverage canceled.

14 ƒ(2) REPORT.—The Secretary shall submit a re15 port on the results of the study to the Committee on

16 Banking, Finance and Urban Affairs of the House of

17 Representatives and the appropriate Committees of

18 the Senate not later than 2 years after the date of the

19 enactment of this Act.

20 ƒ(d) STUDY OF RATING TERRITORIES.—The Secretary

21 shall conduct a study to determine whether the practice in

22 the insurance industry of basing insurance premium

23 amounts on the territory in which the insured risk is lo24 cated has a disparate impact on the availability, afford25 ability, or quality of insurance by race, gender, or type of
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1 neighborhood. The Secretary shall submit a report on the

2 results of the study to the Committee on Banking, Finance

3 and Urban Affairs of the House of Representatives and the

4 appropriate Committees of the Senate not later than 12

5 months after the date of the enactment of this Act.

6 ƒ(e) STUDY OF INSURER REINVESTMENT REQUIRE7 MENTS.—

8 ƒ(1) IN GENERAL.—The Secretary shall conduct

9 a study to determine the feasibility of requiring in10 surers to reinvest in communities and neighborhoods

11 from which they collect premiums for insurance and

12 whether, and the extent to which, community reinvest13 ment requirements for insurers should be established

14 that are comparable to the community reinvestment

15 requirements applicable to depository institutions.

16 The Secretary shall consult with representatives of in17 surers and consumer, community, and civil rights or18 ganizations regarding the results of the study and

19 any recommendations to be made based on the results

20 of the study.

21 ƒ(2) REPORT.—The Secretary shall report the

22 results of the study, including any such recommenda23 tions, to the Committee on Banking, Finance and

24 Urban Affairs of the House of Representatives and the

25 appropriate Committees of the Senate not later than
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1 6 months after the conclusion of the first annual re2 porting period to which the reporting requirements

3 under this title apply (pursuant to section 226).

4 ƒSEC. 223. EXEMPTION AND RELATION TO STATE LAWS.

5 ƒ(a) EXEMPTION FOR UNITED STATES PROGRAMS.—

6 Reporting shall not be required under this title with respect

7 to insurance provided by any program underwritten or ad8 ministered by the United States.

9 ƒ(b) RELATION TO STATE LAWS.—This title does not

10 annul, alter, or affect, or exempt the obligation of any in11 surer subject to this title to comply with the laws of any

12 State or subdivision thereof with respect to public disclo13 sure, submission of information, and recordkeeping.

14 ƒSEC. 224. REGULATIONS.

15 ƒ(a) IN GENERAL.—The Secretary shall issue any reg16 ulations required under this title and any other regulations

17 that may be necessary to carry out this title. The regula18 tions shall be issued through rulemaking in accordance with

19 the procedures under section 553 of title 5, United States

20 Code, for substantive rules. Except as otherwise provided

21 in this title, such final regulations shall be issued not later

22 than the expiration of the 18-month period beginning on

23 the date of the enactment of this Act.

24 ƒ(b) BURDENS.—In prescribing such regulations, the

25 Secretary shall take into consideration the administrative,
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1 paperwork, and other burdens on insurance agents, includ2 ing independent insurance agents, involved in complying

3 with the requirements of this title and shall minimize the

4 burdens imposed by such requirements with respect to such

5 agents.

6 ƒSEC. 225. DEFINITIONS.

7 ƒFor purposes of this title:

8 ƒ(1) AGENT.—The term ‘‘agent’’ means, with re9 spect to an insurer, an agent licensed by a State who

10 sells property and casualty insurance. The term in11 cludes agents who are employees of the insurer, agents

12 who are independent contractors working exclusively

13 for the insurer, and agents who are independent con14 tractors appointed to represent the insurer on a

15 nonexclusive basis.

16 ƒ(2) APPLICABLE REGION.—The term ‘‘applica17 ble region’’ means, with respect to a designated

18 MSA—

19 ƒ(A) for any county located within the

20 MSA that has a population of more than 30,000,

21 the applicable census tract within the county; or

22 ƒ(B) for any county located within the

23 MSA that has a population of 30,000 or less, the

24 applicable county.
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1 ƒ(3) COMMERCIAL INSURANCE.—The term ‘‘com2 mercial insurance’’ means any line of property and

3 casualty insurance, except private passenger auto4 mobile, homeowner’s insurance and dwelling fire and

5 allied lines, and other personal lines of insurance.

6 ƒ(4) DESIGNATED INSURER.—The term ‘‘des7 ignated insurer’’ means, with respect to a designated

8 line, an insurer designated for a State by the Sec9 retary under section 215(b) as a designated insurer

10 for such line or any insurer that is part of an insurer

11 group selected under such section.

12 ƒ(5) DESIGNATED INVESTMENT.—The term ‘‘des13 ignated investment’’ means making or purchasing a

14 loan for the purchase of commercial real estate, mak15 ing or purchasing a mortgage loan for the purchase

16 of a 1- to 4-family dwelling, making or purchasing

17 a commercial or industrial loan, or making any other

18 investment designated by the Secretary under section

19 211(b).

20 ƒ(6) DESIGNATED LINE.—The term ‘‘designated

21 line’’ means a line of insurance or bid, performance,

22 and payment bonds designated by the Secretary

23 under section 215(c).

24 ƒ(7) EXPOSURES.—The term ‘‘exposures’’ means,

25 for purposes of section 204, with respect to an insur-
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1 ance policy, an expression of an exposure unit covered

2 under the policy compared to the duration of the pol3 icy (pursuant to standards established by the Sec4 retary for uniform reporting of exposures).

5 ƒ(8) EXPOSURE UNITS.—The term ‘‘exposure

6 units’’ means, for purposes of section 204, an auto7 mobile or dwelling covered under an insurance policy

8 for private passenger automobile or homeowners or

9 dwelling fire and allied lines coverage.

10 ƒ(9) INSURANCE.—The term ‘‘insurance’’ means

11 property and casualty insurance. Such term includes

12 primary insurance, surplus lines insurance, and any

13 other arrangement for the shifting and distributing of

14 risks that is determined to be insurance under the law

15 of any State in which the insurer or insurer group

16 engages in an insurance business.

17 ƒ(10) INSURER.—Except with respect to section

18 209, the term ‘‘insurer’’ means any corporation, asso19 ciation, society, order, firm, company, mutual, part20 nership, individual, aggregation of individuals, or

21 any other legal entity that is authorized to transact

22 the business of property or casualty insurance in any

23 State or that is engaged in a property or casualty in24 surance business. With respect to section 206, the term

25 means any person authorized to transact the business
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1 of bid, performance, and payment bonds for small

2 businesses. The term includes any certified foreign di3 rect insurer under title I, but does not include an in4 dividual or entity which represents an insurer as

5 agent solely for the purpose of selling or which rep6 resents a consumer as a broker solely for the purpose

7 of buying insurance.

8 ƒ(11) ISSUED.—The term ‘‘issued’’ means, with

9 respect to an insurance policy, newly issued or re10 newed.

11 ƒ(12) JOINT UNDERWRITING ASSOCIATION.—The

12 term ‘‘joint underwriting association’’ means an un13 incorporated association of insurers established to

14 provide a particular form of insurance to the public.

15 ƒ(13) MORTGAGE INSURANCE.—The term ‘‘mort16 gage insurance’’ means insurance against the

17 nonpayment of, or default on, a mortgage or loan for

18 residential or commercial property.

19 ƒ(14) MSA.—The term ‘‘MSA’’ means a Metro20 politan Statistical Area or a Primary Metropolitan

21 Statistical Area.

22 ƒ(15) PRIVATE MORTGAGE INSURANCE.—The

23 term ‘‘private mortgage insurance’’ means mortgage

24 insurance other than mortgage insurance made avail25 able under the National Housing Act, title 38 of the
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1 United States Code, or title V of the Housing Act of

2 1949.

3 ƒ(16) PROPERTY AND CASUALTY INSURANCE.—

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

5 insurance against loss of or damage to property, in6 surance against loss of income or extra expense in7 curred because of loss of, or damage to, property, and

8 insurance against third party liability claims caused

9 by negligence or imposed by statute or contract. Such

10 term does not include workers’ compensation, profes11 sional liability, or title insurance.

12 ƒ(17) RESIDUAL MARKET.—The term ‘‘residual

13 market’’ means an assigned risk plan, joint under14 writing association, or any similar mechanism de15 signed to make insurance available to those unable to

16 obtain it in the voluntary market. The term includes

17 each statewide plan under part A of title XII of the

18 National Housing Act to assure fair access to insur19 ance requirements.

20 ƒ(18) RURAL AREA.—The term ‘‘rural area’’

21 means any area that—

22 ƒ(A) has a population of 10,000 or more;

23 ƒ(B) has a continuous boundary; and

24 ƒ(C) contains only areas that are rural

25 areas, as such term is defined in section 520 of
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1 the Housing Act of 1949 (except that clause

2 (3)(B) of such section 520 shall not apply for

3 purposes of this title).

4 ƒ(19) SECRETARY.—The term ‘‘Secretary’’

5 means the Secretary of Housing and Urban Develop6 ment.

7 ƒ(20) STATE.—The term ‘‘State’’ means any

8 State, the District of Columbia, the Commonwealth of

9 Puerto Rico, the Northern Mariana Islands, the Vir10 gin Islands, American Samoa, and the Trust Terri11 tory of the Pacific Islands.

12 ƒSEC. 226. EFFECTIVE DATE.

13 ƒThe requirements of this title relating to reporting

14 of information by insurers shall take effect with respect to

15 the first annual reporting period that begins more than 36

16 months after the date of the enactment of this Act.

øAmend the title so as to read: ‘‘A bill to establish

minimum standards applicable to foreign insurers and reinsurers providing insurance in the United States, and

provide for public access to information regarding the

availability of insurance, and for other purposes.’’.¿

17 SECTION 1. SHORT TITLE.

18 This Act may be cited as the ‘‘Anti Redlin19 ing in Insurance Disclosure Act’’.

20 SEC. 2. FINDINGS AND CONSTRUCTION.

21 (a) FINDINGS.—The Congress finds that—
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1 (1) disparities in property and cas2 ualty insurance coverage provided by in3 surers engaged in interstate commerce

4 between areas of different incomes and

5 racial composition could adversely affect

6 interstate commerce and the cost and

7 availability of insurance for consumers,

8 and

9 (2) appropriate disclosures of infor10 mation by insurers would benefit con11 sumers and insurance regulators.

12 (b) CONSTRUCTION.—Nothing in this Act is

13 intended to, nor shall it be construed to, en14 courage unsound underwriting practices.

15 SEC. 3. MAINTENANCE OF INFORMATION AND PUBLIC DIS16 CLOSURE.

17 (a) GENERAL RULE.—

18 (1) DESIGNATED INSURERS.—

19 (A) IN GENERAL.—Except as pro20 vided by subsection (b)(7), each des21 ignated insurer shall, in accordance

22 with subsection (b), annually compile,

23 submit to the Secretary, and make

24 available to the public for each cal-
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1 endar year and for designated lines of

2 insurance in a designated MSA—

3 (i) the total number of poli4 cies, total exposure units (in car

5 years and house years), and total

6 earned premium of insurance

7 policies by designated line which

8 were issued by such insurer and

9 the new written exposure units,

10 exposure units canceled, and the

11 exposure units not renewed by

12 such insurer, and

13 (ii) the number of licensed

14 agents of such insurer whose

15 principal place of business is lo16 cated in such designated MSA

17 and the number within each 5-

18 digit zip code in such designated

19 MSA and with respect to each

20 such agent, whether such agent is

21 an employee, independent con22 tractor working exclusively for

23 such insurer, or an independent

24 contractor appointed to represent
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1 such insurer on a non-exclusive

2 basis.

3 (B) SUBMISSIONS AND AVAILABIL4 ITY.—The information described in

5 subparagraph (A) shall be—

6 (i) submitted to the Secretary

7 in accordance with subsection (d),

8 and

9 (ii) made available to the pub10 lic, in accordance with subsection

11 (b)(2), for inspection and copying,

12 at cost, at the home office of the

13 insurer and at a central deposi14 tory, established under sub15 section (c), by the Secretary.

16 (2) NON-DESIGNATED INSURERS.—Except

17 as provided in subsection (b)(7), every in18 surer which sells an insurance policy in a

19 designated line of insurance in a des20 ignated MSA and which is not a des21 ignated insurer in such MSA shall submit

22 to the Secretary for each calendar year in

23 accordance with subsection (d) and regu24 lations of the Secretary the total expo25 sure units (in car years and house years)
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1 of insurance policies in a designated line

2 sold in such MSA. With respect to such

3 policies, the insurer shall report the des4 ignated MSA where the insured risks are

5 located for which such insurance is is6 sued and within such MSA report the 5-

7 digit zip code where the risk is located.

8 (b) REQUIREMENTS.—

9 (1) CONTENT.—The information re10 quired to be maintained and made avail11 able under subsection (a)(1) shall be item12 ized in order to clearly and conspicu13 ously disclose the policies, the exposure

14 units, and the premium amount for each

15 line of insurance for which information is

16 required and be itemized by the 5-digit

17 zip code where the risks are located.

18 (2) AVAILABILITY TO THE PUBLIC.—The

19 information required to be maintained

20 and made available under subsection (a)

21 shall be made available to the public on

22 a timetable determined by the Secretary

23 but not later than October 1 of the cal24 endar year following the calendar year

25 for which the information is required to
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1 be made available, except that such infor2 mation shall not be made available to the

3 public until it is available in its entirety

4 but it shall be made available if not all

5 the information required to be reported

6 is available on such October 1 or on the

7 date determined by the Secretary.

8 (3) SPECIFICATION OF DATA.—

9 (A) IN GENERAL.—With respect to

10 information which is required to be

11 maintained and made available under

12 subsection (a)(1), the Secretary shall

13 by regulation establish specifications

14 for the collection and public report15 ing of such information with respect

16 to the following lines of insurance:

17 private passenger automobile, home18 owners, and dwelling fire and allied

19 lines. The specifications shall—

20 (i) provide that information

21 be aggregated among similar pol22 icyholders and reported on that

23 basis,

24 (ii) be designed to collect in25 formation with respect to the
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1 availability, cost, and type of in2 surance coverage between and

3 among various geographic areas,

4 (iii) detail what data elements

5 should be collected,

6 (iv) provide for the collection

7 of information on an individual

8 insurer basis,

9 (v) minimize burdens on in10 surance agents, including inde11 pendent insurance agents,

12 (vi) provide the data required

13 by clause (ii) with the least bur14 den on insurers, particularly

15 small insurers,

16 (vii) take into account the

17 types of data collected under the

18 Home Mortgage Disclosure Act of

19 1975,

20 (viii) take into account exist21 ing statistical reporting systems

22 in the insurance industry,

23 (ix) require itemization by 5-

24 digit zip code, and
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1 (x) include information on

2 policies written in a residual mar3 ket.

4 (B) CONSULTATIONS.—In develop5 ing the specifications in subpara6 graph (A), the Secretary shall consult

7 with—

8 (i) other Federal agencies

9 with appropriate expertise,

10 (ii) State insurance regu11 lators,

12 (iii) representatives of the in13 surance industry, including sta14 tistical agents,

15 (iv) representatives of insur16 ance producers, including minor17 ity insurance producers, and

18 (v) consumer, community, and

19 civil rights groups who are rep20 resentative of a diversity of geo21 graphic locations.

22 (C) EFFECTIVE DATE.—The regula23 tion under subparagraph (A) shall be

24 issued no later than 270 days after

25 the date of the enactment of this Act.
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1 (4) COMMERCIAL INSURANCE STUDY AND

2 PILOT PROJECT.—

3 (A) STUDY.—The Secretary shall

4 conduct a study regarding the avail5 ability of commercial insurance

6 (other than professional liability in7 surance, workers compensation in8 surance, and title insurance) with

9 special emphasis on the availability

10 of commercial insurance for small

11 business. The study shall focus on—

12 (i) an appropriate definition

13 for small business; and

14 (ii) preliminary views regard15 ing the availability, cost, and type

16 of insurance coverage for small

17 business, which may be based on

18 surveys of members of the small

19 business community.

20 In conducting the study, the Sec21 retary shall consult with interested

22 parties from a diversity of locations,

23 including State insurance regulators,

24 consumer, community, and civil

25 rights groups, representatives of
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1 small business, representatives of the

2 insurance industry, including statis3 tical agents, and representatives of

4 insurance producers, including mi5 nority insurance producers. The Sec6 retary shall submit a report detailing

7 the findings of the study to the Com8 mittee on Energy and Commerce of

9 the House of Representatives and the

10 appropriate committee of the Senate

11 no later than 18 months following the

12 date of enactment of this Act.

13 (B) PROPOSAL OF PILOT PROJECT.—

14 Concurrent with the conduct of the

15 study under subparagraph (A), the

16 Secretary shall develop a proposed

17 data collection pilot project in the 5

18 largest MSA’s to help determine the

19 need for any further data collection

20 requirements to evaluate the avail21 ability, cost, and type of insurance

22 coverage for small business. In devel23 oping the proposed pilot project, the

24 Secretary shall consult with inter25 ested parties from a diversity of loca-
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1 tions, including State insurance regu2 lators, consumer, community, and

3 civil rights groups, representatives of

4 small business, representatives of the

5 insurance industry, including statis6 tical agents, and representatives of

7 insurance producers, including mi8 nority insurance producers. The Sec9 retary shall submit a specific pro10 posal for a pilot project to the Com11 mittee on Energy and Commerce of

12 the House of Representatives and the

13 appropriate committee of the Senate

14 no later than 18 months following the

15 date of enactment of this Act.

16 (C) SPECIFICATIONS FOR PILOT

17 PROJECT.—Immediately following the

18 submission of the proposal for a pilot

19 project, the Secretary shall, by regu20 lation, establish specifications for the

21 collection and public reporting of in22 formation with respect to commercial

23 insurance for the proposed pilot

24 project. As part of the specifications,

25 the Secretary shall designate the 5
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1 largest MSA’s for purposes of the

2 pilot project. The specifications

3 shall—

4 (i) provide that information

5 be aggregated among similar pol6 icyholders and reported on that

7 basis,

8 (ii) be designed to collect in9 formation with respect to the

10 availability, cost, and type of in11 surance coverage between and

12 among various geographic areas,

13 (iii) provide for the collection

14 of information on an individual

15 insurer basis,

16 (iv) provide the data required

17 by clause (ii) with the least bur18 den on insurers, particularly

19 small insurers, and insurance

20 agents, including independent in21 surance agents,

22 (v) take into account existing

23 statistical reporting systems in

24 the insurance industry and use
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1 existing data sources to the maxi2 mum practical extent,

3 (vi) include information on

4 policies written in a residual mar5 ket,

6 (vii) detail what data ele7 ments should be collected,

8 (viii) detail what insurers

9 should be designated insurers for

10 purposes of the pilot project,

11 (ix) detail what lines of com12 mercial insurance should be des13 ignated for purposes of the pilot

14 project, with particular consider15 ation given to commercial fire

16 and business owners lines,

17 (x) include an appropriate

18 definition of small business, if

19 necessary,

20 (xi) provide data representa21 tive of at least 2 years of experi22 ence and provide that the pilot

23 project will terminate no later

24 than 2 years after its inception,

25 and
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1 (xii) provide adequate lead

2 time to insurers designated under

3 clause (viii) for the reporting to

4 begin.

5 The regulation shall be issued within

6 2 years of the date of enactment of

7 this Act.

8 (D) REPORTING UNDER PILOT

9 PROJECT.—Insurers designated under

10 subparagraph (C)(viii) shall report to

11 the Secretary with respect to lines of

12 insurance designated under subpara13 graph (C)(ix) in the 5 largest MSA’s,

14 pursuant to the regulation issued by

15 the Secretary in subparagraph (C).

16 (E) ANALYSIS OF DATA UNDER PILOT

17 PROJECT.—At the conclusion of the

18 pilot project, the Secretary shall ana19 lyze the data collected. Within 1 year

20 of the conclusion of the pilot project,

21 the Secretary shall report to the Com22 mittee on Energy and Commerce of

23 the House of Representatives and the

24 appropriate committee of the Senate

25 on—
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1 (i) any conclusions of the Sec2 retary regarding the data col3 lected under the pilot project,

4 particularly regarding the avail5 ability, cost, and type of commer6 cial insurance for small business,

7 and

8 (ii) the need for further data

9 collection requirements to evalu10 ate the availability, cost, and type

11 of such coverage or to help en12 sure the availability of such cov13 erage.

14 (5) PERIOD OF MAINTENANCE.—Any in15 formation required to be compiled and

16 made available under subsection (a) shall

17 be maintained and made available for a

18 period of 3 years after the close of the

19 first year during which such information

20 is required to be maintained and made

21 available.

22 (6) FORMAT FOR DISCLOSURES.—Subject

23 to subsection (c), the Secretary shall pre24 scribe a standard format for making in25 formation available as required by sub-
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1 section (a). Such format shall encourage

2 the submission of information in a form

3 readable by a computer.

4 (7) EXEMPTION.—

5 (A) SECRETARIAL ACTION.—If the

6 Secretary determines that a State has

7 enacted a law, or otherwise imple8 mented a requirement under which—

9 (i) insurers operating in that

10 State are subject to disclosure re11 quirements on a 5-digit zip code

12 basis substantially similar to

13 those of subsection (a),

14 (ii) there are adequate provi15 sions for enforcement, and

16 (iii) the information disclosed

17 under the State law or require18 ment is made available to the Sec19 retary and the public in a manner

20 similar to other information dis21 closed under subsection (a),

22 then the Secretary shall by regulation

23 exempt insurers operating in that

24 State from complying with the re25 quirements of subsection (a) with re-
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1 spect to that State’s portions of the

2 designated MSA’s. If the Secretary de3 termines that the State law or re4 quirement no longer meets the cri5 teria of clauses (i) through (iii) or is

6 no longer in effect, the Secretary

7 shall by regulation revoke the exemp8 tion.

9 (B) UNITED STATES PROGRAM.—Re10 porting shall not be required under

11 subsection (a) with respect to insur12 ance provided by a program under13 written or administered by the Unit14 ed States.

15 (c) PUBLIC ACCESS SYSTEM.—The Secretary

16 shall implement a system to facilitate public

17 access to information required to be made

18 available to the public under subsection (a).

19 Such system shall include arrangements for a

20 central depository of information in each des21 ignated MSA and for a telephone number

22 which can be used by the public, at cost, to

23 request such information. Statements shall be

24 made available to the public for inspection

25 and copying at such central depository of in-
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1 formation for all designated insurers within

2 such MSA. The Secretary shall also make cop3 ies of such statements available in forms read4 able by widely used personal computers, such

5 as in disc format. The Secretary may charge

6 a fee for such information, which may not ex7 ceed the amount, determined by the Sec8 retary, that is equal to the cost of reproducing

9 the information.

10 (d) SUBMISSION TO SECRETARY.—With re11 spect to the information required to be sub12 mitted under subsection (a) to the Secretary,

13 the Secretary shall develop regulations pre14 scribing the format and method for submit15 ting such information. Such regulations shall

16 ensure uniformity among insurers, to the ex17 tent practicable, in the format used for re18 porting, including the definitions of data ele19 ments. Any reporting insurer may submit in

20 writing to the Secretary such additional data

21 or explanations as it deems relevant to the de22 cision by such insurer to sell insurance.

23 SEC. 4. DESIGNATIONS.

24 (a) DESIGNATIONS BY THE SECRETARY.—
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1 (1) DESIGNATIONS OF MSA’S.—The Sec2 retary shall designate the MSA’s for

3 which reporting is required under sec4 tion 3(a). The Secretary shall designate

5 the 25 MSA’s having the largest popu6 lation.

7 (2) DESIGNATION OF INSURERS.—For

8 each MSA designated under paragraph

9 (1), the Secretary shall take the following

10 actions:

11 (A) The Secretary shall designate

12 the insurers transacting insurance

13 business in such MSA for which re14 porting is required under section

15 3(a). At a minimum, the Secretary

16 shall designate the 25 insurers in

17 such MSA having the largest pre18 mium volume in the designated lines

19 of insurance in each State in which

20 such MSA is located.

21 (B) In addition to the insurers

22 designated under subparagraph (A),

23 the Secretary shall also designate any

24 entity primarily providing insurance

25 in a designated line of insurance as
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1 part of a residual market established

2 by State law.

3 (C) The Secretary shall also des4 ignate, in addition to the insurers

5 designated under subparagraphs (A)

6 and (B), insurers who specialize in

7 selling insurance in urban areas, in8 cluding surplus lines insurers.

9 (D) The Secretary shall also des10 ignate, in addition to the insurers

11 designated under subparagraph (A),

12 (B), and (C) insurers such that insur13 ers representing at least 80 percent of

14 the premium volume in each State in

15 which such MSA is located in the des16 ignated line of insurance are des17 ignated in such MSA. The Secretary

18 may not designate additional insurers

19 under this subparagraph if their mar20 ket share in the designated line of in21 surance in the applicable States, as

22 measured by premium volume in

23 each State in which such MSA is lo24 cated, is under 1 percent.
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1 (E) In addition to the insurers

2 designated under subparagraph (A),

3 (B), (C), and (D) the Secretary may by

4 regulation designate additional insur5 ers in a MSA if the designation of ad6 ditional insurers is necessary to pro7 vide valid data with respect to the

8 availability, cost, and type of insur9 ance in the MSA.

10 (F) The Secretary shall revoke the

11 designation of an insurer designated

12 under subparagraph (A) as follows: If

13 such designated insurer has a market

14 share in a designated line of insur15 ance in a MSA, as measured by pre16 mium volume in each State in which

17 such MSA is located, of under 1 per18 cent, the Secretary shall revoke the

19 designation of such insurer beginning

20 with the insurer with the smallest

21 market share of such insurance if the

22 remainder of the designated insurers

23 have a market share of at least 75

24 percent of such insurance as meas25 ured by premium volume in each
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1 State in which such MSA is located.

2 In addition, the Secretary may revoke

3 the designation of any insurer des4 ignated under subparagraph (A) with

5 a market share in a designated line of

6 insurance in a MSA, as measured by

7 premium volume in each State in

8 which such MSA is located, of under

9 1 percent if such designation has not

10 been revoked under this subpara11 graph and if such insurer primarily

12 sells insurance in rural areas of such

13 MSA.

14 (G) For purposes of this para15 graph, insurers which are affiliated

16 or are members of the same group

17 shall be considered together as one

18 insurer.

19 (3) DESIGNATION OF LINES OF INSUR20 ANCE.—For each MSA designated under

21 paragraph (1) the following are the des22 ignated lines of property and casualty in23 surance for which reporting is required

24 under section 3:
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1 (A) Private passenger automobile

2 insurance.

3 (B) Homeowners insurance.

4 (C) Dwelling fire and allied lines

5 of insurance.

6 (4) TIMING OF DESIGNATIONS.—

7 (A) INITIAL DESIGNATIONS.—The

8 Secretary shall make initial designa9 tions required by paragraphs (1), (2),

10 and (3) no later than July 1 of the

11 year preceding the first year for

12 which reporting is required under

13 section 3. Such initial designations

14 shall be effective for 5 calendar years

15 from the date of designation.

16 (B) SUBSEQUENT DESIGNATIONS.—

17 Not later than July 1 of the year pre18 ceding the fifth year after a designa19 tion under subparagraph (A) or this

20 subparagraph, the Secretary shall

21 make another designation to be effec22 tive upon the expiration of such 5

23 years and such designation shall be

24 effective for 5 calendar years from

25 the date of designation.
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1 (C) NOTICE.—The Secretary shall

2 notify persons involved in the des3 ignations no later than the July 15

4 which follows the designation.

5 (b) OBTAINING INFORMATION.—The Sec6 retary may obtain from insurers such infor7 mation as the Secretary may require to make

8 designations under subsection (a).

9 SEC. 5. TASK FORCE ON AGENCY APPOINTMENTS.

10 (a) ESTABLISHMENT.—Within 90 days of the

11 date of the enactment of this Act, the Sec12 retary shall establish a task force on insur13 ance agency appointments. The task force

14 shall—

15 (1) consist of representatives of ap16 propriate Federal agencies, property and

17 casualty insurance agents, including spe18 cifically minority insurance agents, prop19 erty and casualty insurance companies,

20 State insurance regulators, and public in21 terest groups,

22 (2) have a significant representation

23 from minority insurance agents, and

24 (3) be chaired by the Secretary or the

25 Secretary’s designee.
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1 (b) FUNCTION.— The task force shall—

2 (1) review the problems inner city

3 and minority agents may have in receiv4 ing appointments to represent property

5 and casualty insurance companies,

6 (2) review the practices of insurers in

7 terminating agents and consider the ef8 fect such practices have on the availabil9 ity or cost of insurance, especially in un10 derserved areas, and

11 (3) recommend solutions to improve

12 the ability of inner city and minority in13 surance agents to market property and

14 casualty insurance products, including

15 steps property and casualty insurance

16 companies should take to increase their

17 appointments of such agents.

18 (c) REPORT AND TERMINATION.—The task

19 force shall report to the Committee on Energy

20 and Commerce of the House of Representa21 tives and the appropriate Committee of the

22 Senate its findings under paragraphs (1) and

23 (2) of subsection (b) and its recommendations

24 under paragraph (3) of subsection (b) within

25 2 years after the date of the enactment of this
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1 Act. The task force shall terminate when the

2 report is submitted to the Committees.

3 SEC. 6. IMPLEMENTATION OF SECTION 3.

4 (a) REGULATIONS.—The Secretary shall

5 promulgate such regulations as may be nec6 essary to carry out section 3. Such regulations

7 may—

8 (1) contain such classifications, dif9 ferentiations, or other provisions, and

10 (2) may provide for such adjustments

11 and exceptions for any class of trans12 actions,

13 as in the judgment of the Secretary are nec14 essary and proper to effectuate the purposes

15 of such section and to prevent circumvention

16 or evasion thereof or to facilitate compliance

17 therewith.

18 (b) DATA COLLECTION CONTRACTOR.—The

19 Secretary may contract with a data collection

20 contractor to carry out the Secretary’s re21 sponsibilities under section 3 if the contractor

22 agrees to collect and make available the data

23 pursuant to the terms and conditions of such

24 section. A statistical agent may also be a data

25 contractor.
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1 (c) ROLE OF STATISTICAL AGENTS.—

2 (1) ACCEPTANCE OF DATA.—The Sec3 retary and, if applicable, the contractor

4 under the subsection (b) contract may ac5 cept data reported under section 3(a) by

6 a statistical agent acting on behalf of

7 more than one insurer if—

8 (A) the statistical plan used by

9 the statistical agent for the reporting

10 of data on insurance provides for the

11 reporting of data in a manner com12 patible with section 3(a),

13 (B) the statistical agent reports

14 such data on an individual insurer

15 basis, and, at the discretion of the

16 Secretary, on an aggregate basis,

17 (C) the statistical agent provides

18 adequate procedures to protect the

19 integrity of the data reported,

20 (D) the statistical agent has pro21 cedures in place which ensure that

22 data reported under the statistical

23 plan in connection with reporting

24 under this Act and submitted to the

25 Secretary are not subject to adjust-
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1 ment by the statistical agent or an in2 surer for reasons other than technical

3 accuracy and conformance to the sta4 tistical plan,

5 (E) the statistical agent ensures

6 that the data of one insurer is not

7 subject to review by other insurers

8 before public availability, and

9 (F) the statistical agent provides

10 for the reporting of data in a manner

11 compatible with the format pre12 scribed by the Secretary under sec13 tion 3(d).

14 (2) DISCONTINUANCE OF DATA ACCEPT15 ANCE.—The Secretary may, after provid16 ing an opportunity for a hearing, dis17 continue accepting data reported under

18 section 3(a) by a statistical agent acting

19 on behalf of more than one insurer if the

20 Secretary determines the requirements

21 for acceptance of data in paragraph (1)

22 are no longer met.

23 (d) ROLE OF GAO.—The Comptroller Gen24 eral shall have the authority to review and

25 audit any data collection and reporting per-
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1 formed under section 3, whether by the Sec2 retary, the contractor under the subsection

3 (b) contract, or a statistical agent, to ensure

4 that the integrity of the data collected and re5 ported is protected.

6 (e) BURDENS ON INSURANCE AGENTS.—In

7 prescribing regulations under this Act, the

8 Secretary shall take into consideration the

9 administrative, paperwork, and other bur10 dens on insurance agents, including inde11 pendent insurance agents, involved in com12 plying with the requirements of this Act and

13 shall minimize the burdens imposed by such

14 requirements with respect to such agents.

15 SEC. 7. RELATION TO STATE LAWS.

16 This Act does not annul, alter, or affect, or

17 exempt the obligation of any insurer subject

18 to this Act to comply with the laws of any

19 State or subdivision thereof with respect to

20 public disclosure and recordkeeping.

21 SEC. 8. COMPILATION OF AGGREGATE DATA.

22 (a) SCOPE OF DATA AND TABLES.—The Sec23 retary shall compile each year, for each MSA,

24 data aggregated by 5-digit zip code for all in25 surers who are subject to section 3 or who are
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1 exempt from section 3 under subsection

2 (b)(7)(A) of such section. The Secretary shall

3 also produce tables indicating, for each MSA,

4 insurance policies aggregated for various cat5 egories of 5-digit zip codes grouped according

6 to location, age of property, income level, and

7 racial characteristics of neighborhood.

8 (b) AGGREGATION OF INFORMATION.—Statis9 tical agents may aggregate the data of insur10 ers that report to them and may provide such

11 information to the Secretary. The Secretary

12 may also provide the individual company

13 data submitted by insurers to statistical

14 agents for aggregation.

15 (c) AVAILABILITY TO PUBLIC.—The data

16 compiled and the tables produced pursuant to

17 subsection (a) shall be made available to the

18 public on a timetable determined by the Sec19 retary but not later than October 1 of the year

20 following the calendar year on which the data

21 and tables are based.

22 SEC. 9. ENFORCEMENT.

23 (a) CIVIL PENALTIES.—Any insurer who is

24 determined by the Secretary, after providing

25 opportunity for a hearing on the record, to
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1 have violated the requirements of section 3

2 shall be subject to a civil penalty of not to ex3 ceed $5,000 for each day during which such

4 violation continues.

5 (b) INJUNCTION.—The Secretary may bring

6 an action in an appropriate United States dis7 trict court for appropriate declaratory and in8 junctive relief against any insurer who vio9 lates the requirements of section 3.

10 (c) INSURER LIABILITY.—An insurer shall be

11 responsible under subsections (a) and (b) for

12 any violation of a statistical agent acting on

13 behalf of the insurer.

14 SEC. 10. SUNSET.

15 (a) EXPIRATION.—Except as provided in

16 subsection (b), this Act shall not be in effect

17 after the expiration of 5 years from its effec18 tive date. Prior to the expiration of 4 years

19 from such date, the Secretary shall report to

20 the Energy and Commerce Committee of the

21 House of Representatives and the appropriate

22 committee of the Senate—

23 (1) the quality of data received under

24 section 3 and the effectiveness of the data

25 requirement, including the relation be-
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1 tween the cost of such data gathering

2 and the benefits from having such data

3 available,

4 (2) the appropriateness of the geo5 graphic data reporting units,

6 (3) the need for continued reporting

7 by the designated insurers in urban

8 areas,

9 (4) the efforts of insurers to meet the

10 insurance needs of minority and low-in11 come neighborhoods, and

12 (5) such other information as the Sec13 retary determines will assist in consider14 ing an extension of this Act.

15 (b) EXTENSION.—Based on the Secretary’s

16 report on the need described in subsection

17 (a)(3) and the information described in sub18 section (a)(5), the Secretary may extend this

19 Act for one period of 2 years.

20 SEC. 11. STUDIES.

21 (a) STUDY OF INFORMATION ON INSURANCE

22 APPLICANTS.—

23 (1) IN GENERAL.—The Secretary shall

24 conduct a study to determine the feasibil25 ity and utility of the collection of infor-
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1 mation with respect to the characteristics

2 of applicants for insurance and reasons

3 for rejection of applicants. The study

4 shall examine the extent to which—

5 (A) oral applications or represen6 tations are used by insurers and

7 agents in making determinations re8 garding whether or not to insure a

9 prospective insured,

10 (B) written applications are used

11 by insurers and agents in making de12 terminations regarding whether or

13 not to insure a prospective insured,

14 (C) written applications are sub15 mitted after the insurer or agent has

16 already made a determination to pro17 vide insurance to a prospective in18 sured or has determined that the pro19 spective insured is eligible for insur20 ance, and

21 (D) prospective insureds are dis22 couraged from submitting applica23 tions for insurance based, in whole or

24 in part, on—
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1 (i) the location of the risk to

2 be insured,

3 (ii) the race or ethnicity of the

4 prospective insured,

5 (iii) the racial or ethnic com6 position of the neighborhood in

7 which the risk to be insured is lo8 cated, and

9 (iv) in the case of residential

10 property insurance, the age and

11 value of the risk to be insured.

12 (2) REPORT.—The Secretary shall re13 port the results of the study under para14 graph (1) to the Committee on Energy

15 and Commerce of the House of Rep16 resentatives and the appropriate Com17 mittee of the Senate within 18 months of

18 the date of the enactment of this Act.

19 (b) STUDY OF INSURER ACTIONS TO MEET IN20 SURANCE NEEDS OF CERTAIN NEIGHBORHOODS.—

21 The Secretary shall conduct a study of var22 ious practices, actions, programs, and meth23 ods undertaken by insurers to meet the prop24 erty and casualty insurance needs of resi25 dents of low- and moderate-income neighbor-
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1 hoods, minority neighborhoods, and small

2 businesses located in such neighborhoods.

3 The Secretary may establish a task force of in4 terested parties, including representatives of

5 insurance companies, insurance agents, in6 cluding minority agents, and consumer rep7 resentatives to discuss additional practices,

8 actions, programs, and methods to meet these

9 needs. The Secretary shall report the results

10 of the study, including any recommendations,

11 to the Committee on Energy and Commerce of

12 the House of Representatives and the appro13 priate Committee of the Senate no later than

14 2 years after the date of the enactment of this

15 Act.

16 SEC. 12. DEFINITIONS.

17 For purposes of this Act:

18 (1) The term ‘‘commercial insurance’’

19 means any line of property and casualty

20 insurance, except private passenger auto21 mobile and homeowner’s insurance.

22 (2) The term ‘‘designated insurer’’

23 means an insurer designated by the Sec24 retary pursuant to section 4(a)(2).
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1 (3) The term ‘‘designated line’’ means

2 a line of insurance specified in section

3 4(a)(3).

4 (4) The term ‘‘exposure units’’ means

5 units insured against risk of loss by an

6 insurer and the term ‘‘units’’ means an

7 automobile or the number of units in a

8 building.

9 (5) The term ‘‘insurer’’ means any cor10 poration, association, society, order, firm,

11 company, partnership, individual, or ag12 gregation of individuals which is subject

13 to examination or supervision by any

14 State insurance regulator, or which is

15 doing or represents an insurance busi16 ness. Such term does not include an indi17 vidual or entity which represents an in18 surer as agent for the purpose of selling

19 or which represents a consumer as a

20 broker for the purpose of buying insur21 ance.

22 (6) The term ‘‘MSA’’ means a Metro23 politan Statistical Area or a Consolidated

24 Metropolitan Statistical Area and the

25 term ‘‘designated MSA’’ means an MSA
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1 designated by the Secretary pursuant to

2 section 4(a)(1).

3 (7) The term ‘‘property and casualty

4 insurance’’ means insurance against loss

5 of or damage to property, insurance

6 against loss of income or extra expense

7 incurred because of loss of, or damage to,

8 property, and insurance against third

9 party liability claims caused by neg10 ligence or imposed by statute or contract.

11 (8) The term ‘‘residual market’’ means

12 an assigned risk plan, joint underwriting

13 association, or any similar mechanism de14 signed to make insurance available to

15 those unable to obtain it in the voluntary

16 market.

17 (9) The term ‘‘Secretary’’ means the

18 Secretary of Commerce.

19 (10) The term ‘‘State’’ means any

20 State, the District of Columbia, the Com21 monwealth of Puerto Rico, the Northern

22 Mariana Islands, the Virgin Islands,

23 American Samoa, and the Trust Territory

24 of the Pacific Islands.
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1 SEC. 13. EFFECTIVE DATE.

2 The requirements of this Act shall take ef3 fect with respect to information on insurance

4 described in section 3 and developed in and

5 after calendar year 1995.

Amend the title so as to read: ‘‘A bill to

provide for disclosures for insurance in

interstate commerce.’’.

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