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[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5143 Introduced in House (IH)]

<DOC>

114th CONGRESS
  2d Session
                                H. R. 5143

    To provide greater transparency and congressional oversight of 
  international insurance standards setting processes, and for other 
                               purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             April 29, 2016

  Mr. Luetkemeyer (for himself, Mr. Huizenga of Michigan, Mr. Pearce, 
 Mrs. Wagner, Mr. Barr, Mr. Rothfus, and Mr. Westmoreland) introduced 
 the following bill; which was referred to the Committee on Financial 
                                Services

_______________________________________________________________________

                                 A BILL

 
    To provide greater transparency and congressional oversight of 
  international insurance standards setting processes, and for other 
                               purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Transparent Insurance Standards Act 
of 2016''.

SEC. 2. CONGRESSIONAL FINDINGS.

    The Congress finds the following:
            (1) The State-based system for insurance regulation in the 
        United States has served American consumers well for more than 
        150 years and has fostered an open and competitive marketplace 
        with a diversity of insurance products to the benefit of 
        policyholders and consumers.
            (2) Protecting policyholders by regulating to ensure an 
        insurer's ability to pay claims has been the hallmark of the 
        successful United States system and should be the paramount 
        objective of domestic prudential regulation and emerging 
        international standards.
            (3) United States officials participating in discussions or 
        negotiations regarding international insurance standards shall 
        support standards designed for the protection of policyholders.
            (4) The Secretary of the Treasury shall seek advice and 
        recommendations from a diverse group of outside experts in 
        performing the duties and authorities of the Secretary to 
        coordinate Federal efforts and develop Federal policy on 
        prudential aspects of international insurance matters.
            (5) The draft of the Higher Loss Absorbency capital 
        standard adopted in 2015 by the International Association of 
        Insurance Supervisors, notwithstanding the concerns of U.S. 
        parties to the International Association of Insurance 
        Supervisors, unequally affects insurance products offered in 
        the United States, an issue that must be addressed.
            (6) Any international standard agreed to at the 
        International Association of Insurance Supervisors is not self-
        executing in the United States for any insurer until 
        implemented through the required Federal or State legislative 
        or regulatory process.

SEC. 3. OBJECTIVES FOR INTERNATIONAL INSURANCE STANDARDS.

    The objectives of the United States regarding international 
insurance standards are as follows:
            (1) To ensure standards that maintain strong protection of 
        policy holders, as reflected in the United States solvency 
        regime.
            (2) To ensure, pursuant to enactment of the Insurance 
        Capital Standards Clarification Act of 2014 (Public Law 113-
        279), standards that are appropriate for insurers and are not 
        bank-centric in nature.
            (3) To promote a principles-based approach to insurance 
        supervision, in which capital adequacy is assessed using risk-
        based capital requirements for insurance combined with 
        qualitative risk assessment and management tools.
            (4) To consider the most efficient and least disruptive 
        approaches to enhancing regulatory assessment of the capital 
        adequacy of insurance groups, including tools that are already 
        in place.
            (5) To ensure that any international insurance standard 
        recognizes prudential measures used within the United States as 
        satisfying standards finalized by international standard-
        setting organizations.
            (6) To support increasing transparency at any global 
        insurance or international standard-setting organization in 
        which the United States participates, including advocating for 
        greater stakeholder public observer access to working groups 
        and committee meetings of the International Association of 
        Insurance Supervisors.
            (7) To ensure that there is a sufficient period for public 
        consultation and comment regarding any proposed international 
        insurance standard before it takes effect.
            (8) To ensure that the Secretary of the Treasury and the 
        Board of Governors of the Federal Reserve System achieve 
        consensus positions with State insurance commissioners when the 
        Secretary and the Board are United States participants in 
        discussions on insurance issues before the International 
        Association of Insurance Supervisors, Financial Stability 
        Board, or any other international forum of financial regulators 
        or supervisors that considers such issues.
            (9) To consider the impact of any such standard on the 
        availability and cost of products to consumers.
            (10) To avoid measures that could limit the availability 
        and accessibility of risk protection and retirement security 
        products that are essential to meeting the needs of aging 
        populations.
            (11) To ensure that the merits of existing State-based 
        capital standards are recognized and incorporated in any 
        domestic or global insurance capital standard.
            (12) To advocate for insurance regulatory standards that 
        are based on the nature, scale, and complexity of the risks 
        posed by the regulated insurance group and entity or activity.

SEC. 4. REQUIREMENTS FOR CONSENT TO ADOPT INTERNATIONAL INSURANCE 
              STANDARDS.

    (a) Publication of Standards; Adoption of Capital and Prudential 
Standards.--The United States may not agree to, accept, establish, 
enter into, or consent to the adoption of a final international 
insurance standard with an international standard-setting organization 
or a foreign government, authority, or regulatory entity unless the 
requirements under both of the following paragraphs are complied with:
            (1) Publication.--The requirements under this paragraph are 
        complied with if the conditions under one of the following 
        subparagraphs have been met:
                    (A) By federal reserve and treasury.--The Chairman 
                of the Board of Governors of the Federal Reserve System 
                and the Secretary of the Treasury have caused the 
                proposed text of the proposed international insurance 
                standard to be published in the Federal Register and 
                made available for public comment for a period of not 
                fewer than 30 days (which period may run concurrently 
                with the 90-day period referred to in subsection 
                (b)(3)).
                    (B) By state insurance commissioners.--The State 
                insurance commissioners have caused the proposed text 
                of the proposed international insurance standard to be 
                published in a similar form and manner that provides 
                for notice and public comment.
            (2) Capital standard.--In the case only of a final 
        international insurance standard setting forth any capital 
        standard or standards for insurers--
                    (A) such international capital standard is 
                consistent with capital requirements set forth in the 
                State-based system of insurance regulation;
                    (B) the Board has issued capital requirements for 
                insurance companies supervised by the Board and subject 
                to such requirements, which shall be issued through 
                rulemaking in accordance with the procedures 
                established under section 553 of title 5, United States 
                Code, regarding substantive rules, under which the 
                periods for notice and public comment shall each have a 
                duration of not fewer than 60 days; and
                    (C) to the extent that such international capital 
                standard is intended to be applied to a company or 
                companies supervised by the Board of Governors of the 
                Federal Reserve System, is consistent with the capital 
                requirements of the Board for such companies.
    (b) Submission and Layover Provisions.--The Secretary and the Board 
may not agree to, accept, establish, enter into, or consent to the 
adoption of an international insurance standard established through an 
international standard-setting organization or a foreign government, 
authority, or regulatory entity unless--
            (1) the Secretary and the Board have--
                    (A) conducted an analysis under subsection (c) of 
                the proposed international insurance standard; and
                    (B) submitted to the covered congressional 
                committees, on a day on which both Houses of Congress 
                are in session, a copy of the proposed final text of 
                the proposed international insurance standard and the 
                report required under subsection (c)(2) regarding such 
                analysis;
            (2) the Secretary and the Chairman of the Board have 
        determined, pursuant to such analysis, that the proposed 
        standard will not result in any change in State law; and
            (3) a period of 90 calendar days beginning on the date on 
        which the copy of the proposed final text of the standard is 
        submitted to the covered congressional committees under 
        paragraph (1)(B) has expired, during which period the Congress 
        may take action to approve or reject such final standard.
    (c) Joint Analysis by Chair of the Federal Reserve and Secretary of 
the Treasury.--
            (1) In general.--An analysis under this subsection of a 
        proposed final international insurance standard shall be an 
        analysis conducted by the Secretary and the Chairman of the 
        Board of Governors of the Federal Reserve System, in 
        consultation with the State insurance commissioners, of the 
        impact of such standard on consumers and markets in the United 
        States and whether any changes in State law will result from 
        such final standard.
            (2) Report.--Upon completion of an analysis under this 
        subsection of a final international insurance standard, the 
        Secretary and the Board shall submit a report on the results of 
        the analysis to the covered congressional committees and the 
        Comptroller General of the United States. The report shall 
        include a statement setting forth the determination made 
        pursuant to paragraph (1) regarding any changes in State law 
        resulting from such final standard.
            (3) Notice and comment.--
                    (A) Notice.--The Secretary and the Chairman of the 
                Board of Governors of the Federal Reserve System shall 
                provide notice before the date on which drafting the 
                report is commenced and after the date on which the 
                draft of the report is completed.
                    (B) Opportunity for comment.--There shall be an 
                opportunity for public comment for a period beginning 
                on the date on which the report is submitted under 
                paragraph (2) and ending on the date that is not fewer 
                than 60 days after the date on which the report is 
                submitted. Nothing in this subparagraph shall affect 
                the authority of the Board to issue the rule referred 
                to in subsection (a)(2).
            (4) Review by comptroller general.--Upon submission of a 
        report pursuant to paragraph (2) to the Comptroller General, 
        the Comptroller General shall review the report and shall 
        submit a report to the Congress setting forth the conclusions 
        of the Comptroller General's review.
    (d) Limited Effect.--This section may not be construed to establish 
or expand any authority to implement an international insurance 
standard in the United States or for the United States or any 
representative of the Federal Government to adopt or enter into any 
international insurance standard.
    (e) Treatment of State Law.--In accordance with the Act of March 9, 
1945 (Chapter 20; 59 Stat. 33; 15 U.S.C. 1011 et seq.), commonly 
referred to as the ``McCarran-Ferguson Act'', this section may not be 
construed to preempt State law.

SEC. 5. REPORTS.

    (a) Reports and Testimony by Secretary of the Treasury and Chair of 
the Federal Reserve.--The Secretary and the Chairman of the Board of 
Governors of the Federal Reserve System shall submit to the covered 
congressional committees an annual report and provide testimony, not 
less often than every 6 months, to the covered congressional committees 
on the efforts of the Secretary and the Chairman with the State 
insurance commissioners with respect to international insurance 
standard-setting organizations and international insurance standards, 
including--
            (1) a description of the insurance standard-setting issues 
        under discussion at international standard-setting bodies, 
        including the Financial Stability Board and the International 
        Association of Insurance Supervisors;
            (2) a description of the effects that international 
        insurance standards could have on consumers and insurance 
        markets in the United States;
            (3) a description of any position taken by the Secretary 
        and the Board in international insurance discussions or on any 
        international insurance standard;
            (4) a description of the efforts by the Secretary and the 
        Board to increase transparency and accountability at the 
        Financial Stability Board with respect to insurance proposals 
        and the International Association of Insurance Supervisors, 
        including efforts to provide additional public access to 
        working groups and committees of the International Association 
        of Insurance Supervisors; and
            (5) a description of how the Secretary and the Board are 
        meeting the objectives set forth in section 3, or, if such 
        objectives are not being met, an explanation of the reasons for 
        not meeting such objectives.
    (b) Reports and Testimony by State Insurance Commissioners.--The 
State insurance commissioners may provide testimony or reports to the 
Congress on the issues described in subsection (a).
    (c) Report on Transparency.--Not later than 180 days after the date 
of enactment of this Act, the Chairman of the Board of Governors of the 
Federal Reserve System and the Secretary shall submit to the Congress a 
report and provide testimony to the Congress on the efforts of the 
Chairman and the Secretary pursuant to subsection (a)(4) of this 
section to increase transparency at meetings of the International 
Association of Insurance Supervisors.

SEC. 6. DEFINITIONS.

    In this Act:
            (1) Board.--The term ``Board'' means the Board of Governors 
        of the Federal Reserve System, or the designee of the Board.
            (2) Covered congressional committees.--The term ``covered 
        congressional committees'' means the Committee on Financial 
        Services of the House of Representatives and the Committee on 
        Banking, Housing and Urban Affairs of the Senate.
            (3) International insurance standard.--The term 
        ``international insurance standard'' means any international 
        insurance supervisory standard developed by an international 
        standards setting organization, or regulatory or supervisory 
        forum, in which the United States participates, including the 
        Common Framework for the Supervision of Internationally Active 
        Insurance Groups, the Financial Stability Board, and the 
        International Association of Insurance Supervisors.
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury, or the Secretary's designee.
            (5) State insurance commissioners.--The term ``State 
        insurance commissioners'' means the heads of the insurance 
        commissions for the States, or State employees who are the 
        designees of such officials.

SEC. 7. TREATMENT OF COVERED AGREEMENTS.

    Section 314 of title 31, United States Code is amended--
            (1) in subsection (c)--
                    (A) by designating paragraphs (1) and (2) as 
                paragraphs (2) and (3), respectively; and
                    (B) by inserting before paragraph (2), as so 
                redesignated, the following new paragraph:
            ``(1) the Secretary of the Treasury and the United States 
        Trade Representative have caused to be published in the Federal 
        Register, and made available for public comment for a period of 
        not fewer than 30 days (which period may run concurrently with 
        the 90-day period for the covered agreement referred to in 
        paragraph (3)), the proposed text of the covered agreement;''; 
        and
            (2) by adding at the end the following new subsections:
    ``(d) Consultation With State Insurance Commissioners.--In any 
negotiations regarding a contemplated covered agreement, the Secretary 
and the United States Trade Representative shall consult with and 
directly include State insurance commissioners.
    ``(e) Prohibition on Regulatory Authority.--In accordance with 
subsections (k) and (l) of section 313, a covered agreement shall not 
be used to establish or provide the Federal Insurance Office or the 
Treasury with any general supervisory or regulatory authority over the 
business of insurance or with the authority to participate in a 
supervisory college or similar process.
    ``(f) Treatment Under Other Law.--A covered agreement shall not be 
considered an international insurance standard for purposes of the 
Transparent Insurance Standards Act of 2016 and shall not be subject to 
such Act.''.

SEC. 8. DUTIES OF INDEPENDENT MEMBER OF FINANCIAL STABILITY OVERSIGHT 
              COUNCIL.

    Subsection (a) of section 112 of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (12 U.S.C. 5322(a)) is amended by adding at 
the end the following new paragraph:
            ``(3) Duties of independent member.--To assist the Council 
        with its responsibilities to monitor international insurance 
        developments, advise Congress, and make recommendations, the 
        Independent Member of the Council shall have the authority to--
                    ``(A) regularly consult with international 
                insurance supervisors and international financial 
                stability counterparts;
                    ``(B) consult with, advise, and assist the 
                Secretary of the Treasury with respect to representing 
                the Federal Government of the United States, as 
                appropriate, in the International Association of 
                Insurance Supervisors (including to become a non-voting 
                member thereof), particularly on matters of systemic 
                risk, and to consult with the Board of Governors of the 
                Federal Reserve System and the States concerning such 
                matters;
                    ``(C) attend the Financial Stability Board of The 
                Group of Twenty and join with other members from the 
                United States, including on matters related to 
                insurance and financial stability, and provide for the 
                attendance and participation at such Board, on matters 
                related to insurance and financial stability, of State 
                insurance commissioners; and
                    ``(D) attend, with the United States delegation, 
                the Organization for Economic Cooperation and 
                Development and observe and participate at the 
                Insurance and Private Pensions Committee of such 
                Organization on matters related to insurance and 
                financial stability.''.

SEC. 9. STATE INSURANCE REGULATOR INVOLVEMENT IN INTERNATIONAL STANDARD 
              SETTING.

    Parties representing the United States at the Financial Stability 
Board of the Group of Twenty on matters, and in meetings, related to 
insurance and financial stability shall consult with, and seek to 
include in such meetings, the State insurance commissioners.

SEC. 10. RULE OF CONSTRUCTION.

    Nothing in this Act or the amendments made by this Act may be 
construed to support or endorse the domestic capital standard for 
insurers referred to in section 4(a)(2) or any such domestic capital 
standards established by the Board.
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