I 
109TH CONGRESS 
2D SESSION 
H. R. 6225 
To authorize the issuance of Federal charters and licenses for carrying on 
the sale, solicitation, negotiation, and underwriting of insurance or any 
other insurance operations, to provide a comprehensive system for the 
regulation and supervision of National Insurers and National Agencies, 
to provide for policyholder protections in the event of an insolvency 
or impairment of a National Insurer, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 28, 2006 
Mr. ROYCE introduced the following bill; which was referred to the Committee 
on Financial Services, and in addition to the Committee on the Judiciary, 
for a period to be subsequently determined by the Speaker, in each case 
for consideration of such provisions as fall within the jurisdiction of the 
committee concerned 
A BILL 
To authorize the issuance of Federal charters and licenses 
for carrying on the sale, solicitation, negotiation, and 
underwriting of insurance or any other insurance oper-
ations, to provide a comprehensive system for the regula-
tion and supervision of National Insurers and National 
Agencies, to provide for policyholder protections in the 
event of an insolvency or impairment of a National In-
surer, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘National Insurance Act of 2006’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Purpose. 
Sec. 3. Definitions. 
TITLE I—OFFICE OF NATIONAL INSURANCE 
Subtitle A—Establishment of Office of National Insurance 
Sec. 101. Establishment. 
Sec. 102. Commissioner of National Insurance. 
Sec. 103. Office personnel matters. 
Sec. 104. Division of Insurance Fraud. 
Sec. 105. Division of Consumer Affairs. 
Sec. 106. Insurance self-regulatory organizations. 
Sec. 107. Office of the Ombudsman. 
Subtitle B—Supervision of National Insurers and National Agencies 
Sec. 121. Examination of National Insurers and National Agencies. 
Sec. 122. Examination fees and other assessments. 
Sec. 123. Disclosure of information. 
Sec. 124. Reporting requirement. 
Sec. 125. Relationship to State law. 
Subtitle C—Enforcement of Federal Insurance Laws 
Sec. 141. National Insurer license suspension, restriction, or revocation. 
Sec. 142. Suspension, restriction, or revocation of Federal license of National 
Agencies and federally licensed insurance producers. 
Sec. 143. Cease-and-desist proceedings. 
Sec. 144. Affirmative action to correct conditions resulting from violations or 
conduct. 
Sec. 145. Suspension, removal, and prohibition authority. 
Sec. 146. Suspension or prohibition based on criminal activity. 
Sec. 147. Ancillary provisions. 
Sec. 148. Hearings and judicial review of removal, suspension, or prohibition 
order. 
Sec. 149. Civil and criminal penalties. 
Sec. 150. Public disclosures of final orders and agreements. 
Sec. 151. Foreign investigations. 
Sec. 152. Action or proceeding against non-United States Insurers. 
Sec. 153. Cooperation between Commissioner and State commissioners. 
Subtitle D—Insurance Fraud 
Sec. 161. Investigation of insurance fraud. 
Sec. 162. Penalties. 
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TITLE II—NATIONAL INSURANCE COMPANIES AND NATIONAL 
INSURANCE AGENCIES 
Subtitle A—Organization, Licensing, and Operations 
Sec. 201. Organization, operation, and regulation of National Insurance Com-
panies and National Insurance Agencies. 
Sec. 202. United States branches of non-United States Insurers. 
Sec. 203. Federal licensing of National Insurers. 
Sec. 204. Corporate governance. 
Sec. 205. Conversion of State Insurer to National Insurer or State Insurance 
Agency to National Agency. 
Sec. 206. Conversion of National Insurer to State Insurer or National Agency 
to State Agency. 
Sec. 207. Powers. 
Sec. 208. Separate accounts of National Life Insurer. 
Sec. 209. Protected cells. 
Sec. 210. Chartering and licensing commencement date. 
Subtitle B—Financial, Product, and Market Regulation 
Sec. 211. Transitional financial regulations. 
Sec. 212. Other financial regulations. 
Sec. 213. Product regulation for National Life Insurers. 
Sec. 214. Product regulation for National Property/Casualty Insurers. 
Sec. 215. Regulation of sales and marketing. 
Subtitle C—Reinsurance 
Sec. 221. Federal licensing of reinsurers. 
Sec. 222. Credit for reinsurance. 
Sec. 223. Relationship to State law. 
Subtitle D—Acquisitions of Control; Mergers; Bulk Transfers; Domestication 
Sec. 231. Acquisition of control of National Insurers and National Agencies. 
Sec. 232. Mergers, consolidations, and acquisitions of National Insurers. 
Sec. 233. Bulk transfers. 
Sec. 234. Domestication of United States branch of a non-United States In-
surer. 
Sec. 235. Mergers, consolidations, and acquisitions of National Agencies. 
Subtitle E—Conversions 
Sec. 241. Definitions. 
Sec. 242. Conversion of stock life insurer to National Life Insurer in mutual 
form. 
Sec. 243. Conversion of mutual insurer to National Insurer in stock form. 
Subtitle F—State Taxation 
Sec. 251. State taxation of National Insurers. 
Sec. 252. State taxation of National Agencies. 
TITLE III—INSURANCE PRODUCERS AND OTHER INSURANCE 
SERVICING PERSONS 
Sec. 301. Federal licensing of insurance producers. 
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Sec. 302. Producer database. 
Sec. 303. Supervision and oversight of federally licensed insurance producers. 
Sec. 304. Relationship to State law. 
Sec. 305. Licensing commencement date. 
TITLE IV—HOLDING COMPANIES 
Sec. 401. Definitions. 
Sec. 402. Registration. 
Sec. 403. Standards and management of a National Insurer within an insur-
ance holding company system. 
Sec. 404. Relationship to State law. 
Sec. 405. Conflict with other Federal laws. 
Sec. 406. No delegation permitted. 
TITLE V—PROMPT CORRECTIVE ACTION AND RECEIVERSHIP 
Subtitle A—Prompt Corrective Action 
Sec. 501. Prompt corrective action. 
Subtitle B—Receivership 
Sec. 551. Appointment of Office as receiver. 
Sec. 552. Automatic stay. 
Sec. 553. Powers and duties. 
Sec. 554. Rulemaking. 
Sec. 555. Judicial review. 
TITLE VI—INSOLVENCY PROTECTION 
Sec. 601. Participation in guaranty associations. 
Sec. 602. Qualified and nonqualified State. 
Sec. 603. Establishment of the National Insurance Guaranty Corporation. 
Sec. 604. Benefits for policy holders of National Life Insurers. 
Sec. 605. Claims covered for policyholders of National Property/Casualty Insur-
ers. 
Sec. 606. Powers and duties of the Corporation. 
Sec. 607. Subrogation. 
Sec. 608. Assessments. 
Sec. 609. Regulation. 
Sec. 610. State taxation. 
Sec. 611. Examination of the Corporation; annual report. 
TITLE VII—CONFORMING AMENDMENTS AND MISCELLANEOUS 
PROVISIONS 
Sec. 701. Nondiscrimination. 
Sec. 702. Application of the Federal antitrust laws to National Insurers, Na-
tional Agencies, and federally licensed insurance producers. 
Sec. 703. Application of State law and regulation to National Insurers, Na-
tional Agencies, and federally licensed insurance producers. 
Sec. 704. Federal Court jurisdiction. 
Sec. 705. Federal Court venue. 
Sec. 706. Judicial review. 
Sec. 707. Amendment to Freedom of Information Act. 
Sec. 708. Amendments to the Federal securities laws. 
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Sec. 709. Amendments to the Employee Retirement Income Security Act of 
1974. 
Sec. 710. Amendments to the Gramm-Leach-Bliley Act. 
Sec. 711. Amendments to the Federal Deposit Insurance Act. 
Sec. 712. Amendments to the Bank Holding Company Act of 1956. 
Sec. 713. Amendments to title 18 (crimes and criminal procedure). 
Sec. 714. Amendments to Americans with Disabilities Act of 1990. 
Sec. 715. Amendment to Age Discrimination in Employment Act. 
Sec. 716. Amendments to the Fair Credit Reporting Act. 
SEC. 2. PURPOSE. 
The purpose of this Act is to— 
(1) establish a comprehensive system of Federal 
chartering, licensing, regulation, and supervision for 
insurers and insurance producers that is inde-
pendent of the State system of insurance licensing, 
regulation, and supervision, yet that requires feder-
ally chartered and licensed insurers and producers to 
comply with certain State laws, including State tax 
laws; 
(2) provide for the creation of an Office of Na-
tional Insurance within the Department of the 
Treasury that is funded by assessments imposed 
upon federally chartered and licensed insurers and 
insurance producers; and 
(3) provide for the appointment of a Commis-
sioner of National Insurance, who, among other du-
ties, is authorized to— 
(A) issue Federal charters and licenses to 
insurers and insurance producers; 
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(B) exclusively regulate and supervise the 
operations and solvency of federally chartered 
or licensed insurers and producers on a uni-
form, nationwide basis, including the conduct of 
such insurers and producers with policyholders; 
and 
(C) protect the interests of policyholders 
by establishing a comprehensive scheme for the 
receivership for federally chartered insurers 
that requires federally chartered insurers to 
participate in qualified State guaranty funds. 
SEC. 3. DEFINITIONS. 
In this Act: 
(1) AFFILIATE.—The term ‘‘affiliate’’ means 
any person that controls, is controlled by, or is 
under common control with another person. 
(2) AFFILIATE INSURER.—The term ‘‘affiliate 
insurer’’ means any person that controls, is con-
trolled by, or is under common control with, a Na-
tional Insurer or a National Agency. 
(3) BUSINESS
OF
INSURANCE.—The term 
‘‘business of insurance’’ has the meaning given to 
such term in section 1033(f) of title 18, United 
States Code. 
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(4) 
COMMISSIONER.—The 
term 
‘‘Commis-
sioner’’ means the Commissioner of National Insur-
ance. 
(5) CONTROL.—The term ‘‘control’’, including 
the terms ‘‘controlling’’, ‘‘controlled by’’, and ‘‘under 
common control with’’, means the possession, direct 
or indirect, of the power to direct or cause the direc-
tion of the management and policies of a business 
entity, whether through the ownership of voting se-
curities, by contract or otherwise, unless the power 
is the result of an official position with or corporate 
office held by a person. For purposes of sections 
204(c), 231, 243(g), and title III, control shall be 
presumed to exist if any person, directly or indi-
rectly, owns, controls, holds with the power to vote, 
or holds proxies representing, 10 percent or more of 
the voting securities of any other person. 
(6) CORPORATION.—The term ‘‘Corporation’’ 
means the National Insurance Guaranty Corporation 
that is established in section 603. 
(7) FEDERAL BANKING AGENCIES.—The term 
‘‘Federal banking agencies’’ means the Office of the 
Comptroller of the Currency, the Board of Gov-
ernors of the Federal Reserve System, the Federal 
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Deposit Insurance Corporation, and the Office of 
Thrift Supervision. 
(8) FEDERALLY
LICENSED
INSURANCE
PRO-
DUCER.—The term ‘‘federally licensed insurance 
producer’’ means a person, including a National 
Agency and a natural person acting on behalf of a 
National Agency, that is an insurance producer li-
censed pursuant to section 301. 
(9) FRAUDULENT INSURANCE ACT.—The term 
‘‘fraudulent insurance act’’ has the meaning given to 
such term in section 1037A(d)(3) of title 18, United 
States Code. 
(10) FUNCTIONAL
REGULATOR.—The term 
‘‘functional regulator’’ shall mean— 
(A) in the case of a broker-dealer, invest-
ment advisor or investment Company, the Secu-
rities and Exchange Commission; 
(B) in the case of a State insurer or State 
insurance producer, the appropriate State in-
surance regulator of a State that has jurisdic-
tion over such insurer or insurance producer; 
(C) in the case of a bank holding company 
or financial holding company, the Federal Re-
serve Board; 
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(D) in the case of a savings and loan hold-
ing company, the Office of Thrift Supervision; 
(E) in the case of a national bank, the Of-
fice of the Comptroller of the Currency; 
(F) in the case of a Federal savings bank 
or Federal savings association, the Office of 
Thrift Supervision; 
(G) in the case of a State bank, the appro-
priate State banking authority for the State in 
which the bank is chartered or the Federal De-
posit Insurance Corporation, in the case of a 
State bank that is not a member of the Federal 
Reserve System, or the Federal Reserve Board, 
in the case of a State bank that is a member 
of the Federal Reserve System; 
(H) in the case of a State savings bank or 
State savings association, the appropriate bank-
ing authority for the State in which the thrift 
is chartered; and 
(I) in the case of a commodities company, 
the Commodities Exchange Commission. 
(11) FUNCTIONALLY REGULATED AFFILIATE.— 
The term ‘‘functionally regulated affiliate’’ shall 
mean— 
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(A) a broker or dealer that is registered 
under the Securities Exchange Act of 1934; 
(B) a registered investment adviser, reg-
istered by or on behalf of either the Securities 
and Exchange Commission or any State; 
(C) an investment company that is reg-
istered under the Investment Company Act of 
1940; 
(D) a State insurer or State insurance pro-
ducer that is subject to supervision by a State 
insurance regulator; 
(E) a bank holding company or financial 
holding company registered with or certified by 
the Federal Reserve Board; 
(F) a national bank subject to the super-
vision of the Office of the Comptroller of the 
Currency; 
(G) a State bank subject to the supervision 
of a State banking regulator; 
(H) a Federal savings bank or Federal 
savings association subject to the supervision of 
the Office of Thrift Supervision; 
(I) a State savings bank or State savings 
association subject to the supervision of a State 
banking regulator; and 
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(J) a business entity that is subject to reg-
ulation by the Commodity Futures Trading 
Commission, with respect to commodities activi-
ties of such entity and activities incidental to 
such commodities activities. 
(12) INSOLVENCY; INSOLVENT.— 
(A) IN GENERAL.—The term ‘‘insolvency’’ 
or ‘‘insolvent’’ means the inability of an insurer 
to pay its obligations when they are due or 
when assets do not exceed liabilities plus the 
greater of— 
(i) any capital and surplus required 
by law for its organization; or 
(ii) the total par or stated value of its 
authorized and issued capital stock. 
(B) LIABILITIES.—In this paragraph, the 
term ‘‘liabilities’’ shall include reserves required 
by statute or by rule or specific requirements 
imposed by the Commissioner upon an insurer. 
(13) INSURANCE OPERATIONS.—The term ‘‘in-
surance operations’’ includes but is not limited to— 
(A) the business of insurance; 
(B) all acts and transactions relating to 
the sale, solicitation, negotiation, and under-
writing of insurance; 
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(C) all acts and transactions relating to 
claims adjustment and settlement; and 
(D) all acts and transactions relating to 
the establishment of rates, rules, risk classifica-
tions, rating classifications, rating territories 
and forms (including, but not limited to, en-
dorsements, addendums and policy language) 
for insurance. 
(14) INSURANCE
PERSON.—The term ‘‘insur-
ance person’’ has the meaning given such term in 
section 1037A(d)(4) of title 18. 
(15) INSURANCE
PRODUCER.—The term ‘‘in-
surance producer’’ means any person, including a 
National Agency and a natural person acting on be-
half of a National Agency, that sells, solicits or ne-
gotiates policies of insurance, except that none of 
the following is an insurance producer: 
(A) A National Insurer. 
(B) An officer, director, or employee of a 
National Insurer or of an insurance producer, 
provided that the officer, director, or employee 
does not receive any commission or other com-
pensation on insurance policies written or sold 
by the National Insurer or insurance producer 
which commission or other compensation is di-
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