I
107TH CONGRESS
2D SESSION
H. R. 3766
To establish an Office of the National Insurers within the Department of
the Treasury to authorize the issuance of Federal charters for carrying
out the underwriting and sale of insurance or any other insurance oper-
ations, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 14, 2002
Mr. LAFALCE (for himself and Mrs. JONES of Ohio) introduced the following
bill; which was referred to the Committee on Financial Services, and in
addition to the Committees on the Judicary, and Ways and Means, 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 com-
mittee concerned
A BILL
To establish an Office of the National Insurers within the
Department of the Treasury to authorize the issuance
of Federal charters for carrying out the underwriting
and sale of insurance or any other insurance operations,
and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Insurance Industry Modernization and Consumer Protec-
tion Act’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title and table of contents.
TITLE I—PURPOSE AND DEFINITIONS
Sec. 101. Purposes.
Sec. 102. Definitions.
TITLE II—DIRECTOR OF THE OFFICE OF NATIONAL INSURERS
Sec. 201. Director of the Office of National Insurers.
Sec. 202. Supervision of national insurers.
Sec. 203. Authority to prescribe regulations.
Sec. 204. Examination, assessments, and fees.
Sec. 205. Enforcement.
Sec. 206. Insurance fraud.
Sec. 207. International regulatory support.
TITLE III—NATIONAL INSURERS
Subtitle A—Organization, Licensing, and Operations
Sec. 301. Organization, operation, and regulation of national insurers.
Sec. 302. U.S branches of non-U.S. insurers.
Sec. 303. Federal licensing of national insurers.
Sec. 304. Corporate governance.
Sec. 305. Main office.
Sec. 306. Conversion of State insurer to national insurer.
Sec. 307. Conversion of national insurer to State insurer.
Subtitle B—Powers
Sec. 321. Powers of national insurers.
Sec. 322. Separate accounts.
Sec. 323. Protected cells.
Subtitle C—Financial Regulation
Sec. 331. Accounting principles and auditing standards.
Sec. 332. Investments.
Sec. 333. Asset valuation and rating.
Sec. 334. Valuation of liabilities.
Sec. 335. Continuing and alternate benefits.
Sec. 336. Actuarial opinion.
Sec. 337. Risk-based capital standards.
Sec. 338. Dividends to shareholders.
Subtitle D—Reinsurance
Sec. 351. Definitions.
Sec. 352. Reserve credit.
Sec. 353. Risk transfer regulation.
Sec. 354. International standards; host country reserves.
Sec. 355. Reinsurance contract terms.
Sec. 356. Licensing of Federally qualified reinsurers.
Sec. 357. Transition.
Sec. 358. Applicability of other subtitles and laws.
Subtitle E—Insurance Business
Sec. 361. Product regulation.
Sec. 362. Underwriting standards for life insurers.
Sec. 363. Group, blanket, and franchise insurance.
Sec. 364. Insurable interests under life insurance policies.
Sec. 365. Law applicable to life insurance policies or other products of national
life insurers.
Subtitle F—Market Conduct
Sec. 371. Purposes and regulations.
Sec. 372. Unfair or deceptive practices.
Sec. 373. Replacement of life insurance policies.
Sec. 374. Unfair discrimination, unfair claims settlement practices, and unlaw-
ful inducements.
Sec. 375. HIV written informed consent, discrimination against abuse victims,
and Holocaust victims claims.
Sec. 376. Minimum national standards.
Subtitle G—Acquisitions of Control, Mergers, Bulk Transfers, and
Domestication
Sec. 381. Acquisition of control.
Sec. 382. Mergers, consolidations, and acquisitions.
Sec. 383. Bulk transfers.
Sec. 384. Domestication of U.S. branch of a non-U.S. insurer.
Subtitle H—Health Insurance
Sec. 391. Recommendations for health insurance.
TITLE IV—STATE TAXATION
Sec. 401. State taxation.
TITLE V—TREATMENT OF MCCARRAN-FERGUSON ACT
Sec. 501. Repeal of antitrust exemption for business of insurance.
TITLE VI—HOLDING COMPANIES
Sec. 601. Definitions
Sec. 602. Registration.
Sec. 603. Standards and management of national insurer within an insurance
holding company system.
Sec. 604. Conflict with other Federal laws.
TITLE VII—RELATIONSHIPS WITH STATE LAW
Sec. 701. Definitions.
Sec. 702. General prohibition.
Sec. 703. State license not required.
Sec. 704. State insurance law.
Sec. 705. Prohibition of discrimination.
Sec. 706. Permissible State regulation.
Sec. 707. Sales activities by State-licensed insurance producers.
TITLE VIII—CONFORMING AMENDMENTS AND OTHER
PROVISIONS
Sec. 801. Federal court jurisdiction.
Sec. 802. Federal court venue.
Sec. 803. Judicial review.
Sec. 804. Amendment to Freedom of Information Act.
Sec. 805. Amendments to Internal Revenue Code of 1986.
Sec. 806. Amendments to Federal securities laws.
Sec. 807. Amendments to Employee Retirement Income Security Act of 1974.
Sec. 608. Amendments to Gramm-Leach-Bliley Act.
Sec. 809. Amendment to Act of October 28, 1974.
Sec. 810. Amendments to Federal Deposit Insurance Act.
Sec. 811. Amendments to Bank Holding Company Act of 1956.
Sec. 812. Amendments to title 18, United States Code.
Sec. 813. Amendments to Americans With Disabilities Act of 1990.
TITLE IX—RECEIVERSHIP
Subtitle A—Definitions
Sec. 901. Definitions.
Sec. 902. Construction.
Subtitle B—The Court
Sec. 903. Jurisdiction.
Sec. 904. Powers.
Sec. 905. Appeals.
Sec. 906. Appeal pendency plans.
Subtitle C—General Provisions
Sec. 907. Duty to provide information to corporation, State commissioners, and
associations.
Sec. 908. Cooperation of officers, owners, and employees.
Sec. 909. Right to appear and be heard.
Subtitle D—Administration
Sec. 910. Entities subject to this title.
Sec. 911. Commencement of receivership.
Sec. 912. Grounds for entry of a rehabilitation or liquidation order.
Sec. 913. Service of summons and return.
Sec. 914. Automatic stay.
Sec. 915. Answer and hearing.
Sec. 916. Notice of entry of order of rehabilitation or liquidation.
Sec. 917. Contents of notice of receivership.
Sec. 918. Initial status hearing.
Sec. 919. Dismissal of receivership proceeding.
Sec. 920. Receivership proceedings for non-U.S. States insurers.
Sec. 921. Trusteed assets of a United States branch of a non-U.S. insurer.
Sec. 922. Trust fund claims.
Sec. 923. Limited appearance.
Sec. 924. Advisory committees.
Sec. 925. Ex parte orders of conservation and seizure.
Sec. 926. Confidentiality of hearings.
Sec. 927. Modification of orders.
Sec. 928. Authority to operate and restructure insurer’s business.
Sec. 929. Conversion to liquidation.
Sec. 930. Order of liquidation.
Sec. 931. Continuation of coverage.
Subtitle E—Office of the Receiver
Sec. 932. Appointment of receiver.
Sec. 933. Title to and possession of assets and records.
Sec. 934. Immunity and indemnification of the receiver and employees.
Sec. 935. Employment of professional persons.
Sec. 936. Powers of rehabilitators and liquidators.
Sec. 937. Advances to the receiver.
Sec. 938. Executory contracts.
Sec. 939. Abandonment of property and records.
Sec. 940. Extension of time.
Sec. 941. Periodic reports.
Sec. 942. Document depository.
Sec. 943. Audit of receivership records.
Sec. 944. General service list.
Sec. 945. Routine matters.
Sec. 946. Matters requiring prior court approval.
Sec. 947. Notice of proposed claims disposition.
Subtitle F—The Estate
Sec. 948. Turnover of property to receiver.
Sec. 949. Turnover of premiums owed.
Sec. 950. Limitation on avoiding powers.
Sec. 951. Receiver as lien creditor and as successor to certain creditors, pur-
chasers and fiduciaries.
Sec. 952. Preferences.
Sec. 953. Fraudulent transfers and obligations.
Sec. 954. Transfer of national insurer’s property to good faith purchaser.
Sec. 955. Recoupment from affiliates.
Sec. 956. Liability of transferee of an avoided transfer.
Sec. 957. Automatic preservation of avoided transfer.
Sec. 958. Setoff.
Sec. 959. Qualified financial contracts.
Sec. 960. Recovery from reinsurers.
Sec. 961. Cut-through provisions.
Sec. 962. Life reinsurance.
Subtitle G—Creditors and Claims
Sec. 963. Rights and liabilities of creditors fixed upon liquidation.
Sec. 964. Claims filing; late filing.
Sec. 965. Proof of claim.
Sec. 966. Allowance of claims.
Sec. 967. Allowance of contingent and unliquidated claims.
Sec. 968. Reserve for third party claims against insured.
Sec. 969. Allowance of secured claims.
Sec. 970. Preliminary notice of claims determination.
Sec. 971. Claims of co-debtors.
Sec. 972. Approval of agreed claims.
Sec. 973. Denial of a claim.
Sec. 974. Claim by creditor in receipt of voidable transfer.
Sec. 975. Priority of distribution.
Sec. 976. Liquidator’s proposal for early access disbursements.
Subtitle H—The Plan
Sec. 977. Who may file a plan.
Sec. 978. Contents of a plan.
Sec. 979. Court approval of plan.
Sec. 980. Effect of court approval of plan.
Sec. 981. Partial and final distributions or dividends.
Sec. 982. Transfer of assets and liabilities to liquidating trust.
Sec. 983. Collateralization of case reserves and incurred but not reported
losses.
Sec. 984. Commutations.
Sec. 985. Mandatory negotiation and arbitration.
Sec. 986. Reinsurance recoverable trust provisions.
Sec. 987. Liquidating trust provisions.
Subtitle I—Post Plan
Sec. 988. Unclaimed and undistributed funds.
Sec. 989. Termination of receivership proceedings and discharge of receiver.
Sec. 990. Petition to reopen proceedings.
TITLE X—INSOLVENCY PROTECTION
Subtitle A—Life Insurance
Sec. 1001. Definitions.
Sec. 1002. National insurer participation in qualified State associations.
Sec. 1003. Qualified State defined.
Sec. 1004. Transition rules when association preempted.
Sec. 1005. Establishment of the National Life Insurance Guaranty Corpora-
tion; protection for residents in preempted States.
Sec. 1006. Protections against insolvency: coverage and limitations.
Sec. 1007. Accounts for administration and assessments.
Sec. 1008. Board of directors.
Sec. 1009. Powers and duties of the corporation.
Sec. 1010. Assessments.
Sec. 1011. Appeal by national insurer of assessments.
Sec. 1012. Duties and powers of Director.
Sec. 1013. Cooperation between Director and State commissioners.
Sec. 1014. Prohibited discrimination in tax treatment.
Sec. 1015. Miscellaneous provisions.
Sec. 1016. Examination of the corporation; annual report.
Sec. 1017. Immunity.
Sec. 1018. Stay of proceedings; reopening default judgments.
Sec. 1019. Prohibited advertisement of State association or the corporation in
insurance sales; notice to policyowners.
Subtitle B—Property and Casualty Insurance
Sec. 1020. Definitions.
Sec. 1021. National insurer participation in qualified State associations.
Sec. 1022. Qualified State defined.
Sec. 1023. Transition rules when association preempted.
Sec. 1024. Establishment of National Property and Casualty Insurance Guar-
anty Corporation; protection for residents in preempted States.
Sec. 1025. Protections against insolvency; coverage and limitations.
Sec. 1026. Board of directors.
Sec. 1027. Powers and duties of the corporation.
Sec. 1028. Duties and powers of Director.
Sec. 1029. Effect of paid claim.
Sec. 1030. Exhaustion of other coverage.
Sec. 1031. Cooperation between Director and State commissioners.
Sec. 1032. Prohibited discrimination in tax treatment.
Sec. 1033. Examination of the corporation; annual report.
Sec. 1034. Immunity.
Sec. 1035. Stay of proceedings
TITLE XI—EFFECTIVE DATE
Sec. 1101. Effective date.
TITLE I—PURPOSE AND
DEFINITIONS
SEC. 101. PURPOSES.
The purposes of this Act are to—
(1) provide for the chartering of national insur-
ers;
(2) provide for the licensing of national insur-
ers;
(3) provide for the regulation of the under-
writing and sale of insurance and other insurance
operations as conducted by national insurers and in-
surance producers; and
(4) provide for the establishment of the Office
of National Insurers and the position of Director of
the Office of National Insurers with responsibility
for administering and enforcing this Act, including
with respect to such chartering, licensing, and regu-
latory activities.
SEC. 102. DEFINITIONS.
For purposes of this Act:
(1) ACQUIRING AND/OR ASSUMING INSURER.—
The term ‘‘acquiring and/or assuming insurer’’
means a national insurer that is the acquiring and/
or assuming insurer in an acquisition of assets and/
or an assumption of liabilities pursuant to sub-
section (a) of section 382.
(2) AFFILIATE.—Except as specifically provided
otherwise in this Act, the term ‘‘affiliate’’ means any
person that controls, is controlled by, or is under
common control with, a national insurer.
(3) BUSINESS
ENTITY.—The term ‘‘business
entity’’ means a corporation, association, partner-
ship, limited liability company, limited liability part-
nership, or other legal entity.
(4) CONDUCT.—The term ‘‘conduct’’ includes
acts, action, omissions, and inaction.
(5) CONTROL.—The terms ‘‘control’’, ‘‘control-
ling’’, ‘‘controlled by’’, and ‘‘under common control
with’’, means the possession, direct or indirect, of
the power to direct or cause the direction of the
management and policies of a business entity,
whether through the ownership of voting securities,
by contract or otherwise, unless the power is the re-
sult of an official position with or corporate office
held by a person. For purposes of section 381 and
title VI, control shall be presumed to exist if any
person, directly or indirectly, owns, controls, holds
with the power to vote, or holds proxies rep-
resenting, 10 percent or more of the voting securi-
ties of any other person.
(6) CORPORATE FORM.—The term ‘‘corporate
form’’ means, with respect to an insurer, stock, mu-
tual, or fraternal form.
(7) DIRECTOR.—The term ‘‘Director’’ means
the Director of the Office of National Insurers.
(8) DOMESTICATION.—The term ‘‘domestica-
tion’’ means the reorganization pursuant to subtitle
G of the U.S. branch of a non-U.S. insurer whereby
a national insurer succeeds to all business and assets
and assumes all liabilities of such U.S. branch.
(9) 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, and the Fed-
eral Deposit Insurance Corporation.
(10) FEDERAL LICENSE.—The term ‘‘Federal
license’’ means a license issued under section 303.
(11) FOREIGN GOVERNMENTAL AUTHORITY.—
The term ‘‘foreign governmental authority’’ means a
governmental authority of a foreign jurisdiction.
(12) FOREIGN JURISDICTION.—The term ‘‘for-
eign jurisdiction’’ means any jurisdiction other than
the United States or a State.
(13) INSURANCE.—Except as specifically pro-
vided otherwise in this Act, the term ‘‘insurance’’ in-
cludes life insurance and property and casualty in-
surance. Such term does not include health insur-
ance.
(14) INSURANCE OPERATIONS.—The term ‘‘in-
surance operations’’ includes the business of insur-
ance.
(15) INSURANCE
PRODUCER.—The term ‘‘in-
surance producer’’ means any person that sells, so-
licits or negotiates 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,
if—
(i) the officer, director or employee
does not receive any commission or other
compensation on insurance policies written
or sold by the national insurer which com-
mission or other compensation is directly
dependent upon the amount of insurance
policies written or sold; and
(ii)(I) the officer, director or employ-
ee’s activities are executive, administrative,
managerial, clerical or a combination of
these, and are only indirectly related to the
sale, solicitation or negotiation of insur-
ance;
(II) the officer, director or employee’s
function relates to underwriting, loss con-
trol, inspection or the processing, adjust-
ing, investigating or settling of a claim on
a policy of insurance; or
(III) the officer, director or employee
is acting in the capacity of a special agent
or agency supervisor assisting insurance
producers where the person’s activities are
limited to providing technical advice and
assistance to State licensed insurance pro-
ducers and do not include the sale, solicita-
tion or negotiation of insurance.
(C) A person who secures and furnishes in-
formation for the purpose of group insurance
policies; or for the purpose of enrolling individ-
uals under plans, or issuing certificates under
plans or otherwise assisting in administering
plans, where no commission or other compensa-
tion directly dependent upon the amount of in-
surance policies written or sold is paid to the
person for the service.
(D) An employer or association or its offi-
cers, directors, employees, or the trustees of an
employee trust plan, to the extent that the em-
ployer, officer, employee, director or trustee is
engaged in the administration or operation of a
program of employee benefits for the employer’s
or association’s own employees or the employees
of its subsidiaries or affiliates, which program
involves the use of insurance written by the na-
tional insurer, as long as the employers, asso-
ciations, officers, directors, employees or trust-
(I) Any other kind of person identified by
the Director, by regulation, as not being an in-
surance producer within the meaning of this
paragraph.
(16) INSURANCE SECURITIZATION.—The term
‘‘insurance securitization’’ means the issuance of
debt instruments, the proceeds from which support
the exposures attributed to a protected cell, by a na-
tional insurer where repayment of principal or inter-
est, or both, to investors pursuant to the transaction
terms is contingent upon the occurrence or non-
occurrence of an event with respect to which the na-
tional insurer is exposed to loss under insurance
policies or reinsurance contracts it has written.
(17) INSURER-AFFILIATED PARTY.—The term
‘‘insurer-affiliated party’’ means—
(A) any director, officer, employee, or con-
trolling shareholder (other than a holding com-
pany) of, or agent for, a national insurer;
(B) any other person who has filed or is
required to file a statement with the Director
under section 381;
(C) any shareholder (other than a holding
company), consultant, joint venture partner,
and any other person as determined by the Di-
rector (by regulation or case-by-case) who par-
ticipates in the conduct of the affairs of a na-
tional insurer; and
(D) any independent contractor (including
any attorney, actuary, or accountant) of a na-
tional insurer who in that capacity knowingly or
recklessly participates in—
(i) any violation of any law or regula-
tion;
(ii) any breach of fiduciary duty; or
(iii) any conduct that involves an
undue risk of loss to a national insurer’s
policyholders as a whole, which violation,
breach or conduct caused or is likely to
cause more than a minimal financial loss
to, or a significant adverse effect on, a na-
tional insurer or the policyholders of a na-
tional insurer.
(18) LIFE INSURANCE.—
(A) IN GENERAL.—The term ‘‘life insur-
ance’’ means insurance for which the prob-
abilities of the duration of human life or the
rate of mortality are an element or condition of
insurance.
(B) INCLUDED
INSURANCE.—Life insur-
ance includes the granting of—
(i) endowment benefits;
(ii) additional benefits in the event of
death by accident or accidental means;
(iii) disability income benefits;
(iv) additional disability benefits that
operate to safeguard the contract from
lapse or to provide a special surrender
value, or special benefit in the event of
total and permanent disability;
(v) benefits that provide payment or
reimbursement for long-term home health
care, or long-term care in a nursing home
or other related facility;
(vi) burial insurance; and
(vii) optional modes of settlement of
proceeds of life insurance.
(C) EXCLUSIONS.—Life insurance does not
include workers compensation insurance.
(19) MAIN OFFICE.—The term ‘‘main office’’
means the office of a national insurer designated as
its main office in accordance with section 305.
(20) NAIC.—The term ‘‘NAIC’’ means the Na-
tional Association of Insurance Commissioners.
(21) NATIONAL INSURER.—The term ‘‘national
insurer’’ means an insurer chartered under section
301 and the regulations thereunder.
(22) NATIONAL LIFE INSURER.—The term ‘‘na-
tional life insurer’’ means a life insurer chartered
under section 301 and the regulations thereunder.
(23) NATIONAL PROPERTY AND CASUALTY IN-
SURER.—The term ‘‘national property and casualty
insurer’’ means a property and casualty insurer
chartered under section 301 and the regulations
thereunder.
(24) 
NEGOTIATE.—The 
term 
‘‘negotiate’’
means, with respect to a policy of insurance, to en-
gage in the act of conferring directly with or offering
advice directly to a purchaser or prospective pur-
chaser of a particular policy of insurance concerning
any of the substantive benefits, terms or conditions
of the contract, provided that the person engaged in
that act either sells insurance or obtains insurance
from insurers for purchasers.
(25) NON-U.S. INSURER.—The term ‘‘non-U.S.
insurer’’ means an insurer organized under the laws
of a foreign jurisdiction.
(26) OFFICE.—The term ‘‘Office’’ means the
Office of National Insurers.
(27) PARENT.—The term ‘‘parent’’ means a
business entity that, directly or indirectly, controls
another business entity.
(28) PERSON.—The term ‘‘person’’ means any
natural person and any corporation, partnership,
limited liability company, limited liability partner-
ship, trust, association, governmental body or entity,
voluntary organization or similar organization.
(29) PERSON ASSOCIATED WITH A MEMBER.—
The term ‘‘person associated with a member’’ means
any director, officer, employee, controlling share-
holder, agent, or independent contractor (including
any attorney, actuary or accountant) of a national
insurer that is a member of an insurance self-regu-
latory organization.
(30) POLICY OF INSURANCE.—The term ‘‘policy
of insurance’’ or ‘‘insurance policy’’ means a policy,
contract, or certificate or evidence of insurance, an
annuity contract, and a funding agreement.
(31) POLICYHOLDER.—The term ‘‘policyholder’’
of an insurance policy means the person who is iden-
tified as the legal owner under the terms of the in-
surance policy or who is otherwise vested with legal
title to the insurance policy through an assignment,
absolute on its face, completed in accordance with
the terms of the insurance policy and properly re-
corded as the policyholder on the books of the in-
surer. Such term does not include a person with a
mere beneficial interest in an insurance policy or a
person to which an insurance policy is assigned for
collateral security purposes.
(32) PROPERTY AND CASUALTY INSURANCE.—
(A) IN
GENERAL.—The term ‘‘property
and casualty insurance’’ means insurance for
persons or properties in the United States
against—
(i) loss of or damage to property;
(ii) loss of income or extra expense in-
curred because of loss of or damage to
property;
(iii) third party liability claims caused
by negligence or imposed by statute or con-
tract, including workers compensation; or
(iv) loss resulting from debt or default
of another, including sureties.
(B) EXCLUSIONS.—Such term does not in-
clude health or life insurance, including group
life insurance;
(33) PROTECTED CELL.—The term ‘‘protected
cell’’ means an identified pool of assets and liabil-
ities of a national insurer segregated and insulated
from the remainder of the national insurer’s assets
and liabilities. The remainder of the national insur-
er’s assets and liabilities includes general account
assets and liabilities, separate account assets and li-
abilities and assets and liabilities of other protected
cells.
(34) PROTECTED CELL ACCOUNT.—The term
‘‘protected cell account’’ means a specifically identi-
fied bank or custodial account established by a na-
tional insurer for the purpose of segregating the pro-
tected cell assets of one protected cell from the pro-
tected cell assets of other protected cells and from
the assets of the national insurer’s general account
and separate accounts.
(35) RELEVANT STATE LAW.—The term ‘‘rel-
evant State law’’ means, with respect to a national
insurer, the law of the relevant State applicable to
an insurer that is chartered under the law of such
State and that is of the same corporate form as the
national insurer.
(36) RESULTING INSURER.—The term ‘‘result-
ing insurer’’ means a national insurer resulting from
a merger or consolidation pursuant to subsection (a)
of section 382.
(37) SELL.—The term ‘‘sell’’ means, with re-
spect to a policy of insurance, to exchange by any
means, for money or its equivalent, on behalf of an
insurer.
(38) SEPARATE ACCOUNT.—The term ‘‘separate
account’’ means an account established and main-
tained by a national insurer under which income,
gains and losses, whether or not realized, from as-
sets allocated to such account, are, in accordance
with the applicable contract, credited to or charged
against such account without regard to other in-
come, gains, or losses of the national insurer.
(39) SOLICIT.—The term ‘‘solicit’’ means, with
respect to a policy of insurance, attempting to sell
insurance or asking or urging a person to apply for
a particular kind of insurance from a particular in-
surer.
(40) STATE.—The term ‘‘State’’ means any
State of the United States, the District of Columbia,
any territory of the United States, Puerto Rico,
Guam, American Samoa, the Trust Territory of the
Pacific Islands, the Virgin Islands, and the Northern
Mariana Islands.
(41) STATE
INSURER.—The term ‘‘State in-
surer’’ means an insurer incorporated or organized
under the laws of a State.
(42) 
STATE
LICENSED
INSURANCE
PRO-
DUCER.—The term ‘‘State licensed insurance pro-
ducer’’ means a person that is an insurance pro-
ducer licensed by a State, but only in those cir-
cumstances in which such person is acting, in any
respect, with regard to a insurance policy or other
product of a national insurer; and such person shall
not be subject to the provisions of this Act when act-
ing in any other circumstances.
(43) 
SUBSIDIARY.—The 
term 
‘‘subsidiary’’
means a business entity controlled, directly or indi-
rectly, by another business entity. For purposes of
this paragraph—
(A) a business entity is conclusively pre-
sumed to be controlled by a person that, di-
rectly or indirectly, with power to vote, owns,
controls or holds a majority of the outstanding
voting securities of such business entity;
(B) no presumption, either of control or of
absence of control, arises if such ownership,
control or holding of voting securities is less
than a majority but more than 5 percent;
(C) absence of control is presumed if such
ownership, control or holding of voting securi-
ties is 5 percent or less; and
(D) in determining control, voting securi-
ties held in separate accounts of a business en-
tity shall be deemed to be owned by the busi-
ness entity, but voting securities in an invest-
ment advisory account that are not owned by a
business entity but are held in an account as to
which the business entity is an investment ad-
viser shall not be deemed to be controlled or
held by such business entity.
(44) TRANSITION COMMENCEMENT DATE.—The
term ‘‘transition commencement date’’ means the
date on which the first national insurer is granted
a Federal license by the Director under this Act.
(45) TRANSITION
TERMINATION
DATE.—The
term ‘‘transition termination date’’ means the 5th
anniversary of the transition commencement date.
(46) TRUSTEED ASSETS.—The term ‘‘trusteed
assets’’ means assets required or permitted by this
Act to be deposited by a non-U.S. insurer with a
qualified trustee for the security of its policyholders
and creditors in the United States.
(47) TRUSTEED SURPLUS.—The term ‘‘trusteed
surplus’’ means, with respect to a U.S. branch, the
value of the insurer’s trusteed assets deposited with
a trustee in compliance with subsection (b) of sec-
tion 302, plus accrued investment income thereon
where such interest is collected by the States trust-
ees, less the aggregate net amount of all of its re-
serves and other liabilities in the United States as
determined in accordance with subsection (b) of sec-
tion 302.
(48) U.S. BRANCH.—The term ‘‘U.S. branch’’
means the business unit through which business is
transacted within the United States by a non-U.S.
insurer and the assets and liabilities of the insurer
within the United States pertaining to such busi-
ness.
(49) VIOLATION.—The term ‘‘violation’’ in-
cludes any action or inaction (alone or with another
or others) for or toward causing, bringing about,
participating in, counseling, or aiding or abetting a
violation.
(50) VOTING SECURITIES.—The term ‘‘voting
securities’’ means securities of any class or any own-
ership interest having voting power for the election
of directors, trustees or management of a business
entity, other than securities having such power only
by reason of the happening of a contingency.
TITLE II—DIRECTOR OF THE
OFFICE OF NATIONAL INSURERS
SEC. 201. DIRECTOR OF THE OFFICE OF NATIONAL INSUR-
ERS.
(a) ESTABLISHMENT OF OFFICE.—There is estab-
lished the Office of National Insurers, which shall be an
office in the Department of the Treasury.
(b) ESTABLISHMENT OF POSITION OF DIRECTOR.—
There is established the position of the Director of the
Office of National Insurers, who shall be the head of the
Office of National Insurers and shall be subject to the gen-
eral oversight of the Secretary of the Treasury.
(c) AUTONOMY OF DIRECTOR.—The Secretary of the
Treasury may not intervene in any matter or proceeding
before the Director (including agency enforcement actions)
unless otherwise specifically provided by law.
(d) APPOINTMENT; TERM.—
(1) APPOINTMENT.—The Director shall be ap-
pointed by the President, by and with the advice and
consent of the Senate, from among individuals who
are citizens of the United States.
(2) TERM.—The Director shall be appointed for
a term of 4 years that begins on August 1 of the