533
principal and is not a subsidiary of the bank, the national
bank and any subsidiary of the national bank may not en-
gage in any activity involving the underwriting of title in-
surance pursuant to subsection (a).
(c) INSURANCE SUBSIDIARY.—In the case of a na-
tional bank which has a subsidiary which provides insur-
ance as principal and has no affiliate which provides insur-
ance as principal and is not a subsidiary, the national
bank may not engage in any activity involving the under-
writing of title insurance pursuant to subsection (a).
(d) ‘‘AFFILIATE’’ AND ‘‘SUBSIDIARY’’ DEFINED.—For
purposes of this section, the terms ‘‘affiliate’’ and ‘‘subsidi-
ary’’ have the same meanings as in section 2 of the Bank
Holding Company Act of 1956.
SEC. 306. EXPEDITED AND EQUALIZED DISPUTE RESOLU-
TION FOR FINANCIAL REGULATORS.
(a) FILING IN COURT OF APPEAL.—In the case of a
regulatory conflict between a State insurance regulator and
a Federal regulator as to whether any product is or is not
insurance as defined in section 304(c) of this Act, or wheth-
er a State statute, regulation, order, or interpretation re-
garding any insurance sales or solicitation activity is prop-
erly treated as preempted under Federal law, either regu-
lator may seek expedited judicial review of such determina-
tion by the United States Court of Appeals for the circuit
534
in which the State is located or in the United States Court
of Appeals for the District of Columbia Circuit by filing
a petition for review in such court.
(b) EXPEDITED REVIEW.—The United States court of
appeals in which a petition for review is filed in accordance
with paragraph (1) shall complete all action on such peti-
tion, including rendering a judgment, before the end of the
60-day period beginning on the date such petition is filed,
unless all parties to such proceeding agree to any extension
of such period.
(c) SUPREME COURT REVIEW.—Any request for certio-
rari to the Supreme Court of the United States of any judg-
ment of a United States court of appeals with respect to
a petition for review under this section shall be filed with
the United States Supreme Court as soon as practicable
after such judgment is issued.
(d) STATUTE OF LIMITATION.—No action may be filed
under this section challenging an order, ruling, determina-
tion, or other action of a Federal financial regulator or
State insurance regulator after the later of—
(1) the end of the 12-month period beginning on
the date the first public notice is made of such order,
ruling, or determination in its final form; or
535
(2) the end of the 6-month period beginning on
the date such order, ruling, or determination takes ef-
fect.
(e) STANDARD OF REVIEW.—The court shall decide an
action filed under this section based on its review on the
merits of all questions presented under State and Federal
law, including the nature of the product or activity and
the history and purpose of its regulation under State and
Federal law, without unequal deference.
SEC. 307. CONSUMER PROTECTION REGULATIONS.
The Federal Deposit Insurance Act (12 U.S.C. 1811
et seq.) is amended by adding at the end the following new
section:
‘‘SEC. 45. CONSUMER PROTECTION REGULATIONS.
‘‘(a) REGULATIONS REQUIRED.—
‘‘(1) IN GENERAL.—The Federal banking agen-
cies shall prescribe and publish in final form, before
the end of the 1-year period beginning on the date of
the enactment of this Act, consumer protection regula-
tions (which the agencies jointly determine to be ap-
propriate) that—
‘‘(A) apply to retail sales practices, solicita-
tions, advertising, or offers of any insurance
product by any insured depository institution or
wholesale financial institution or any person
536
who is engaged in such activities at an office of
the institution or on behalf of the institution;
and
‘‘(B) are consistent with the requirements of
this Act and provide such additional protections
for consumers to whom such sales, solicitations,
advertising, or offers are directed as the agency
determines to be appropriate.
‘‘(2) APPLICABILITY TO SUBSIDIARIES.—The reg-
ulations prescribed pursuant to paragraph (1) shall
extend such protections to any subsidiaries of an in-
sured depository institution, as deemed appropriate
by the regulators referred to in paragraph (3), where
such extension is determined to be necessary to ensure
the consumer protections provided by this section.
‘‘(3) CONSULTATION AND JOINT REGULATIONS.—
The Federal banking agencies shall consult with each
other and prescribe joint regulations pursuant to
paragraph (1), after consultation with the State in-
surance regulators, as appropriate.
‘‘(b) SALES PRACTICES.—The regulations prescribed
pursuant to subsection (a) shall include anticoercion rules
applicable to the sale of insurance products which prohibit
an insured depository institution from engaging in any
practice that would lead a consumer to believe an extension
537
of credit, in violation of section 106(b) of the Bank Holding
Company Act Amendments of 1970, is conditional upon—
‘‘(1) the purchase of an insurance product from
the institution or any of its affiliates or subsidiaries;
or
‘‘(2) an agreement by the consumer not to ob-
tain, or a prohibition on the consumer from obtain-
ing, an insurance product from an unaffiliated en-
tity.
‘‘(c) DISCLOSURES AND ADVERTISING.—The regula-
tions prescribed pursuant to subsection (a) shall include the
following provisions relating to disclosures and advertising
in connection with the initial purchase of an insurance
product:
‘‘(1) DISCLOSURES.—
‘‘(A) IN GENERAL.—Requirements that the
following disclosures be made orally and in writ-
ing before the completion of the initial sale and,
in the case of clause (iv), at the time of applica-
tion for an extension of credit:
‘‘(i) UNINSURED STATUS.—As appro-
priate, the product is not insured by the
Federal Deposit Insurance Corporation, the
United States Government, or the insured
depository institution.
538
‘‘(ii) INVESTMENT RISK.—In the case
of a variable annuity or other insurance
product which involves an investment risk,
that there is an investment risk associated
with the product, including possible loss of
value.
‘‘(iii) COERCION.—The approval of an
extension of credit may not be conditioned
on—
‘‘(I) the purchase of an insurance
product from the institution in which
the application for credit is pending or
any of its affiliates or subsidiaries; or
‘‘(II) an agreement by the con-
sumer not to obtain, or a prohibition
on the consumer from obtaining, an
insurance product from an unaffiliated
entity.
‘‘(B) MAKING DISCLOSURE READILY UNDER-
STANDABLE.—Regulations prescribed under sub-
paragraph (A) shall encourage the use of disclo-
sure that is conspicuous, simple, direct, and
readily understandable, such as the following:
‘‘(i) ‘NOT FDIC–INSURED’.
539
‘‘(ii) ‘NOT GUARANTEED BY THE
BANK’.
‘‘(iii) ‘MAY GO DOWN IN VALUE’.
‘‘(C) 
ADJUSTMENTS
FOR
ALTERNATIVE
METHODS OF PURCHASE.—In prescribing the re-
quirements under subparagraphs (A) and (D),
necessary adjustments shall be made for purchase
in person, by telephone, or by electronic media to
provide for the most appropriate and complete
form of disclosure and acknowledgments.
‘‘(D) CONSUMER ACKNOWLEDGMENT.—A re-
quirement that an insured depository institution
shall require any person selling an insurance
product at any office of, or on behalf of, the in-
stitution to obtain, at the time a consumer re-
ceives the disclosures required under this para-
graph or at the time of the initial purchase by
the consumer of such product, an acknowledg-
ment by such consumer of the receipt of the dis-
closure required under this subsection with re-
spect to such product.
‘‘(2) PROHIBITION ON MISREPRESENTATIONS.—A
prohibition on any practice, or any advertising, at
any office of, or on behalf of, the insured depository
institution, or any subsidiary as appropriate, which
540
could mislead any person or otherwise cause a reason-
able person to reach an erroneous belief with respect
to—
‘‘(A) the uninsured nature of any insurance
product sold, or offered for sale, by the institu-
tion or any subsidiary of the institution; or
‘‘(B) in the case of a variable annuity or
other insurance product that involves an invest-
ment risk, the investment risk associated with
any such product.
‘‘(d) SEPARATION OF BANKING AND NONBANKING AC-
TIVITIES.—
‘‘(1) REGULATIONS REQUIRED.—The regulations
prescribed pursuant to subsection (a) shall include
such provisions as the Federal banking agencies con-
sider appropriate to ensure that the routine accept-
ance of deposits is kept, to the extent practicable,
physically segregated from insurance product activity.
‘‘(2) REQUIREMENTS.—Regulations prescribed
pursuant to paragraph (1) shall include the following
requirements:
‘‘(A) SEPARATE SETTING.—A clear delinea-
tion of the setting in which, and the cir-
cumstances under which, transactions involving
insurance products should be conducted in a lo-
541
cation physically segregated from an area where
retail deposits are routinely accepted.
‘‘(B) REFERRALS.—Standards which per-
mit any person accepting deposits from the pub-
lic in an area where such transactions are rou-
tinely conducted in an insured depository insti-
tution to refer a customer who seeks to purchase
any insurance product to a qualified person who
sells such product, only if the person making the
referral receives no more than a one-time nomi-
nal fee of a fixed dollar amount for each referral
that does not depend on whether the referral re-
sults in a transaction.
‘‘(C) QUALIFICATION
AND
LICENSING
RE-
QUIREMENTS.—Standards prohibiting any in-
sured depository institution from permitting any
person to sell or offer for sale any insurance
product in any part of any office of the institu-
tion, or on behalf of the institution, unless such
person is appropriately qualified and licensed.
‘‘(e) DOMESTIC VIOLENCE DISCRIMINATION PROHIBI-
TION.—
‘‘(1) IN GENERAL.—In the case of an applicant
for, or an insured under, any insurance product de-
scribed in paragraph (2), the status of the applicant
542
or insured as a victim of domestic violence, or as a
provider of services to victims of domestic violence,
shall not be considered as a criterion in any decision
with regard to insurance underwriting, pricing, re-
newal, or scope of coverage of insurance policies, or
payment of insurance claims, except as required or
expressly permitted under State law.
‘‘(2) SCOPE OF APPLICATION.—The prohibition
contained in paragraph (1) shall apply to any insur-
ance product which is sold or offered for sale, as prin-
cipal, agent, or broker, by any insured depository in-
stitution or any person who is engaged in such activi-
ties at an office of the institution or on behalf of the
institution.
‘‘(3) SENSE OF THE CONGRESS.—It is the sense
of the Congress that, by the end of the 30-month pe-
riod beginning on the date of the enactment of this
Act, the States should enact prohibitions against dis-
crimination with respect to insurance products that
are at least as strict as the prohibitions contained in
paragraph (1).
‘‘(4) DOMESTIC VIOLENCE DEFINED.—For pur-
poses of this subsection, the term ‘domestic violence’
means the occurrence of 1 or more of the following
543
acts by a current or former family member, household
member, intimate partner, or caretaker:
‘‘(A) Attempting to cause or causing or
threatening another person physical harm, severe
emotional distress, psychological trauma, rape,
or sexual assault.
‘‘(B) Engaging in a course of conduct or re-
peatedly committing acts toward another person,
including following the person without proper
authority, under circumstances that place the
person in reasonable fear of bodily injury or
physical harm.
‘‘(C) Subjecting another person to false im-
prisonment.
‘‘(D) Attempting to cause or cause damage
to property so as to intimidate or attempt to
control the behavior of another person.
‘‘(f) CONSUMER GRIEVANCE PROCESS.—The Federal
banking agencies shall jointly establish a consumer com-
plaint mechanism, for receiving and expeditiously address-
ing consumer complaints alleging a violation of regulations
issued under the section, which shall—
‘‘(1) establish a group within each regulatory
agency to receive such complaints;
544
‘‘(2) develop procedures for investigating such
complaints;
‘‘(3) develop procedures for informing consumers
of rights they may have in connection with such com-
plaints; and
‘‘(4) develop procedures for addressing concerns
raised by such complaints, as appropriate, including
procedures for the recovery of losses to the extent ap-
propriate.
‘‘(g) EFFECT ON OTHER AUTHORITY.—
‘‘(1) IN GENERAL.—No provision of this section
shall be construed as granting, limiting, or otherwise
affecting—
‘‘(A) any authority of the Securities and
Exchange Commission, any self-regulatory orga-
nization, the Municipal Securities Rulemaking
Board, or the Secretary of the Treasury under
any Federal securities law; or
‘‘(B) except as provided in paragraph (2),
any authority of any State insurance commis-
sioner or other State authority under any State
law.
‘‘(2) COORDINATION WITH STATE LAW.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), regulations prescribed by a
545
Federal banking agency under this section shall
not apply to retail sales, solicitations, advertis-
ing, or offers of any insurance product by any
insured depository institution or wholesale fi-
nancial institution or to any person who is en-
gaged in such activities at an office of such insti-
tution or on behalf of the institution, in a State
where the State has in effect statutes, regulations,
orders, or interpretations, that are inconsistent
with or contrary to the regulations prescribed by
the Federal banking agencies.
‘‘(B) PREEMPTION.—If, with respect to any
provision of the regulations prescribed under this
section, the Board of Governors of the Federal
Reserve System, the Comptroller of the Currency,
and the Board of Directors of the Federal De-
posit Insurance Corporation determine jointly
that the protection afforded by such provision for
consumers is greater than the protection pro-
vided by a comparable provision of the statutes,
regulations, orders, or interpretations referred to
in subparagraph (A) of any State, such provi-
sion of the regulations prescribed under this sec-
tion shall supersede the comparable provision of
546
such State statute, regulation, order, or interpre-
tation.
‘‘(h) INSURANCE PRODUCT DEFINED.—For purposes
of this section, the term ‘insurance product’ includes an an-
nuity contract the income of which is subject to tax treat-
ment under section 72 of the Internal Revenue Code of
1986.’’.
SEC. 308. CERTAIN STATE AFFILIATION LAWS PREEMPTED
FOR INSURANCE COMPANIES AND AFFILI-
ATES.
Except as provided in section 104(a)(2), no State may,
by law, regulation, order, interpretation, or otherwise—
(1) prevent or significantly interfere with the
ability of any insurer, or any affiliate of an insurer
(whether such affiliate is organized as a stock com-
pany, mutual holding company, or otherwise), to be-
come a financial holding company or to acquire con-
trol of an insured depository institution;
(2) limit the amount of an insurer’s assets that
may be invested in the voting securities of an insured
depository institution (or any company which con-
trols such institution), except that the laws of an in-
surer’s State of domicile may limit the amount of
such investment to an amount that is not less than
5 percent of the insurer’s admitted assets; or
547
(3) prevent, significantly interfere with, or have
the authority to review, approve, or disapprove a
plan of reorganization by which an insurer proposes
to reorganize from mutual form to become a stock in-
surer (whether as a direct or indirect subsidiary of a
mutual holding company or otherwise) unless such
State is the State of domicile of the insurer.
Subtitle B—National Association of
Registered Agents and Brokers
SEC. 321. STATE FLEXIBILITY IN MULTISTATE LICENSING
REFORMS.
(a) IN GENERAL.—The provisions of this subtitle shall
take effect unless, not later than 3 years after the date of
enactment of this Act, at least a majority of the States—
(1) have enacted uniform laws and regulations
governing the licensure of individuals and entities au-
thorized to sell and solicit the purchase of insurance
within the State; or
(2) have enacted reciprocity laws and regula-
tions governing the licensure of nonresident individ-
uals and entities authorized to sell and solicit insur-
ance within those States.
(b) UNIFORMITY REQUIRED.—States shall be deemed
to have established the uniformity necessary to satisfy sub-
section (a)(1) if the States—
548
(1) establish uniform criteria regarding the in-
tegrity, personal qualifications, education, training,
and experience of licensed insurance producers, in-
cluding the qualification and training of sales person-
nel in ascertaining the appropriateness of a particu-
lar insurance product for a prospective customer;
(2) establish uniform continuing education re-
quirements for licensed insurance producers;
(3) establish uniform ethics course requirements
for licensed insurance producers in conjunction with
the continuing education requirements under para-
graph (2);
(4) establish uniform criteria to ensure that an
insurance product, including any annuity contract,
sold to a consumer is suitable and appropriate for the
consumer based on financial information disclosed by
the consumer; and
(5) do not impose any requirement upon any in-
surance producer to be licensed or otherwise qualified
to do business as a nonresident that has the effect of
limiting or conditioning that producer’s activities be-
cause of its residence or place of operations, except
that counter-signature requirements imposed on non-
resident producers shall not be deemed to have the ef-
fect of limiting or conditioning a producer’s activities
549
because of its residence or place of operations under
this section.
(c) RECIPROCITY REQUIRED.—States shall be deemed
to have established the reciprocity required to satisfy sub-
section (a)(2) if the following conditions are met:
(1) ADMINISTRATIVE LICENSING PROCEDURES.—
At least a majority of the States permit a producer
that has a resident license for selling or soliciting the
purchase of insurance in its home State to receive a
license to sell or solicit the purchase of insurance in
such majority of States as a nonresident to the same
extent that such producer is permitted to sell or solicit
the purchase of insurance in its State, if the produc-
er’s home State also awards such licenses on such a
reciprocal basis, without satisfying any additional re-
quirements other than submitting—
(A) a request for licensure;
(B) the application for licensure that the
producer submitted to its home State;
(C) proof that the producer is licensed and
in good standing in its home State; and
(D) the payment of any requisite fee to the
appropriate authority.
(2) CONTINUING EDUCATION REQUIREMENTS.—A
majority of the States accept an insurance producer’s
550
satisfaction of its home State’s continuing education
requirements for licensed insurance producers to sat-
isfy the States’ own continuing education require-
ments if the producer’s home State also recognizes the
satisfaction of continuing education requirements on
such a reciprocal basis.
(3) 
NO
LIMITING
NONRESIDENT
REQUIRE-
MENTS.—A majority of the States do not impose any
requirement upon any insurance producer to be li-
censed or otherwise qualified to do business as a non-
resident that has the effect of limiting or conditioning
that producer’s activities because of its residence or
place of operations, except that countersignature re-
quirements imposed on nonresident producers shall
not be deemed to have the effect of limiting or condi-
tioning a producer’s activities because of its residence
or place of operations under this section.
(4) RECIPROCAL
RECIPROCITY.—Each of the
States that satisfies paragraphs (1), (2), and (3)
grants reciprocity to residents of all of the other
States that satisfy such paragraphs.
(d) DETERMINATION.—
(1) NAIC DETERMINATION.—At the end of the 3-
year period beginning on the date of the enactment of
this Act, the National Association of Insurance Com-
551
missioners shall determine, in consultation with the
insurance commissioners or chief insurance regu-
latory officials of the States, whether the uniformity
or reciprocity required by subsections (b) and (c) has
been achieved.
(2) JUDICIAL REVIEW.—The appropriate United
States district court shall have exclusive jurisdiction
over any challenge to the National Association of In-
surance Commissioners’ determination under this sec-
tion and such court shall apply the standards set
forth in section 706 of title 5, United States Code,
when reviewing any such challenge.
(e) CONTINUED APPLICATION.—If, at any time, the
uniformity or reciprocity required by subsections (b) and
(c) no longer exists, the provisions of this subtitle shall take
effect 2 years after that date, unless the uniformity or reci-
procity required by those provisions is satisfied before the
expiration of that 2-year period.
(f) SAVINGS PROVISION.—No provision of this section
shall be construed as requiring that any law, regulation,
provision, or action of any State which purports to regulate
insurance producers, including any such law, regulation,
provision, or action which purports to regulate unfair trade
practices or establish consumer protections, including
countersignature laws, be altered or amended in order to
552
satisfy the uniformity or reciprocity required by subsections
(b) and (c), unless any such law, regulation, provision, or
action is inconsistent with a specific requirement of any
such subsection and then only to the extent of such incon-
sistency.
(g) UNIFORM LICENSING.—Nothing in this section
shall be construed to require any State to adopt new or ad-
ditional licensing requirements to achieve the uniformity
necessary to satisfy subsection (a)(1).
SEC. 322. NATIONAL ASSOCIATION OF REGISTERED AGENTS
AND BROKERS.
(a) ESTABLISHMENT.—There is established the Na-
tional Association of Registered Agents and Brokers (here-
after in this subtitle referred to as the ‘‘Association’’).
(b) STATUS.—The Association shall—
(1) be a nonprofit corporation;
(2) have succession until dissolved by an Act of
Congress;
(3) not be an agent or instrumentality of the
United States Government; and
(4) except as otherwise provided in this Act, be
subject to, and have all the powers conferred upon a
nonprofit corporation by the District of Columbia
Nonprofit Corporation Act (D.C. Code, sec. 29y–1001
et seq.).
553
SEC. 323. PURPOSE.
The purpose of the Association shall be to provide a
mechanism through which uniform licensing, appointment,
continuing education, and other insurance producer sales
qualification requirements and conditions can be adopted
and applied on a multistate basis, while preserving the
right of States to license, supervise, and discipline insur-
ance producers and to prescribe and enforce laws and regu-
lations with regard to insurance-related consumer protec-
tion and unfair trade practices.
SEC. 324. RELATIONSHIP TO THE FEDERAL GOVERNMENT.
The Association shall be subject to the supervision and
oversight of the National Association of Insurance Commis-
sioners (hereafter in this subtitle referred to as the ‘‘NAIC’’).
SEC. 325. MEMBERSHIP.
(a) ELIGIBILITY.—
(1) IN GENERAL.—Any State-licensed insurance
producer shall be eligible to become a member in the
Association.
(2) INELIGIBILITY FOR SUSPENSION OR REVOCA-
TION OF LICENSE.—Notwithstanding paragraph (1),
a State-licensed insurance producer shall not be eligi-
ble to become a member if a State insurance regulator
has suspended or revoked such producer’s license in
that State during the 3-year period preceding the date
on which such producer applies for membership.
554
(3) RESUMPTION
OF
ELIGIBILITY.—Paragraph
(2) shall cease to apply to any insurance producer
if—
(A) the State insurance regulator renews the
license of such producer in the State in which the
license was suspended or revoked; or
(B) the suspension or revocation is subse-
quently overturned.
(b) AUTHORITY TO ESTABLISH MEMBERSHIP CRI-
TERIA.—The Association shall have the authority to estab-
lish membership criteria that—
(1) bear a reasonable relationship to the pur-
poses for which the Association was established; and
(2) do not unfairly limit the access of smaller
agencies to the Association membership.
(c) ESTABLISHMENT OF CLASSES AND CATEGORIES.—
(1) CLASSES OF MEMBERSHIP.—The Association
may establish separate classes of membership, with
separate criteria, if the Association reasonably deter-
mines that performance of different duties requires
different levels of education, training, or experience.
(2) CATEGORIES.—The Association may estab-
lish separate categories of membership for individuals
and for other persons. The establishment of any such
categories of membership shall be based either on the
555
types of licensing categories that exist under State
laws or on the aggregate amount of business handled
by an insurance producer. No special categories of
membership, and no distinct membership criteria,
shall be established for members which are insured de-
pository institutions or wholesale financial institu-
tions or for their employees, agents, or affiliates.
(d) MEMBERSHIP CRITERIA.—
(1) IN GENERAL.—The Association may establish
criteria for membership which shall include standards
for integrity, personal qualifications, education,
training, and experience.
(2) MINIMUM
STANDARD.—In establishing cri-
teria under paragraph (1), the Association shall con-
sider the highest levels of insurance producer quali-
fications established under the licensing laws of the
States.
(e) EFFECT OF MEMBERSHIP.—Membership in the As-
sociation shall entitle the member to licensure in each State
for which the member pays the requisite fees, including li-
censing fees and, where applicable, bonding requirements,
set by such State.
(f) ANNUAL RENEWAL.—Membership in the Associa-
tion shall be renewed on an annual basis.
556
(g) CONTINUING EDUCATION.—The Association shall
establish, as a condition of membership, continuing edu-
cation requirements which shall be comparable to or greater
than the continuing education requirements under the li-
censing laws of a majority of the States.
(h) SUSPENSION AND REVOCATION.—The Association
may—
(1) inspect and examine the records and offices
of the members of the Association to determine com-
pliance with the criteria for membership established
by the Association; and
(2) suspend or revoke the membership of an in-
surance producer if—
(A) the producer fails to meet the applicable
membership criteria of the Association; or
(B) the producer has been subject to dis-
ciplinary action pursuant to a final adjudica-
tory proceeding under the jurisdiction of a State
insurance regulator, and the Association con-
cludes that retention of membership in the Asso-
ciation would not be in the public interest.
(i) OFFICE OF CONSUMER COMPLAINTS.—
(1) IN GENERAL.—The Association shall establish
an office of consumer complaints that shall—
557
(A) receive and investigate complaints from
both consumers and State insurance regulators
related to members of the Association; and
(B) recommend to the Association any dis-
ciplinary actions that the office considers appro-
priate, to the extent that any such recommenda-
tion is not inconsistent with State law.
(2) RECORDS
AND
REFERRALS.—The office of
consumer complaints of the Association shall—
(A) maintain records of all complaints re-
ceived in accordance with paragraph (1) and
make such records available to the NAIC and to
each State insurance regulator for the State of
residence of the consumer who filed the com-
plaint; and
(B) refer, when appropriate, any such com-
plaint to any appropriate State insurance regu-
lator.
(3) TELEPHONE AND OTHER ACCESS.—The office
of consumer complaints shall maintain a toll-free tele-
phone number for the purpose of this subsection and,
as practicable, other alternative means of communica-
tion with consumers, such as an Internet home page.
558
SEC. 326. BOARD OF DIRECTORS.
(a) ESTABLISHMENT.—There is established the board
of directors of the Association (hereafter in this subtitle re-
ferred to as the ‘‘Board’’) for the purpose of governing and
supervising the activities of the Association and the mem-
bers of the Association.
(b) POWERS.—The Board shall have such powers and
authority as may be specified in the bylaws of the Associa-
tion.
(c) COMPOSITION.—
(1) MEMBERS.—The Board shall be composed of
7 members appointed by the NAIC.
(2) REQUIREMENT.—At least 4 of the members of
the Board shall have significant experience with the
regulation of commercial lines of insurance in at least
1 of the 20 States in which the greatest total dollar
amount of commercial-lines insurance is placed in the
United States.
(3) INITIAL BOARD MEMBERSHIP.—
(A) IN GENERAL.—If, by the end of the 2-
year period beginning on the date of enactment
of this Act, the NAIC has not appointed the ini-
tial 7 members of the Board of the Association,
the initial Board shall consist of the 7 State in-
surance regulators of the 7 States with the great-
560
SEC. 327. OFFICERS.
(a) IN GENERAL.—
(1) POSITIONS.—The officers of the Association
shall consist of a chairperson and a vice chairperson
of the Board, a president, secretary, and treasurer of
the Association, and such other officers and assistant
officers as may be deemed necessary.
(2) MANNER OF SELECTION.—Each officer of the
Board and the Association shall be elected or ap-
pointed at such time and in such manner and for
such terms not exceeding 3 years as may be prescribed
in the bylaws of the Association.
(b) CRITERIA FOR CHAIRPERSON.—Only individuals
who are members of the NAIC shall be eligible to serve as
the chairperson of the board of directors.
SEC. 328. BYLAWS, RULES, AND DISCIPLINARY ACTION.
(a) ADOPTION AND AMENDMENT OF BYLAWS.—
(1) COPY REQUIRED TO BE FILED WITH THE
NAIC.—The board of directors of the Association shall
file with the NAIC a copy of the proposed bylaws or
any proposed amendment to the bylaws, accompanied
by a concise general statement of the basis and pur-
pose of such proposal.
(2) EFFECTIVE DATE.—Except as provided in
paragraph (3), any proposed bylaw or proposed
amendment shall take effect—
561
(A) 30 days after the date of the filing of
a copy with the NAIC;
(B) upon such later date as the Association
may designate; or
(C) such earlier date as the NAIC may de-
termine.
(3) DISAPPROVAL BY THE NAIC.—Notwithstand-
ing paragraph (2), a proposed bylaw or amendment
shall not take effect if, after public notice and oppor-
tunity to participate in a public hearing—
(A) the NAIC disapproves such proposal as
being contrary to the public interest or contrary
to the purposes of this subtitle and provides no-
tice to the Association setting forth the reasons
for such disapproval; or
(B) the NAIC finds that such proposal in-
volves a matter of such significant public interest
that public comment should be obtained, in
which case it may, after notifying the Associa-
tion in writing of such finding, require that the
procedures set forth in subsection (b) be followed
with respect to such proposal, in the same man-
ner as if such proposed bylaw change were a pro-
posed rule change within the meaning of such
paragraph.
562
(b) ADOPTION AND AMENDMENT OF RULES.—
(1) FILING PROPOSED REGULATIONS WITH THE
NAIC.—
(A) IN GENERAL.—The board of directors of
the Association shall file with the NAIC a copy
of any proposed rule or any proposed amend-
ment to a rule of the Association which shall be
accompanied by a concise general statement of
the basis and purpose of such proposal.
(B) OTHER RULES AND AMENDMENTS INEF-
FECTIVE.—No proposed rule or amendment shall
take effect unless approved by the NAIC or other-
wise permitted in accordance with this para-
graph.
(2) INITIAL CONSIDERATION BY THE NAIC.—Not
later than 35 days after the date of publication of no-
tice of filing of a proposal, or before the end of such
longer period not to exceed 90 days as the NAIC may
designate after such date, if the NAIC finds such
longer period to be appropriate and sets forth its rea-
sons for so finding, or as to which the Association
consents, the NAIC shall—
(A) by order approve such proposed rule or
amendment; or
563
(B) institute proceedings to determine
whether such proposed rule or amendment should
be modified or disapproved.
(3) NAIC PROCEEDINGS.—
(A) IN
GENERAL.—Proceedings instituted
by the NAIC with respect to a proposed rule or
amendment pursuant to paragraph (2) shall—
(i) include notice of the grounds for
disapproval under consideration;
(ii) provide opportunity for hearing;
and
(iii) be concluded not later than 180
days after the date of the Association’s fil-
ing of such proposed rule or amendment.
(B) DISPOSITION
OF
PROPOSAL.—At the
conclusion of any proceeding under subpara-
graph (A), the NAIC shall, by order, approve or
disapprove the proposed rule or amendment.
(C) EXTENSION
OF
TIME
FOR
CONSIDER-
ATION.—The NAIC may extend the time for con-
cluding any proceeding under subparagraph (A)
for—
(i) not more than 60 days if the NAIC
finds good cause for such extension and sets
forth its reasons for so finding; or
564
(ii) for such longer period as to which
the Association consents.
(4) STANDARDS FOR REVIEW.—
(A) GROUNDS FOR APPROVAL.—The NAIC
shall approve a proposed rule or amendment if
the NAIC finds that the rule or amendment is in
the public interest and is consistent with the
purposes of this Act.
(B) APPROVAL BEFORE END OF NOTICE PE-
RIOD.—The NAIC shall not approve any pro-
posed rule before the end of the 30-day period be-
ginning on the date on which the Association
files proposed rules or amendments in accord-
ance with paragraph (1), unless the NAIC finds
good cause for so doing and sets forth the reasons
for so finding.
(5) ALTERNATE PROCEDURE.—
(A) IN
GENERAL.—Notwithstanding any
provision of this subsection other than subpara-
graph (B), a proposed rule or amendment relat-
ing to the administration or organization of the
Association may take effect—
(i) upon the date of filing with the
NAIC, if such proposed rule or amendment
is designated by the Association as relating
565
solely to matters which the NAIC, consistent
with the public interest and the purposes of
this subsection, determines by rule do not
require the procedures set forth in this
paragraph; or
(ii) upon such date as the NAIC shall
for good cause determine.
(B) ABROGATION BY THE NAIC.—
(i) IN GENERAL.—At any time within
60 days after the date of filing of any pro-
posed rule or amendment under subpara-
graph (A)(i) or clause (ii) of this subpara-
graph, the NAIC may repeal such rule or
amendment and require that the rule or
amendment be refiled and reviewed in ac-
cordance with this paragraph, if the NAIC
finds that such action is necessary or ap-
propriate in the public interest, for the pro-
tection of insurance producers or policy-
holders, or otherwise in furtherance of the
purposes of this subtitle.
(ii) EFFECT OF RECONSIDERATION BY
THE NAIC.—Any action of the NAIC pursu-
ant to clause (i) shall—
566
(I) not affect the validity or force
of a rule change during the period such
rule or amendment was in effect; and
(II) not be considered to be a final
action.
(c) ACTION REQUIRED BY THE NAIC.—The NAIC
may, in accordance with such rules as the NAIC determines
to be necessary or appropriate to the public interest or to
carry out the purposes of this subtitle, require the Associa-
tion to adopt, amend, or repeal any bylaw, rule or amend-
ment of the Association, whenever adopted.
(d) DISCIPLINARY ACTION BY THE ASSOCIATION.—
(1) SPECIFICATION OF CHARGES.—In any pro-
ceeding to determine whether membership shall be de-
nied, suspended, revoked, and not renewed (hereafter
in this section referred to as a ‘‘disciplinary action’’),
the Association shall bring specific charges, notify
such member of such charges, give the member an op-
portunity to defend against the charges, and keep a
record.
(2) SUPPORTING STATEMENT.—A determination
to take disciplinary action shall be supported by a
statement setting forth—
(A) any act or practice in which such mem-
ber has been found to have been engaged;
567
(B) the specific provision of this subtitle,
the rules or regulations under this subtitle, or the
rules of the Association which any such act or
practice is deemed to violate; and
(C) the sanction imposed and the reason for
such sanction.
(e) NAIC REVIEW OF DISCIPLINARY ACTION.—
(1) NOTICE TO THE NAIC.—If the Association or-
ders any disciplinary action, the Association shall
promptly notify the NAIC of such action.
(2) REVIEW BY THE NAIC.—Any disciplinary ac-
tion taken by the Association shall be subject to re-
view by the NAIC—
(A) on the NAIC’s own motion; or
(B) upon application by any person ag-
grieved by such action if such application is filed
with the NAIC not more than 30 days after the
later of—
(i) the date the notice was filed with
the NAIC pursuant to paragraph (1); or
(ii) the date the notice of the discipli-
nary action was received by such aggrieved
person.
(f) EFFECT OF REVIEW.—The filing of an application
to the NAIC for review of a disciplinary action, or the insti-
568
tution of review by the NAIC on the NAIC’s own motion,
shall not operate as a stay of disciplinary action unless the
NAIC otherwise orders.
(g) SCOPE OF REVIEW.—
(1) IN GENERAL.—In any proceeding to review
such action, after notice and the opportunity for hear-
ing, the NAIC shall—
(A) determine whether the action should be
taken;
(B) affirm, modify, or rescind the discipli-
nary sanction; or
(C) remand to the Association for further
proceedings.
(2) DISMISSAL OF REVIEW.—The NAIC may dis-
miss a proceeding to review disciplinary action if the
NAIC finds that—
(A) the specific grounds on which the action
is based exist in fact;
(B) the action is in accordance with appli-
cable rules and regulations; and
(C) such rules and regulations are, and
were, applied in a manner consistent with the
purposes of this subtitle.
569
SEC. 329. ASSESSMENTS.
(a) INSURANCE PRODUCERS SUBJECT
TO ASSESS-
MENT.—The Association may establish such application
and membership fees as the Association finds necessary to
cover the costs of its operations, including fees made reim-
bursable to the NAIC under subsection (b), except that, in
setting such fees, the Association may not discriminate
against smaller insurance producers.
(b) NAIC ASSESSMENTS.—The NAIC may assess the
Association for any costs that the NAIC incurs under this
subtitle.
SEC. 330. FUNCTIONS OF THE NAIC.
(a) ADMINISTRATIVE PROCEDURE.—Determinations of
the NAIC, for purposes of making rules pursuant to section
328, shall be made after appropriate notice and oppor-
tunity for a hearing and for submission of views of inter-
ested persons.
(b) EXAMINATIONS AND REPORTS.—
(1) The NAIC may make such examinations and
inspections of the Association and require the Associa-
tion to furnish to the NAIC such reports and records
or copies thereof as the NAIC may consider necessary
or appropriate in the public interest or to effectuate
the purposes of this subtitle.
(2) As soon as practicable after the close of each
fiscal year, the Association shall submit to the NAIC
570
a written report regarding the conduct of its business,
and the exercise of the other rights and powers grant-
ed by this subtitle, during such fiscal year. Such re-
port shall include financial statements setting forth
the financial position of the Association at the end of
such fiscal year and the results of its operations (in-
cluding the source and application of its funds) for
such fiscal year. The NAIC shall transmit such report
to the President and the Congress with such comment
thereon as the NAIC determines to be appropriate.
SEC. 331. LIABILITY OF THE ASSOCIATION AND THE DIREC-
TORS, OFFICERS, AND EMPLOYEES OF THE
ASSOCIATION.
(a) IN GENERAL.—The Association shall not be deemed
to be an insurer or insurance producer within the meaning
of any State law, rule, regulation, or order regulating or
taxing insurers, insurance producers, or other entities en-
gaged in the business of insurance, including provisions im-
posing premium taxes, regulating insurer solvency or fi-
nancial condition, establishing guaranty funds and levying
assessments, or requiring claims settlement practices.
(b) LIABILITY OF THE ASSOCIATION, ITS DIRECTORS,
OFFICERS, AND EMPLOYEES.—Neither the Association nor
any of its directors, officers, or employees shall have any
liability to any person for any action taken or omitted in
571
good faith under or in connection with any matter subject
to this subtitle.
SEC. 332. ELIMINATION OF NAIC OVERSIGHT.
(a) IN GENERAL.—The Association shall be established
without NAIC oversight and the provisions set forth in sec-
tion 324, subsections (a), (b), (c), and (e) of section 328,
and sections 329(b) and 330 of this subtitle shall cease to
be effective if, at the end of the 2-year period beginning on
the date on which the provisions of this subtitle take effect
pursuant to section 321—
(1) at least a majority of the States representing
at least 50 percent of the total United States commer-
cial-lines insurance premiums have not satisfied the
uniformity or reciprocity requirements of subsections
(a) and (b) of section 321; and
(2) the NAIC has not approved the Association’s
bylaws as required by section 328 or is unable to op-
erate or supervise the Association, or the Association
is not conducting its activities as required under this
Act.
(b) BOARD APPOINTMENTS.—If the repeals required by
subsection (a) are implemented, the following shall apply:
(1) GENERAL APPOINTMENT POWER.—The Presi-
dent, with the advice and consent of the United States
Senate, shall appoint the members of the Association’s
572
Board established under section 326 from lists of can-
didates recommended to the President by the National
Association of Insurance Commissioners.
(2) PROCEDURES FOR OBTAINING NATIONAL AS-
SOCIATION OF INSURANCE COMMISSIONERS APPOINT-
MENT RECOMMENDATIONS.—
(A) INITIAL
DETERMINATION
AND
REC-
OMMENDATIONS.—After the date on which the
provisions of subsection (a) take effect, the NAIC
shall, not later than 60 days thereafter, provide
a list of recommended candidates to the Presi-
dent. If the NAIC fails to provide a list by that
date, or if any list that is provided does not in-
clude at least 14 recommended candidates or
comply with the requirements of section 326(c),
the President shall, with the advice and consent
of the United States Senate, make the requisite
appointments without considering the views of
the NAIC.
(B) SUBSEQUENT
APPOINTMENTS.—After
the initial appointments, the NAIC shall provide
a list of at least 6 recommended candidates for
the Board to the President by January 15 of
each subsequent year. If the NAIC fails to pro-
vide a list by that date, or if any list that is pro-
573
vided does not include at least 6 recommended
candidates or comply with the requirements of
section 326(c), the President, with the advice and
consent of the Senate, shall make the requisite
appointments without considering the views of
the NAIC.
(C) PRESIDENTIAL OVERSIGHT.—
(i) REMOVAL.—If the President deter-
mines that the Association is not acting in
the interests of the public, the President
may remove the entire existing Board for
the remainder of the term to which the
members of the Board were appointed and
appoint, with the advice and consent of the
Senate, new members to fill the vacancies
on the Board for the remainder of such
terms.
(ii) SUSPENSION
OF
RULES
OR
AC-
TIONS.—The President, or a person des-
ignated by the President for such purpose,
may suspend the effectiveness of any rule, or
prohibit any action, of the Association
which the President or the designee deter-
mines is contrary to the public interest.
574
(c) ANNUAL REPORT.—As soon as practicable after the
close of each fiscal year, the Association shall submit to the
President and to the Congress a written report relative to
the conduct of its business, and the exercise of the other
rights and powers granted by this subtitle, during such fis-
cal year. Such report shall include financial statements set-
ting forth the financial position of the Association at the
end of such fiscal year and the results of its operations (in-
cluding the source and application of its funds) for such
fiscal year.
SEC. 333. RELATIONSHIP TO STATE LAW.
(a) PREEMPTION OF STATE LAWS.—State laws, regu-
lations, provisions, or other actions purporting to regulate
insurance producers shall be preempted as provided in sub-
section (b).
(b) PROHIBITED ACTIONS.—No State shall—
(1) impede the activities of, take any action
against, or apply any provision of law or regulation
to, any insurance producer because that insurance
producer or any affiliate plans to become, has applied
to become, or is a member of the Association;
(2) impose any requirement upon a member of
the Association that it pay different fees to be licensed
or otherwise qualified to do business in that State, in-
cluding bonding requirements, based on its residency;
575
(3) impose any licensing, appointment, integ-
rity, personal or corporate qualifications, education,
training, experience, residency, or continuing edu-
cation requirement upon a member of the Association
that is different from the criteria for membership in
the Association or renewal of such membership, except
that counter-signature requirements imposed on non-
resident producers shall not be deemed to have the ef-
fect of limiting or conditioning a producer’s activities
because of its residence or place of operations under
this section; or
(4) implement the procedures of such State’s sys-
tem of licensing or renewing the licenses of insurance
producers in a manner different from the authority of
the Association under section 325.
(c) SAVINGS PROVISION.—Except as provided in sub-
sections (a) and (b), no provision of this section shall be
construed as altering or affecting the continuing effective-
ness of any law, regulation, provision, or other action of
any State which purports to regulate insurance producers,
including any such law, regulation, provision, or action
which purports to regulate unfair trade practices or estab-
lish consumer protections, including countersignature laws.
576
SEC. 334. COORDINATION WITH OTHER REGULATORS.
(a) COORDINATION WITH STATE INSURANCE REGU-
LATORS.—The Association shall have the authority to—
(1) issue uniform insurance producer applica-
tions and renewal applications that may be used to
apply for the issuance or removal of State licenses,
while preserving the ability of each State to impose
such conditions on the issuance or renewal of a license
as are consistent with section 333;
(2) establish a central clearinghouse through
which members of the Association may apply for the
issuance or renewal of licenses in multiple States; and
(3) establish or utilize a national database for
the collection of regulatory information concerning
the activities of insurance producers.
(b) COORDINATION WITH THE NATIONAL ASSOCIATION
OF SECURITIES DEALERS.—The Association shall coordi-
nate with the National Association of Securities Dealers in
order to ease any administrative burdens that fall on per-
sons that are members of both associations, consistent with
the purposes of this subtitle and the Federal securities laws.
SEC. 335. JUDICIAL REVIEW.
(a) JURISDICTION.—The appropriate United States
district court shall have exclusive jurisdiction over litiga-
tion involving the Association, including disputes between
the Association and its members that arise under this sub-
593
‘‘(4) LIMITATION ON STATE ACTION WHILE FED-
ERAL ACTION PENDING.—If the Federal Trade Com-
mission or any agency described in subsection (b) has
instituted a civil action for a violation of this title,
no State may, during the pendency of such action,
bring an action under this section against any de-
fendant named in the complaint of the Federal Trade
Commission or such agency for any violation of this
title that is alleged in that complaint.
‘‘SEC. 1005. CIVIL LIABILITY.
‘‘Any person, other than a financial institution, who
fails to comply with any provision of this title with respect
to any financial institution or any customer information
of a financial institution shall be liable to such financial
institution or the customer to whom such information re-
lates in an amount equal to the sum of the amounts deter-
mined under each of the following paragraphs:
‘‘(1) ACTUAL DAMAGES.—The greater of—
‘‘(A) the amount of any actual damage sus-
tained by the financial institution or customer
as a result of such failure; or
‘‘(B) any amount received by the person
who failed to comply with this title, including
an amount equal to the value of any nonmone-