whether to designate additional insurers, the
Secretary shall ensure that—
(i) insurers who specialize in selling
insurance in urban areas, including surplus
lines insurers, are specifically considered
for designation notwithstanding their pre-
mium volume, and
(ii) that insurers representing at least
90 percent of the premium volume in
the designated lines of insurance are
designated in such MSA.
(3) DESIGNATION OF LINES OF INSURANCE.—
For each MSA designated under paragraph (1) the
Secretary shall designate the lines of property and
casualty insurance sold in such MSA for which re-
porting is required under section 3. At a minimum,
the Secretary shall annually designate—
(A) private passenger automobile insurance
(including appropriate sublines and classes),
(B) property insurance which does not
cover commercial property (including appro-
priate sublines and classes and related cov-
erages such as coverage of property contents
and property insured at cash value), and
(C) commercial insurance for small busi-
ness.
The Secretary may designate additional lines of in-
surance on the basis of such criteria as the Sec-
retary may by rule develop. Such a rule shall be
issued in accordance with section 553 of title 5,
United States Code. For purposes of this Act, the
designation of a line of insurance includes a designa-
tion of a subline or class of insurance.
(4) TIMING OF DESIGNATIONS.—The Secretary
shall make the annual designations required by
paragraphs (1), (2), and (3) no later than Septem-
ber 1 of the year preceding the year for which re-
porting is required under section 3. The Secretary
shall notify persons involved in the designations no
later than the October 1 which follows the designa-
tion.
(b) OBTAINING INFORMATION.—The Secretary may
obtain from insurers such information as the Secretary
may require to make designations under subsection (a).
SEC. 5. DISCLOSURES TO REJECTED APPLICANTS.
(a) IN GENERAL.—Except as provided in subsection
(e), the Secretary shall, by regulation issued under section
553 of title 5, United States Code—
(1) require insurers to provide to each applicant
for insurance in a designated line—
(A) reasons for denying an application for
such insurance or for canceling or not renewing
a policy in force, and
(B) actions the applicant may take to qual-
ify for such insurance, and
(2) restrict the use insurers may make of infor-
mation relating to—
(A) adverse underwriting decisions, or
(B) insurance coverage in a residual mar-
ket.
(b) MODEL ACTS.—In issuing regulations under sub-
section (a), the Secretary shall consider relevant portions
of model acts developed by the National Association of
Insurance Commissioners.
(c) ENFORCEMENT.—The Secretary may delegate to
the States the authority to enforce the requirements of
regulations issued under subsection (a).
(d) PREEMPTION.—Subsection (a) is not to be con-
strued to preempt any State from imposing on insurers
requirements of the type stated in such subsection, includ-
ing requirements which are more stringent or more com-
prehensive.
(e) EXEMPTION.—A regulation issued under sub-
section (a) may not apply to insurance provided under a
program underwritten or administered by the United
States.
(f) 
DEFINITION.—For 
purposes 
of 
subsection
(a)(2)(A), an adverse underwriting decision means any of
the following actions with respect to insurance trans-
actions involving insurance coverage which is individually
underwritten:
(1) A declination of insurance coverage.
(2) A termination of insurance coverage.
(3) Failure of an agent to apply for insurance
coverage with a specific insurance entity which the
agent represents and which is requested by the
applicant.
(4) In the case of property or casualty insur-
ance coverage—
(A) place by an insurance entity or agent
of a risk with a residual market mechanism, an
unauthorized insurer, or an insurance entity
which specializes in substandard risks, or
(B) the charging of higher rates on the
basis of information which differs from that
which the applicant or policyholder furnished.
SEC. 6. TERMINATION OF AGENTS.
(a) REGULATIONS.—Except as provided in subsection
(d), the Secretary shall, by regulation issued under section
553 of title 5, United States Code, ensure that the prac-
tices of insurers in terminating agents who handle prop-
erty or casualty insurance do not result in an inappropri-
ate effect on the availability or affordability of insurance
from such insurers. Such regulations shall specifically en-
sure that such practices do not result in unfair discrimina-
tion against agents as a result of their geographic loca-
tions or of the geographic locations of their clients. Regu-
lations under subsection (a) shall be stated in terms of
minimum standards.
(b) PREEMPTION.—Subsection (a) is not to be con-
strued to preempt any State from imposing on insurers
requirements of the type stated in such subsection, includ-
ing requirements which are more stringent or more com-
prehensive.
(c) ENFORCEMENT.—The Secretary may delegate to
the States the enforcement of such regulations.
(d) EXEMPTION.—A regulation issued under sub-
section (a) may not apply to insurance provided under a
program underwritten or administered by the United
States.
SEC. 7. IMPLEMENTATION.
The Secretary shall prescribe such regulations as may
be necessary to carry out section 3. Such regulations may
contain such classifications, differentiations, or other pro-
visions, and may provide for such adjustments and excep-
tions for any class of transactions, as in the judgment of
the Secretary are necessary and proper to effectuate the
purposes of such section and to prevent circumvention or
evasion thereof or to facilitate compliance therewith.
SEC. 8. RELATION TO STATE LAWS.
This Act does not annul, alter, or affect, or exempt
the obligation of any insurer subject to this Act to comply
with the laws of any State or subdivision thereof with
respect to public disclosure and recordkeeping.
SEC. 9. IMPROVED METHODS.
The Secretary shall develop, or assist in the improve-
ment of, methods of matching addresses and census tracts
to facilitate compliance by insurers, in as economical a
manner as possible, with the requirements of this Act.
SEC. 10. REPORT.
The Secretary shall report to the Committee on Com-
merce of the House of Representatives and the Committee
on
of the Senate on the implementation of
this Act and shall make recommendations to such commit-
tees on such additional legislation as the Secretary deems
appropriate to carry out this Act.
SEC. 11. COMPILATION OF AGGREGATE DATA.
(a) SCOPE OF DATA AND TABLES.—The Secretary
shall compile each year, for each MSA, aggegate data by
census tract for all insurers who are subject to section 3
or who are exempt from section 3 under subsection
(b)(5)(A) of such section. The Secretary shall also produce
tables indicating, for each MSA, aggregate insurance un-
derwriting patterns for various categories of census tracts
grouped according to location, age of property, income
level, and racial characteristics.
(b) AVAILABILITY TO PUBLIC.—The data compiled
and the tables produced pursuant to subsection (a) shall
be made available to the public on a timetable determined
by the Secretary but not later than December 31 of the
year following the calendar year on which the data and
tables are based.
SEC. 12. ENFORCEMENT.
(a) CIVIL PENALTIES.—An insurer who does not
comply with the requirements of section 3 or a regulation
issued under section 5 or 6 shall be subject to a civil pen-
alty of not to exceed $5,000 for each day during which
such violation continues.
(b) INJUNCTION.—The district courts of the United
States shall have jurisdiction over a petition of the Sec-
retary to enjoin an insurer from actions which are in viola-
tion of the requirements of section 3 or of a regulation
issued under section 5 or 6.
SEC. 13. DEFINITIONS.
For purposes of this Act:
(1) The term ‘‘commercial insurance’’ means
any line of property and casualty insurance, except
private passenger automobile and homeowner’s in-
surance.
(2) The term ‘‘insurer’’ means any corporation,
association, society, order, firm, company, partner-
ship, individual, or aggregation of individuals which
is subject to examination or supervision by any State
insurance regulator, or which is doing or represents
an insurance business.
(3) The term ‘‘personal lines of insurance’’
means any property and casualty insurance issued
for noncommercial personal, family, or household
purposes.
(4) The term ‘‘property and casualty insur-
ance’’ means insurance against loss of or damage to
property, insurance against loss of income or extra
expense incurred because of loss of, or damage to,
property, and insurance against third party liability
claims caused by negligence or imposed by statute or
contract.
(5) The term ‘‘residual market’’ means an as-
signed risk plan, joint underwriting association, or
any similar mechanism designed to make insurance
available to those unable to obtain it in the
voluntary market.
(6) The term ‘‘Secretary’’ means the Secretary
of Commerce.
(7) The term ‘‘State’’ means any State, the
District of Columbia, the Commonwealth of Puerto
Rico, the Northern Mariana Islands, the Virgin Is-
lands, American Samoa, and the Trust Territory of
the Pacific Islands.
SEC. 14. EFFECTIVE DATE
The requirements of this Act shall take effect with
respect to calendar year 1996.
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HR 1188 1H——2