205 
of a State of domicile under this subsection, the Na-
tional Insurer shall be deemed to have designated as 
its State of domicile the State in which its principal 
place of business in the United States is located. 
(d) CHANGE IN DOMICILE.—A National Insurer may 
change its State of domicile, with the approval of the Com-
missioner, to any other State meeting the requirements 
under subsection (c). 
(e) STATUS OF NATIONAL INSURER.—For purposes 
of State taxation, a National Insurer— 
(1) shall not be considered a department, agen-
cy, or instrumentality of the Federal Government; 
and 
(2) except as provided in this section, a Na-
tional Insurer shall not be exempt from any State 
tax or subject to a lesser burden of any State tax, 
solely by reason of its status as a National Insurer 
under this Act. 
SEC. 252. STATE TAXATION OF NATIONAL AGENCIES. 
(a) STATE TAXATION RULE.—A National Agency 
shall be subject to all taxes imposed under the authority 
of any State legislation to the same extent and in the same 
manner as an agency chartered in the State where the 
National Agency is considered domiciled pursuant to sub-
section (b). 
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206 
(b) STATE OF DOMICILE.—For purposes of this sec-
tion, the State of domicile of a National Agency shall be 
deemed to be the State in which the Agency’s principal 
place of business in the United States is located. 
(c) STATUS OF NATIONAL AGENCY.—For purposes 
of State taxation, a National Agency shall not— 
(1) be considered to be a department, agency, 
or instrumentality of the Federal Government; and 
(2) except as provided in this section, be ex-
empt from any State tax or subject to a lesser bur-
den of any State tax, solely by reason of its status 
as a National Agency under this Act. 
TITLE 
III—INSURANCE 
PRO-
DUCERS AND OTHER INSUR-
ANCE SERVICING PERSONS 
SEC. 301. FEDERAL LICENSING OF INSURANCE PRO-
DUCERS. 
(a) COMMISSIONER’S
AUTHORITY.—The Commis-
sioner— 
(1) shall have authority to issue Federal pro-
ducer licenses; and 
(2) shall, by regulation— 
(A) define the line or lines of insurance for 
which a person may obtain a Federal producer 
license; and 
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207 
(B) specify educational and examination 
requirements for persons seeking a Federal pro-
ducer license, other than National Agencies that 
are subject to chartering criteria under section 
201. 
(b) NATIONAL AGENCIES.—The Commissioner shall 
issue a Federal producer license to a National Agency 
upon the issuance of a charter certificate to such Agency 
pursuant to section 201. 
(c) AUTHORITY OF PERSON HOLDING A FEDERAL 
PRODUCER LICENSE.—A Federal producer license author-
izes the person to sell, solicit, or negotiate insurance in 
any State for any line or lines of insurance specified in 
such license. 
(d) EXAMINATIONS AND REPORTS.—In addition to 
the examination and reporting requirements applicable to 
National Agencies pursuant to sections 124 and 125, the 
Commissioner may— 
(1) provide for the examination of federally li-
censed insurance producers that are not National 
Agencies only in response to a complaint or any 
other evidence that the federally licensed insurance 
producer has violated or is about to violate— 
(A) a law, rule, or regulation; 
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208 
(B) any condition imposed in writing by 
the Commissioner in connection with issuing a 
Federal producer’s license; or 
(C) any written agreement entered into 
with the Commissioner; and 
(2) require federally licensed insurance pro-
ducers that are not National Agencies to make such 
reports, containing such information and in such 
form, as the Commissioner may prescribe by regula-
tion to the extent necessary to require compliance 
with this Act. 
(e) INFORMATION PRACTICES.—The Commissioner 
may, by regulation, provide that there shall be no civil li-
ability imposed on and no cause of action shall arise from 
a National Insurer or National Agency, an insurer-affili-
ated party, or a federally licensed insurance producer sub-
mitting any statement or information required under this 
Act or any regulation thereunder or requested in writing 
by the Commissioner relating to the conduct of a federally 
licensed insurance producer, provided that— 
(1) this protection may not apply to false state-
ments made with actual malice; and 
(2) such regulation shall not abrogate or modify 
any existing common law or statutory privileges or 
immunities. 
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209 
SEC. 302. PRODUCER DATABASE. 
(a) IN GENERAL.—The Commissioner shall adopt 
regulations for the development of an electronic database 
consisting of information relating to federally licensed in-
surance producers and an electronic communication net-
work that links the Commissioner with State insurance 
regulators and insurers for an electronic exchange of such 
information. 
(b) MAINTENANCE.—The Commissioner, by rule or 
order, may delegate authority over the maintenance of 
each database described in subsection (a) to an insurance 
self-regulatory organization. In making any such rule or 
entering any such order, the Commissioner shall take into 
consideration the regulatory capabilities and procedures of 
the insurance self-regulatory organization, availability of 
staff, convenience of location, avoidance of unnecessary 
regulatory duplication, and any other factors the Commis-
sioner may consider appropriate to the protection of pol-
icyholders, the efficiency of the producer licensing system, 
and the cooperation and coordination among regulatory 
organizations. 
SEC. 303. SUPERVISION AND OVERSIGHT OF FEDERALLY LI-
CENSED INSURANCE PRODUCERS. 
(a) PURPOSE.—The purpose of this section is to es-
tablish when a National Insurer, National Agency, or fed-
erally licensed insurance producer has a duty to supervise 
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210 
a federally licensed insurance producer. The duty to super-
vise as required in this section shall be in addition to the 
authority of the Commissioner to supervise federally li-
censed insurance producers under section 102(b). 
(b) DUTY TO SUPERVISE.— 
(1) NATIONAL INSURERS.—A National Insurer 
shall have a duty to supervise the sales and mar-
keting practices of a federally licensed insurance 
producer with respect to the sale, solicitation, or ne-
gotiation of insurance policies of such National In-
surer, if such producer— 
(A) is an employee of the National Insurer; 
or 
(B) is an agent of the National Insurer— 
(i) who is an individual; and 
(ii) whose entire or principal business 
activity is devoted to the sale, solicitation, 
or negotiation of insurance policies for 
such Insurer, the recumbent, training, or 
supervision of the agents, or both. 
(2) NATIONAL AGENCIES.—A National Agency 
or other federally licensed insurance producer that is 
an entity has a duty to supervise the sales and mar-
keting practices of its employees and agents with re-
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211 
spect to the sale, solicitation, or negotiation of insur-
ance policies if— 
(A) in the case of an employee, the insur-
ance policy sold, solicited, or negotiated is with-
in the scope of such person’s employment; and 
(B) in the case of an agent, the insurance 
policy is sold, solicited, or negotiated pursuant 
to the terms of the agreement between the 
agent and such National Agency or other entity 
that is a federally licensed insurance producer. 
(3) STANDARDS FOR SUPERVISION.—The Com-
missioner shall, by regulation, establish standards 
for the supervision of the sales and marketing prac-
tices of federally licensed insurance producers re-
quired in paragraphs (1) and (2). 
(4) NO DUTY.—A National Insurer, National 
Agency, or other federally licensed insurance pro-
ducer that is an entity shall not have a duty to su-
pervise the sales and marketing practices of persons 
not listed in paragraphs (1) and (2). 
(5) OVERSIGHT OF INDIVIDUAL INDEPENDENT 
FEDERALLY LICENSED INSURANCE PRODUCERS.— 
(A) IN
GENERAL.—The sales and mar-
keting practices of a federally licensed insur-
ance producer with respect to the sale, solicita-
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212 
tion, or negotiation of insurance policies shall 
be subject to the direct oversight of the Com-
missioner if such producer is not— 
(i) an individual who is an employee 
or agent of a National Insurer, National 
Agency, or other federally licensed insur-
ance producer that is an entity; or 
(ii) an individual whose entire or prin-
cipal business activity is devoted to the 
sale, solicitation, or negotiation of insur-
ance policies for a National Insurer or re-
cumbent, training, or supervision of the 
agents. 
(B) STANDARDS AND PROCEDURES.—The 
Commissioner shall, by regulation, establish 
standards and procedures for the direct over-
sight of the sales and marketing practices of 
federally licensed insurance producers provided 
in subparagraph (A). 
SEC. 304. RELATIONSHIP TO STATE LAW. 
(a) NO STATE RESTRICTIONS.—No State may, by 
statute, regulation, order, interpretation, or otherwise, 
prevent or restrict a National Insurer from engaging in 
the acts described in subsection (b) for any person, or 
from engaging the services of a person who engages in 
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213 
such acts for the National Insurer, nor shall any State 
require that a person be licensed by reason of engaging 
in such acts for a National Insurer. 
(b) ACTS
PROTECTED
FROM
STATE
RESTRIC-
TIONS.—The acts referred to in subsection (a) are the fol-
lowing: 
(1) Investigating, evaluating, ascertaining, or 
determining the amount of or negotiating, settling, 
or adjusting or otherwise participating in the dis-
posal of claims, losses, or damages arising under in-
surance policies written by a National Insurer, 
whether the person performing the act is called an 
adjuster, independent adjuster, or another name. 
(2) Soliciting, negotiating, or placing reinsur-
ance cessions or retrocessions on behalf of a ceding 
National Insurer without the authority or power to 
bind reinsurance on behalf of such National Insurer, 
whether the person performing the act is called a re-
insurance intermediary or another name. 
(3) Having authority to bind or manage all or 
part of the assumed reinsurance business of a Na-
tional Insurer that is a reinsurer (including the 
management of a separate division, department, or 
underwriting office) and acting as an agent for such 
reinsurer whether the person performing the act is 
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214 
called a reinsurance intermediary-manager, man-
ager, or another name. 
(4) Directly or indirectly underwriting, col-
lecting charges or premiums, or adjusting or settling 
claims, in connection with policies of insurance writ-
ten by a National Insurer. 
(c) ACTIVITIES OF FEDERALLY LICENSED INSUR-
ANCE PRODUCERS.—No State may— 
(1) by statute, regulation, order, interpretation, 
or otherwise, prevent or restrict a federally licensed 
insurance producer from selling, soliciting, or negoti-
ating insurance in such State on behalf of a Na-
tional Insurer, State insurer, or United States 
branch of a non-United States Insurer; or 
(2) require such producer to be licensed by rea-
son of engaging in such acts on behalf of a National 
Insurer, State insurer, or a United States branch of 
a non-United States Insurer. 
(d) ACTIVITIES OF STATE PRODUCERS.—No State 
may, by statute, regulation, order, interpretation, or other-
wise, prevent or restrict an insurance producer licensed 
by such State from selling, soliciting, or negotiating insur-
ance in such State on behalf of a National Insurer. 
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215 
SEC. 305. LICENSING COMMENCEMENT DATE. 
(a) 
FEDERALLY
LICENSED
INSURANCE
PRO-
DUCERS.—The Commissioner shall not license a Federal 
insurance producer until after the following regulations 
have been published in final form: 
(1) The fee and assessment regulations author-
ized by section 122. 
(2) The reporting regulations authorized by sec-
tion 124. 
(3) The market conduct regulations authorized 
by section 215. 
(4) The producer licensing regulations author-
ized by section 301. 
(5) Such other regulations that the Commis-
sioner determines, at the Commissioner’s discretion, 
to be necessary prior to the initial licensing of Fed-
eral insurance producers. 
(b) TIMING AND NOTICE.— 
(1) TIMING.—The regulations described in sub-
section (a) shall be published in final form not later 
than 2 years after the initial appointment and con-
firmation of the Commissioner. 
(2) NOTICE.—At such time as the regulations 
described in subsection (a) have been issued in final 
form, the Commissioner shall publish a notice in the 
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216 
Federal Register announcing that the Office is pre-
pared to act on licensing applications. 
TITLE IV—HOLDING COMPANIES 
SEC. 401. DEFINITIONS. 
In this title: 
(1) EXTRAORDINARY DIVIDEND OR DISTRIBU-
TION.—Except as may otherwise be specified by the 
Commissioner by regulation, the term ‘‘extraor-
dinary dividend or distribution’’ means a dividend or 
distribution of cash or other property on its out-
standing shares (excluding pro rata distributions of 
any class of the National Insurer’s own shares), 
whose fair market value together with that of other 
dividends or distributions made within the prior 12 
months exceeds the greater of— 
(A) 10 percent of the National Insurer’s 
policyholder surplus as of the prior December 
31; or 
(B) the net income of the National Insurer 
for the 12-month period ending the prior De-
cember 31. 
(2) INSURANCE HOLDING COMPANY SYSTEM.— 
The term ‘‘insurance holding company system’’ 
means 2 or more affiliated persons, 1 or more of 
which is a National Insurer. 
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217 
SEC. 402. REGISTRATION. 
(a) REGISTRATION.—Each National Insurer that is 
a member of an insurance holding company system shall 
register with the Commissioner. 
(b) REGISTRATION STATEMENT.—The Commissioner 
shall, by regulation, prescribe— 
(1) the form and content of the registration 
statement to be filed pursuant to subsection (a); and 
(2) the time and place where the registration 
statement is required to be filed with the Commis-
sioner. 
(c) TERMINATION OF REGISTRATION.—The Commis-
sioner shall terminate the registration of any National In-
surer which demonstrates that it no longer is a member 
of an insurance holding company system. 
(d) CONSOLIDATED REGISTRATION STATEMENT.— 
The Commissioner may require or allow 2 or more affili-
ated National Insurers to file a consolidated registration 
statement. 
(e) EXEMPTIONS.—The provisions of this section 
shall not apply to any National Insurer, information, or 
transaction if, and to the extent that, the Commissioner 
by regulation or order, exempts such Insurer, information, 
or transaction from the provisions of this section. 
(f) DISCLAIMER.—Any person may file with the Com-
missioner a disclaimer of affiliation with any National In-
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218 
surer or a disclaimer may be filed by the National Insurer 
or any member of an insurance holding company system. 
The disclaimer shall fully disclose all material relation-
ships and bases for affiliation between the person and the 
National Insurer as well as the basis for disclaiming the 
affiliation. After a disclaimer has been filed, the National 
Insurer shall be relieved of any duty to register or report 
under this section which may arise out of the National 
Insurer’s relationship with the person unless and until the 
Commissioner disallows the disclaimer. The Commissioner 
shall disallow a disclaimer only after furnishing all parties 
in interest with notice and opportunity to be heard and 
after making specific findings of fact to support the dis-
allowance. 
SEC. 403. STANDARDS AND MANAGEMENT OF A NATIONAL 
INSURER WITHIN AN INSURANCE HOLDING 
COMPANY SYSTEM. 
(a) TRANSACTIONS WITHIN AN INSURANCE HOLDING 
COMPANY SYSTEM.— 
(1) STANDARDS.—Transactions within an in-
surance holding company system to which a Na-
tional Insurer subject to registration under section 
402 is a party shall be subject to the following 
standards: 
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219 
(A) The terms shall be fair, reasonable, 
and at least as favorable to the National In-
surer as those that would be offered to, or 
would apply to, a nonaffiliate. 
(B) Charges or fees for services performed 
shall be reasonable and at least as favorable to 
the National Insurer as those that would be of-
fered to, or would apply to, a nonaffiliate. 
(C) Expenses incurred and payment re-
ceived shall be allocated to the National Insurer 
in conformity with customary insurance ac-
counting practices consistently applied. 
(D) The books, accounts, and records of 
each party to all such transactions shall be so 
maintained as to clearly and accurately disclose 
the nature and details of the transactions in-
cluding such accounting information as is nec-
essary to support the reasonableness of the 
charges or fees to the respective parties. 
(E) The National Insurer’s surplus as re-
gards policyholders following any dividends or 
distributions to shareholders shall be reasonable 
in relation to the National Insurer’s out-
standing liabilities and adequate to meet its fi-
nancial needs. 
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220 
(2) APPROVAL OF CERTAIN TRANSACTIONS.— 
The Commissioner may, by regulation, specify cer-
tain transactions involving a National Insurer and 
any person in its insurance holding company system 
that are not permissible for a National Insurer un-
less the National Insurer has notified the Commis-
sioner in writing of its intention to enter into the 
transaction and the Commissioner either has ap-
proved or not disapproved the transaction within a 
specified time period. 
(3) 
COMPLIANCE
WITH
STANDARDS.—The 
Commissioner, in reviewing any transaction for 
which notice is required pursuant to paragraph (2), 
shall consider whether the transaction complies with 
the standards set forth in paragraph (1) and wheth-
er the transaction may adversely affect the interests 
of policyholders. 
(b) EXTRAORDINARY DIVIDENDS.— 
(1) IN GENERAL.—No National Insurer that is 
a member of an insurance holding company system 
shall pay any extraordinary dividend or distribution 
to its shareholders until 30 days after the Commis-
sioner has received notice of the declaration in a 
form prescribed by the Commissioner. 
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221 
(2) CONDITIONAL
DIVIDEND
OR
DISTRIBU-
TION.—A National Insurer that is a member of an 
insurance holding company system may declare an 
extraordinary dividend or distribution which is con-
ditional upon the Commissioner’s approval, and the 
declaration shall confer no rights upon shareholders 
unless— 
(A) the Commissioner has approved the 
payment of the dividend or distribution; or 
(B) the Commissioner has not disapproved 
payment within the 30-day period referred to in 
paragraph (1). 
SEC. 404. RELATIONSHIP TO STATE LAW. 
(a) PERMITTED AFFILIATION.—A National Insurer 
that is part of an insurance holding company system may 
be affiliated with an insurer or agency that is not char-
tered or licensed under this Act. 
(b) REINSURANCE
POOLING
AGREEMENTS.—The 
Commissioner shall have exclusive jurisdiction over rein-
surance pooling agreements to which 1 or more National 
Property/Casualty Insurers and affiliated State property/ 
casualty insurers, or agency are parties under which poli-
cies of insurance sold, solicited, negotiated, and under-
written by and reinsurance assumed by affiliated National 
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222 
Property/Casualty Insurers and State property/casualty 
insurers are pooled. 
SEC. 405. CONFLICT WITH OTHER FEDERAL LAWS. 
This title shall be interpreted and applied so as not 
to conflict with or supersede the provisions of any other 
Federal law or regulation governing the regulation of hold-
ing companies, including financial holding companies as 
defined in section 2 of the Bank Holding Company Act 
of 1956 (12 U.S.C. 1841). 
SEC. 406. NO DELEGATION PERMITTED. 
The Commissioner may not delegate to any insurance 
self-regulatory organization any authority conferred under 
this title with respect to regulation of a National Insurer 
that is a member of an insurance holding company system. 
TITLE V—PROMPT CORRECTIVE 
ACTION AND RECEIVERSHIP 
Subtitle A—Prompt Corrective 
Action 
SEC. 501. PROMPT CORRECTIVE ACTION. 
(a) RULEMAKING.—Not later than the expiration of 
the 6-month period beginning upon the submission of the 
report under subsection (b)(3) to the Commissioner, the 
Commissioner shall promulgate such regulations, applica-
ble to National Insurers, as the Commissioner determines 
appropriate and consisent with the recommendation in the 
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