591
•HR 10 RH2
‘‘(9) REFERENCE TO BOARD BACKUP EX-
AMINATION AND ENFORCEMENT AUTHORITY.—
The Board of Governors of the Federal
Reserve System has backup authority,
pursuant to section 10(e) of the Bank
Holding Company Act of 1956, with re-
spect to supervised investment bank
holding companies described in para-
graph (1).
‘‘(10) DEFINITIONS.—For purposes of
this subsection and subsection (j)—
‘‘(A) The term ‘investment bank
holding company’ means—
‘‘(i) any person other than a
natural person that owns or con-
trols one or more brokers or deal-
ers; and
‘‘(ii) the associated persons of
the investment bank holding com-
pany.
‘‘(B) The term ‘supervised invest-
ment bank holding company’ means
any investment bank holding com-
pany that is supervised by the Com-
592
•HR 10 RH2
mission pursuant to paragraph (1) or
(2) of this section.
‘‘(C) Any investment bank holding
company is ‘substantially engaged in
the securities business’ if—
‘‘(i) the annual total consoli-
dated net revenues derived by the
holding company from effecting
transactions in or buying and
selling securities as a broker or
dealer represent at least 35 per-
cent of the annual total consoli-
dated net revenues of the com-
pany; or
‘‘(ii) the company controls one
or more brokers or dealers that in
the aggregate have total equity
capital and qualifying subordi-
nated debt (based on an average
of the four preceding calendar
quarters) in excess of $750,000,000
and such total equity capital and
qualifying subordinated debt does
not fall below $500,000,000 (based
593
•HR 10 RH2
on an average for the four preced-
ing calendar quarters).
‘‘(D) The term ‘wholesale financial
institution’ means a wholesale finan-
cial institution subject to section 9B
of the Federal Reserve Act.
‘‘(E) The terms ‘affiliate,’ ‘bank,’
‘bank holding company,’ ‘company,’
‘control,’ ‘savings association,’ ‘well
capitalized,’ and ‘well managed’ have
the meanings given to those terms in
section 2 of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1841).
‘‘(F) The term ‘insured bank’ has
the meaning given to that term in
section 3 of the Federal Deposit In-
surance Act.
‘‘(G) The term ‘foreign bank’ has
the meaning given to that term in
section 1(b)(7) of the International
Banking Act of 1978.
‘‘(H) The terms ‘‘person associated
with an investment bank holding
company’ and ‘‘associated person of
an investment bank holding company’
594
•HR 10 RH2
means any person directly or indi-
rectly controlling, controlled by, or
under common control with, an in-
vestment bank holding company.
‘‘(j) COMMISSION BACKUP AUTHORITY.—
‘‘(1) INSPECTION AUTHORITY FOR INVEST-
MENT BANK HOLDING COMPANIES THAT ARE
NOT SUPERVISED INVESTMENT BANK HOLDING
COMPANIES.—
‘‘(A) AUTHORITY.—The Commission
may make inspections of any invest-
ment bank holding company that—
‘‘(i) controls a wholesale fi-
nancial institution,
‘‘(ii) is not a foreign bank, and
‘‘(iii) does not control an in-
sured bank (other than an institu-
tion permitted under subpara-
graph (D), (F), or (G) of section
2(c)(2) of the Bank Holding Com-
pany Act of 1956) or a savings as-
sociation,
and any affiliate of such company, for
the purpose of monitoring and en-
forcing compliance by the investment
596
•HR 10 RH2
an insurance company of any li-
censed insurance company; and
‘‘(iii) made by any Federal or
State banking agency of any bank
or institution described in sub-
paragraph (D), (F), or (G) of sec-
tion 2(c)(2) of the Bank Holding
Company Act of 1956.
‘‘(D) NOTICE.—To the fullest extent
possible, the Commission shall notify
the appropriate regulatory agency
prior to conducting an inspection of a
wholesale financial institution or in-
stitution described in subparagraph
(D), (F), or (G) of section 2(c)(2) of the
Bank Holding Company Act of 1956.
‘‘(k) AUTHORITY TO LIMIT DISCLOSURE OF
INFORMATION.—Notwithstanding 
any 
other
provision of law, the Commission shall not be
compelled to disclose any information re-
quired to be reported under subsection (h),
(i), or (j), or any information supplied to the
Commission by any domestic or foreign regu-
latory agency that relates to the financial or
operational condition of any associated per-
597
•HR 10 RH2
son of a broker or dealer, investment bank
holding company, or any affiliate of an invest-
ment bank holding company. Nothing in this
subsection shall authorize the Commission to
withhold information from Congress, or pre-
vent the Commission from complying with a
request for information from any other Fed-
eral department or agency or any self-regu-
latory organization requesting the informa-
tion for purposes within the scope of its juris-
diction, or complying with an order of a court
of the United States in an action brought by
the United States or the Commission. For pur-
poses of section 552 of title 5, United States
Code, this subsection shall be considered a
statute described in subsection (b)(3)(B) of
such section 552. In prescribing regulations to
carry out the requirements of this subsection,
the Commission shall designate information
described in or obtained pursuant to subpara-
graphs (A), (B), and (C) of paragraph (5) of
subsection (i), and subsection (j) as confiden-
tial information for purposes of section
24(b)(2) of this title.’’.
(b) CONFORMING AMENDMENTS.—
598
•HR 10 RH2
(1) Section 3(a)(34) of the Securities
Exchange 
Act 
of 
1934 
(15 
U.S.C.
78c(a)(34)) is amended by adding at the
end the following new subparagraphs:
‘‘(H) When used with respect to a
wholesale financial institution—
‘‘(i) the Board of Governors of
the Federal Reserve System, in
the case of a wholesale financial
institution that has a national
bank charter, a State bank char-
ter, or is operating under the
Code of Law for the District of
Columbia; and
‘‘(ii) the Comptroller of the
Currency, in the case of a whole-
sale financial institution that has
a national bank charter or is op-
erating under the Code of Law for
the District of Columbia.
‘‘(I) When used with respect to an
institution 
described 
in 
subpara-
graph (D), (F), or (G) of section 2(c)(2)
of the Bank Holding Company Act of
1956—
599
•HR 10 RH2
‘‘(i) the Comptroller of the
Currency, in the case of a na-
tional bank or a bank in the Dis-
trict of Columbia examined by the
Comptroller of the Currency;
‘‘(ii) the Board of Governors of
the Federal Reserve System, in
the case of a State member bank
of the Federal Reserve System or
any corporation chartered under
section 25A of the Federal Re-
serve Act;
‘‘(iii) the Federal Deposit In-
surance Corporation, in the case
of any other bank the deposits of
which are insured in accordance
with the Federal Deposit Insur-
ance Act; or
‘‘(iv) the Commission in the
case of all other such institu-
tions.’’.
(2) Section 15(b)(6)(A) of the Securi-
ties Exchange Act of 1934 (15 U.S.C.
78o(b)(6)(A)) is amended by inserting
after ‘‘With respect to any person who is
600
•HR 10 RH2
associated,’’ the following: ‘‘including an
investment bank holding company, a
wholesale financial institution, or institu-
tion described in subparagraph (D), (F),
or (G) of section 2(c)(2) of the Bank Hold-
ing Company Act of 1956,’’.
(3) Section 3(a)(18) of the Securities
Exchange 
Act 
of 
1934 
(15 
U.S.C.
78c(a)(18)) is amended by inserting after
‘‘under common control with such broker
or dealer’’ the following: ‘‘(including an
investment 
bank 
holding 
company,
wholesale financial institution, or institu-
tion described in subparagraph (D), (F),
or (G) of section 2(c)(2) of the Bank Hold-
ing Company Act of 1956 that is affiliated
with an investment bank holding com-
pany)’’.
(4) Section 3(a)(21) of the Securities
Exchange 
Act 
of 
1934 
(15 
U.S.C.
78c(a)(21)) is amended by inserting after
‘‘under common control with such mem-
ber’’ the following: ‘‘(including an invest-
ment bank holding company, wholesale
financial institution or institution de-
601
•HR 10 RH2
scribed in subparagraph (D), (F), or (G) of
section 2(c)(2) of the Bank Holding Com-
pany Act of 1956 that is affiliated with an
investment bank holding company)’’.
(5) Section 1112(e) of the Right to Fi-
nancial Privacy Act of 1978 (12 U.S.C.
3412(e)) is amended—
(A) by striking ‘‘this title’’ and in-
serting ‘‘law’’; and
(B) by inserting ‘‘, examination re-
ports’’ after ‘‘financial records’’.
Subtitle D—Study
SEC. 241. STUDY OF METHODS TO INFORM INVESTORS AND
CONSUMERS OF UNINSURED PRODUCTS.
Within one year after the date of enact-
ment of this Act, the Comptroller General of
the United States shall submit a report to the
Congress regarding the efficacy, costs, and
benefits of requiring that any depository in-
stitution that accepts federally insured depos-
its and that, directly or through a contractual
or other arrangement with a broker, dealer,
or agent, buys from, sells to, or effects trans-
actions for retail investors in securities or
consumers of insurance to inform such inves-
602
•HR 10 RH2
tors and consumers through the use of a logo
or seal that the security or insurance is not
insured by the Federal Deposit Insurance
Corporation.
TITLE III—INSURANCE
Subtitle A—State Regulation of
Insurance
SEC. 301. STATE REGULATION OF THE BUSINESS OF INSUR-
ANCE.
The Act entitled ‘‘An Act to express the in-
tent of the Congress with reference to the reg-
ulation of the business of insurance’’ and ap-
proved March 9, 1945 (15 U.S.C. 1011 et seq.),
commonly referred to as the ‘‘McCarran—Fer-
guson Act’’) remains the law of the United
States.
SEC. 302. MANDATORY INSURANCE LICENSING REQUIRE-
MENTS.
No person or entity shall provide insur-
ance in a State as principal or agent unless
such person or entity is licensed by the appro-
priate insurance regulator of such State.
SEC. 303. FUNCTIONAL REGULATION OF INSURANCE.
The insurance sales activity of any person
or entity shall be functionally regulated.
603
•HR 10 RH2
SEC. 
304. 
INSURANCE 
UNDERWRITING 
IN 
NATIONAL
BANKS.
(a) IN GENERAL.—Except as provided in
section 306, a national bank and the subsidi-
aries of a national bank may not provide in-
surance in a State as principal except that
this prohibition shall not apply to authorized
products.
(b) AUTHORIZED PRODUCTS.—For the pur-
poses of this section, a product is authorized
if—
(1) as of January 1, 1997, the Comp-
troller of the Currency had determined in
writing that national banks may provide
such product as principal, or national
banks were in fact lawfully providing
such product as principal;
(2) no court of relevant jurisdiction
had, by final judgment, overturned a de-
termination of the Comptroller of the
Currency that national banks may pro-
vide such product as principal; and
(3) the product is not title insurance,
or an annuity contract the income of
which is subject to tax treatment under
604
•HR 10 RH2
section 72 of the Internal Revenue Code
of 1986.
(c) DEFINITION.—For purposes of this sec-
tion, the term ‘‘insurance’’ means—
(1) any product regulated as insur-
ance as of January 1, 1997, in accordance
with the relevant State insurance law, in
the State in which the product is pro-
vided;
(2) any product first offered after
January 1, 1997, which—
(A) a State insurance regulator
determines shall be regulated as in-
surance in the State in which the
product is provided because the prod-
uct insures, guarantees, or indem-
nifies against liability, loss of life, loss
of health, or loss through damage to
or destruction of property, including,
but not limited to, life insurance,
health insurance, title insurance, and
property 
and 
casualty 
insurance
(such as private passenger or com-
mercial 
automobile, 
homeowners,
commercial multiperil, general liabil-
605
•HR 10 RH2
ity, professional liability, workers’
compensation, fire and allied lines,
farm owners multiperil, aircraft, fi-
delity, surety, medical malpractice,
ocean marine, inland marine, and
boiler and machinery insurance); and
(B) is not a product or service of
a bank that is (i) a deposit product,
(ii) a loan, discount, letter of credit,
or other extension of credit, (iii) a
trust or other fiduciary service, (iv) a
qualified financial contract (as de-
fined in or determined pursuant to
section 11(e)(8)(D)(i) of the Federal
Deposit Insurance Act), or (v) a finan-
cial guaranty, except that this sub-
paragraph (B) shall not apply to a
product that includes an insurance
component such that if the product is
offered or proposed to be offered by
the bank as principal—
(I) it would be treated as a life
insurance contract under section
7702 of the Internal Revenue
Code of 1986, as amended; or
606
•HR 10 RH2
(II) in the event that the prod-
uct is not a letter of credit or
other similar extension of credit,
a qualified financial contract, or a
financial guaranty, it would qual-
ify for treatment for losses in-
curred with respect to such prod-
uct under section 832(b)(5) of the
Internal Revenue Code of 1986, as
amended, if the bank were sub-
ject to tax as an insurance com-
pany under section 831 of such
Code; or
(3) any annuity contract the income
on which is subject to tax treatment
under section 72 of the Internal Revenue
Code of 1986, as amended.
SEC. 305. NEW BANK AGENCY ACTIVITIES ONLY THROUGH
ACQUISITION 
OF 
EXISTING 
LICENSED
AGENTS.
If a national bank or a subsidiary of a na-
tional bank is not providing insurance as
agent in a State as of the date of the enact-
ment of this Act, the national bank and the
subsidiary of the national bank may provide
607
•HR 10 RH2
insurance (which such bank or subsidiary is
otherwise authorized to provide) as agent in
such State after such date only by acquiring
a company which has been licensed by the ap-
propriate State regulator to provide insur-
ance as agent in such State for not less than
2 years before such acquisition.
SEC. 306. TITLE INSURANCE ACTIVITIES OF NATIONAL
BANKS AND THEIR AFFILIATES.
(a) AUTHORITY.—
(1) IN GENERAL.—Notwithstanding any
other provision of this Act or any other
law, no national bank, and no subsidiary
of a national bank, may engage in any ac-
tivity involving the underwriting or sale
of title insurance other than title insur-
ance activities in which such national
bank or subsidiary was actively and law-
fully engaged before the date of the en-
actment of this Act.
(2) INSURANCE AFFILIATE.—In the case
of a national bank which has an affiliate
which provides insurance as principal
and is not a subsidiary of the bank, the
national bank and any subsidiary of the
608
•HR 10 RH2
national bank may not engage in any ac-
tivity involving the underwriting or sale
of title insurance pursuant to paragraph
(1).
(3) 
INSURANCE
SUBSIDIARY.—In 
the
case of a national bank which has a sub-
sidiary which provides insurance as prin-
cipal and has no affiliate which provides
insurance as principal and is not a sub-
sidiary, the national bank may not en-
gage in any activity involving the under-
writing or sale of title insurance pursu-
ant to paragraph (1).
(4) 
AFFILIATE
AND
SUBSIDIARY
DE-
FINED.—For purposes of this section, the
terms ‘‘affiliate’’ and ‘‘subsidiary’’ have
the meaning given such terms in section
2 of the Bank Holding Company Act of
1956.
(b) PARITY EXCEPTION.—Notwithstanding
subsection (a), in the case of any State in
which banks organized under the laws of such
State were authorized to sell title insurance
as agent as of January 1, 1997, a national bank
and a subsidiary of a national bank may sell
609
•HR 10 RH2
title insurance as agent in such State in the
same manner and to the same extent such
State banks are authorized to sell title insur-
ance as agent in such State.
SEC. 307. EXPEDITED AND EQUALIZED DISPUTE RESOLU-
TION FOR FINANCIAL REGULATORS.
(a) IN GENERAL.—
(1) FILING.—In the case of a regu-
latory conflict between a State insurance
regulator and a Federal financial regu-
lator as to whether any product is or is
not insurance or whether a State law reg-
ulating an insurance activity is properly
treated as preempted under Federal law,
any State insurance regulator or any
Federal financial regulator may seek an
expedited judicial determination of such
conflict including the appropriate classi-
fication or definition of a new product, or
regulation of an insurance activity, by fil-
ing an action in—
(A) any United States district
court in which such action may be
brought under chapter 87 of title 28,
United States Code; or
610
•HR 10 RH2
(B) the United States District
Court for the District of Columbia.
(2) EXPEDITED
REVIEW.—The United
States district court in which an action
described in paragraph (1) is filed shall
complete all action on such case, includ-
ing rendering a judgment, before the end
of the 90-day period beginning on the
date such action is filed, unless all par-
ties to such action agree to any extension
of such period.
(3) SAVINGS
PROVISION.—This section
shall not apply with respect to any deter-
mination as to whether any product is or
is not a security for purposes of the secu-
rities laws (as such term is defined in sec-
tion 3(a) of the Securities Exchange Act
of 1934).
(b) APPEAL.—
(1) IN GENERAL.—Any petition for re-
view by any party to an action described
in subsection (a)(1) of any final judgment
of a United States district court with re-
spect to such action shall be filed by such
party before the end of the 10-day period
611
•HR 10 RH2
beginning on the date such judgment is
issued by the district court in—
(A) the United States court of ap-
peals for the circuit in which such
United States district court is located;
or
(B) the United States Court of Ap-
peals for the District of Columbia.
(2) EXPEDITED
REVIEW.—The United
States court of appeals in which a peti-
tion for review is filed in accordance
with paragraph (1) shall complete all ac-
tion on such petition, including render-
ing 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 certiori to the Supreme Court of the Unit-
ed States of any judgment of a United States
court of appeals with respect to a petition for
review in accordance with subsection (b)
shall be filed with the United States Supreme
612
•HR 10 RH2
Court as soon as practicable after such judg-
ment is issued.
(d) STATUTE
OF
LIMITATION.—No action
may be filed under this section challenging an
order, ruling, determination, or other action
of a Federal financial regulator or State in-
surance regulator after the later of—
(1) the end of the 12-month period be-
ginning on the date the first public notice
is made of such order, ruling, or deter-
mination in its final form; or
(2) the end of the 6-month period be-
ginning on the date such order, ruling, or
determination takes effect.
(e) STANDARD OF REVIEW.—The court shall
decide an action filed under this section
based on its review on the merits of all ques-
tions presented under State and Federal law,
including the nature of the product or activ-
ity and the history and purpose of its regula-
tion under State and Federal law, without un-
equal deference.
(f) INJUNCTIONS.—The court may issue an
injunction against a financial regulator or
613
•HR 10 RH2
any person to which an action filed under this
section relates.
(g) FEDERAL
FINANCIAL
REGULATOR
DE-
FINED.—For purposes of this section, the term
‘‘Federal financial regulator’’ means—
(1) any Federal banking agency (as
defined in section 3(z) of the Federal De-
posit Insurance Act); and
(2) the Securities and Exchange Com-
mission only with respect to the respon-
sibilities of the Commission under sec-
tion 17(i) of the Securities Exchange Act
of 1934.
SEC. 308. CONSUMER PROTECTION REGULATIONS.
(a) REGULATIONS REQUIRED.—
(1) IN GENERAL.—Each Federal bank-
ing agency shall prescribe and publish in
final form, before the end of the 1-year
period beginning on the date of the en-
actment of this Act, consumer protection
regulations which—
(A) apply to retail sales, solicita-
tions, advertising, or offers of any in-
surance product by any insured de-
pository institution or any person
614
•HR 10 RH2
who is engaged in such activities at
an office of the institution or on be-
half of the institution; and
(B) meet the requirements of this
section 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 regulations prescribed pursuant to
paragraph (1) shall extend such protec-
tions to any subsidiaries of an insured
depository institution, as deemed appro-
priate by the regulators referred to in
paragraph (3), where such extension is
necessary to ensure the consumer protec-
tions provided by this section.
(3) CONSULTATION AND JOINT REGULA-
TIONS.—The Federal banking agencies
shall consult with each other and pre-
scribe joint regulations pursuant to para-
graph (1), after consultation with the
State insurance regulators, as appro-
priate.
615
•HR 10 RH2
(b) SALES
PRACTICES.—The regulations
prescribed pursuant to subsection (a) shall in-
clude anticoercion rules applicable to the sale
of insurance products which prohibit an in-
sured depository institution from engaging in
any practice that would lead a consumer to
believe an extension 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 
obtain, 
or 
a 
prohibition 
on 
the
consumer from obtaining, an insurance
product from an unaffiliated entity.
(c) DISCLOSURES
AND
ADVERTISING.—The
regulations prescribed pursuant to subsection
(a) shall include the following provisions re-
lating to disclosures and advertising in con-
nection with the initial purchase of an insur-
ance product:
(1) DISCLOSURES.—
616
•HR 10 RH2
(A) 
IN
GENERAL.—Requirements
that the following disclosures be
made orally and in writing before the
completion of the initial sale and, in
the case of clause (iv), at the time of
application for an extension of credit:
(i) UNINSURED STATUS.—As ap-
propriate, the product is not in-
sured by the Federal Deposit In-
surance Corporation, the United
States Government, or the in-
sured depository institution.
(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 associ-
ated with the product, including
possible loss of value.
(iv) COERCION.—The approval
of an extension of credit may not
be conditioned on—
(I) the purchase of an in-
surance product from the in-
stitution in which the applica-
617
•HR 10 RH2
tion for credit is pending or
any of its affiliates or subsidi-
aries; or
(II) an agreement by the
consumer not to obtain, or a
prohibition on the consumer
from obtaining, an insurance
product from an unaffiliated
entity.
(B) MAKING
DISCLOSURE
READILY
UNDERSTANDABLE.—Regulations 
pre-
scribed under subparagraph (A) shall
encourage the use of disclosure that
is conspicuous, simple, direct, and
readily understandable, such as the
following:
(i) ‘‘NOT FDIC-INSURED’’.
(ii) ‘‘NOT GUARANTEED BY
THE BANK’’.
(iii) 
‘‘MAY 
GO 
DOWN 
IN
VALUE’’.
(C) ADJUSTMENTS FOR ALTERNATIVE
METHODS
OF
PURCHASE.—In prescrib-
ing the requirements under subpara-
graphs (A) and (D), necessary adjust-
618
•HR 10 RH2
ments shall be made for purchase in
person, by telephone, or by electronic
media to provide for the most appro-
priate and complete form of disclo-
sure and acknowledgements.
(D) 
CONSUMER
ACKNOWLEDGE-
MENT.—A requirement that an insured
depository institution shall require
any person selling an insurance prod-
uct at any office of, or on behalf of,
the institution to obtain, at the time a
consumer receives the disclosures re-
quired under this paragraph or at the
time of the initial purchase by the
consumer of such product, an ac-
knowledgement by such consumer of
the receipt of the disclosure required
under this subsection with respect to
such product.
(2) PROHIBITION
ON
MISREPRESENTA-
TIONS.—A prohibition on any practice, or
any advertising, at any office of, or on be-
half of, the insured depository institu-
tion, or any subsidiary as appropriate,
which could mislead any person or other-
619
•HR 10 RH2
wise cause a reasonable person to reach
an erroneous belief with respect to—
(A) the uninsured nature of any
insurance product sold, or offered for
sale, by the institution or any subsidi-
ary of the institution; or
(B) in the case of a variable annu-
ity or other insurance product that
involves an investment risk, the in-
vestment risk associated with any
such product.
(d) SEPARATION
OF
BANKING
AND
NON-
BANKING ACTIVITIES.—
(1) REGULATIONS REQUIRED.—The regu-
lations prescribed pursuant to subsection
(a) shall include such provisions as the
Federal banking agencies consider appro-
priate to ensure that the routine accept-
ance of deposits and the making of loans
is kept, to the extent practicable, phys-
ically segregated from insurance product
activity.
(2) REQUIREMENTS.—Regulations pre-
scribed pursuant to paragraph (1) shall
include the following requirements:
620
•HR 10 RH2
(A) SEPARATE SETTING.—A clear de-
lineation of the setting in which, and
the 
circumstances 
under 
which,
transactions 
involving 
insurance
products should be conducted in a lo-
cation physically segregated from an
area where retail deposits are rou-
tinely accepted or loans are made.
(B) REFERRALS.—Standards which
permit any person accepting deposits
from, or making loans to, the public
in an area where such transactions
are routinely conducted in an insured
depository institution to refer a cus-
tomer who seeks to purchase any in-
surance product to a qualified person
who sells such product, only if the
person making the referral receives
no more than a one-time nominal fee
of a fixed dollar amount for each re-
ferral that does not depend on wheth-
er the referral results in a trans-
action.
(C) QUALIFICATION
AND
LICENSING
REQUIREMENTS.—Standards 
prohibit-
621
•HR 10 RH2
ing any insured depository institution
from permitting any person to sell or
offer for sale any insurance product
in any part of any office of the insti-
tution, or on behalf of the institution,
unless such person is appropriately
qualified and licensed.
(e) DOMESTIC
VIOLENCE
DISCRIMINATION
PROHIBITION.—
(1) REGULATIONS REQUIRED.—The Fed-
eral banking agencies shall jointly estab-
lish regulations which shall prohibit dis-
crimination, except as required under
State law, against victims of domestic vi-
olence by prohibiting the consideration
of such status as a criterion in any deci-
sion with regard to insurance underwrit-
ing, pricing, renewal of insurance poli-
cies, or payment of insurance claims.
(2) SCOPE OF APPLICATION.—The regu-
lations prescribed under paragraph (1)
shall apply to any insurance product
which is sold or offered for sale, as prin-
cipal, agent, or broker, by any insured
depository institution or any person who
622
•HR 10 RH2
is engaged in such activities at an office
of the institution or on behalf of the insti-
tution.
(3) SENSE OF THE CONGRESS.—It is the
sense of the Congress that, by the end of
the 30-month period beginning on the
date of the enactment of this Act, the
States should enact or adopt regulations
prohibiting discrimination with respect
to insurance products that are at least as
strict as the regulations required by
paragraph (1) of this subsection.
(f) CONSUMER GRIEVANCE PROCESS.—The
Federal banking agencies shall jointly estab-
lish a consumer complaint mechanism, for re-
ceiving 
and 
expeditiously 
addressing
consumer complaints alleging a violation of
regulations issued under the section, which
shall—
(1) establish a group within each reg-
ulatory agency to receive such com-
plaints;
(2) develop procedures for investigat-
ing such complaints;
623
•HR 10 RH2
(3) develop procedures for informing
consumers of rights they may have in
connection with such complaints; and
(4) develop procedures for addressing
concerns raised by such complaints, as
appropriate, including procedures for the
recovery of losses to the extent appro-
priate.
(g) NO EFFECT ON OTHER AUTHORITY.—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 organization, the Munici-
pal Securities Rulemaking Board, or
the Secretary of the Treasury under
any Federal securities law;
(B) any authority of any State in-
surance commissioner or other State
authority under any State law; or
(C) the applicability of any State
law, or any regulation prescribed by
any State insurance commissioner or
other State authority pursuant to any
such law, to any person.
624
•HR 10 RH2
(h) DEFINITIONS.—For purposes of this sec-
tion, the following definitions shall apply:
(1) 
APPROPRIATE
FEDERAL
BANKING
AGENCY; 
INSURED
DEPOSITORY
INSTITU-
TION.—The terms ‘‘appropriate Federal
banking agency’’ and ‘‘insured depository
institution’’ have the same meanings as in
section 3 of the Federal Deposit Insur-
ance Act.
(2) INSURANCE
PRODUCT.—The term
‘‘insurance product’’ includes an annuity
contract the income of which is subject to
tax treatment under section 72 of the In-
ternal Revenue Code of 1986.
SEC. 309. CERTAIN STATE AFFILIATION LAWS PREEMPTED
FOR INSURANCE COMPANIES AND AFFILI-
ATES.
No State may, by law, regulation, order,
interpretation, or otherwise—
(1) prevent or restrict any insurer, or
any affiliate of an insurer (whether such
affiliate is organized as a stock company,
mutual holding company, or otherwise),
from becoming a financial holding com-
625
•HR 10 RH2
pany or acquiring control 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 insti-
tution (or any company which controls
such institution), except that the laws of
an insurer’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
(3) prevent, restrict, or have the au-
thority to review, approve, or disapprove
a plan of reorganization by which an in-
surer proposes to reorganize from mutual
form to become a stock insurer (whether
as a direct or indirect subsidiary of a mu-
tual holding company or otherwise) un-
less such State is the State of domicile of
the insurer.
Subtitle B—Redomestication of
Mutual Insurers
SEC. 311. GENERAL APPLICATION.
This subtitle shall only apply to a mutual
insurance company in a State which has not
626
•HR 10 RH2
enacted a law which expressly establishes
reasonable terms and conditions for a mutual
insurance company domiciled in such State to
reorganize into a mutual holding company.
SEC. 312. REDOMESTICATION OF MUTUAL INSURERS.
(a) REDOMESTICATION.—A mutual insurer
organized under the laws of any State may
transfer its domicile to a transferee domicile
as a step in a reorganization in which, pursu-
ant to the laws of the transferee domicile and
consistent with the standards in subsection
(f), the mutual insurer becomes a stock in-
surer that is a direct or indirect subsidiary of
a mutual holding company.
(b) RESULTING DOMICILE.—Upon comply-
ing with the applicable law of the transferee
domicile governing transfers of domicile and
completion of a transfer pursuant to this sec-
tion, the mutual insurer shall cease to be a do-
mestic insurer in the transferor domicile and,
as a continuation of its corporate existence,
shall be a domestic insurer of the transferee
domicile.
(c) LICENSES PRESERVED.—The certificate
of authority, agents’ appointments and li-
627
•HR 10 RH2
censes, rates, approvals and other items that
a licensed State allows and that are in exist-
ence immediately prior to the date that a re-
domesticating insurer transfers its domicile
pursuant to this subtitle shall continue in full
force and effect upon transfer, if the insurer
remains duly qualified to transact the busi-
ness of insurance in such licensed State.
(d) EFFECTIVENESS OF OUTSTANDING POLI-
CIES AND CONTRACTS.—
(1) IN
GENERAL.—All outstanding in-
surance policies and annuities contracts
of a redomesticating insurer shall remain
in full force and effect and need not be
endorsed as to the new domicile of the in-
surer, unless so ordered by the State in-
surance regulator of a licensed State, and
then only in the case of outstanding poli-
cies and contracts whose owners reside
in such licensed State.
(2) FORMS.—
(A) Applicable State law may re-
quire a redomesticating insurer to
file new policy forms with the State
insurance regulator of a licensed
628
•HR 10 RH2
State on or before the effective date
of the transfer.
(B) 
Notwithstanding 
subpara-
graph (A), a redomesticating insurer
may use existing policy forms with
appropriate endorsements to reflect
the new domicile of the redomesticat-
ing insurer until the new policy forms
are approved for use by the State in-
surance regulator of such licensed
State.
(e) NOTICE.—A redomesticating insurer
shall give notice of the proposed transfer to
the State insurance regulator of each licensed
State and shall file promptly any resulting
amendments to corporate documents re-
quired to be filed by a foreign licensed mutual
insurer with the insurance regulator of each
such licensed State.
(f) PROCEDURAL REQUIREMENTS.—No mu-
tual insurer may redomesticate to another
State and reorganize into a mutual holding
company pursuant to this section unless the
State insurance regulator of the transferee
domicile determines that the plan of reorga-
629
•HR 10 RH2
nization of the insurer includes the following
requirements:
(1) APPROVAL BY BOARD OF DIRECTORS
AND
POLICYHOLDERS.—The reorganization
is approved by at least a majority of the
board of directors of the mutual insurer
and at least a majority of the policy-
holders who vote after notice, disclosure
of the reorganization and the effects of
the transaction on policyholder contrac-
tual rights, and reasonable opportunity
to vote, in accordance with such notice,
disclosure, and voting procedures as are
approved by the State insurance regu-
lator of the transferee domicile.
(2) CONTINUED VOTING CONTROL BY POL-
ICYHOLDERS; REVIEW OF PUBLIC STOCK OF-
FERING.—After the consummation of a re-
organization, the policyholders of the re-
organized insurer shall have the same
voting rights with respect to the mutual
holding company as they had before the
reorganization with respect to the mu-
tual insurer. With respect to an initial
public offering of stock, the offering shall
630
•HR 10 RH2
be conducted in compliance with applica-
ble securities laws and in a manner ap-
proved by the State insurance regulator
of the transferee domicile.
(3) AWARD OF STOCK OR GRANT OF OP-
TIONS TO OFFICERS AND DIRECTORS.—For a
period of 6 months after completion of an
initial public offering, neither a stock
holding company nor the converted in-
surer shall award any stock options or
stock grants to persons who are elected
officers or directors of the mutual hold-
ing company, the stock holding company,
or the converted insurer, except with re-
spect to any such awards or options to
which a person is entitled as a policy-
holder and as approved by the State in-
surance regulator of the transferee domi-
cile.
(4) CONTRACTUAL RIGHTS.—Upon reor-
ganization into a mutual holding com-
pany, the contractual rights of the policy-
holders are preserved.
(5) FAIR AND EQUITABLE TREATMENT OF
POLICYHOLDERS.—The 
reorganization 
is
631
•HR 10 RH2
approved as fair and equitable to the pol-
icyholders by the insurance regulator of
the transferee domicile.
SEC. 313. EFFECT ON STATE LAWS RESTRICTING REDOMES-
TICATION.
(a) IN GENERAL.—Unless otherwise per-
mitted by this subtitle, State laws of any
transferor domicile that conflict with the pur-
poses and intent of this subtitle are pre-
empted, including but not limited to—
(1) any law that has the purpose or
effect of impeding the activities of, taking
any action against, or applying any provi-
sion of law or regulation to, any insurer
or an affiliate of such insurer because
that insurer or any affiliate plans to re-
domesticate, or has redomesticated, pur-
suant to this subtitle;
(2) any law that has the purpose or
effect of impeding the activities of, taking
action against, or applying any provision
of law or regulation to, any insured or
any 
insurance 
licensee 
or 
other
intermediary because such person or en-
tity has procured insurance from or
632
•HR 10 RH2
placed insurance with any insurer or af-
filiate of such insurer that plans to re-
domesticate, or has redomesticated, pur-
suant to this subtitle, but only to the ex-
tent that such law would treat such in-
sured licensee or other intermediary dif-
ferently than if the person or entity pro-
cured insurance from, or placed insur-
ance with, an insured licensee or other
intermediary which had not redomes-
ticated;
(3) any law that has the purpose or
effect of terminating, because of the re-
domestication of a mutual insurer pursu-
ant to this subtitle, any certificate of au-
thority, agent appointment or license,
rate approval, or other approval, of any
State insurance regulator or other State
authority in existence immediately prior
to the redomestication in any State other
than the transferee domicile.
(b) 
DIFFERENTIAL
TREATMENT
PROHIB-
ITED.—No State law, regulation, interpreta-
tion, or functional equivalent thereof, of a
State other than a transferee domicile may
633
•HR 10 RH2
treat a redomesticating or redomesticated in-
surer or any affiliate thereof any differently
than an insurer operating in that State that
is not a redomesticating or redomesticated in-
surer.
(c) LAWS PROHIBITING OPERATIONS.—If any
licensed State fails to issue, delays the issu-
ance of, or seeks to revoke an original or re-
newal certificate of authority of a redomes-
ticated insurer immediately following re-
domestication, except on grounds and in a
manner consistent with its past practices re-
garding the issuance of certificates of author-
ity to foreign insurers that are not redomes-
ticating, then the redomesticating insurer
shall be exempt from any State law of the li-
censed State to the extent that such State law
or the operation of such State law would
make unlawful, or regulate, directly or indi-
rectly, the operation of the redomesticated in-
surer, except that such licensed State may re-
quire the redomesticated insurer to—
(1) comply with the unfair claim set-
tlement practices law of the licensed
State;
634
•HR 10 RH2
(2) pay, on a nondiscriminatory basis,
applicable 
premium 
and 
other 
taxes
which are levied on licensed insurers or
policyholders under the laws of the li-
censed State;
(3) register with and designate the
State insurance regulator as its agent
solely for the purpose of receiving service
of legal documents or process;
(4) submit to an examination by the
State insurance regulator in any licensed
state in which the redomesticated insurer
is doing business to determine the insur-
er’s financial condition, if—
(A) the State insurance regulator
of the transferee domicile has not
begun an examination of the re-
domesticated insurer and has not
scheduled such an examination to
begin before the end of the 1-year pe-
riod beginning on the date of the re-
domestication; and
(B) any such examination is co-
ordinated to avoid unjustified dupli-
cation and repetition;
635
•HR 10 RH2
(5) comply with a lawful order issued
in—
(A) 
a 
delinquency 
proceeding
commenced by the State insurance
regulator of any licensed State if
there has been a judicial finding of fi-
nancial impairment under paragraph
(7); or
(B) a voluntary dissolution pro-
ceeding;
(6) comply with any State law regard-
ing deceptive, false, or fraudulent acts or
practices, except that if the licensed
State seeks an injunction regarding the
conduct described in this paragraph,
such injunction must be obtained from a
court of competent jurisdiction as pro-
vided in section 314(a);
(7) comply with an injunction issued
by a court of competent jurisdiction,
upon a petition by the State insurance
regulator alleging that the redomesticat-
ing insurer is in hazardous financial con-
dition or is financially impaired;
636
•HR 10 RH2
(8) participate in any insurance insol-
vency guaranty association on the same
basis as any other insurer licensed in the
licensed State; and
(9) require a person acting, or offer-
ing to act, as an insurance licensee for a
redomesticated insurer in the licensed
State to obtain a license from that State,
except that such State may not impose
any qualification or requirement that dis-
criminates against a nonresident insur-
ance licensee.
SEC. 314. OTHER PROVISIONS.
(a) JUDICIAL
REVIEW.—The appropriate
United States district court shall have exclu-
sive jurisdiction over litigation arising under
this section involving any redomesticating or
redomesticated insurer.
(b) SEVERABILITY.—If any provision of this
section, or the application thereof to any per-
son or circumstances, is held invalid, the re-
mainder of the section, and the application of
such provision to other persons or cir-
cumstances, shall not be affected thereby.
637
•HR 10 RH2
SEC. 315. DEFINITIONS.
For purposes of this subtitle, the follow-
ing definitions shall apply:
(1) COURT
OF
COMPETENT
JURISDIC-
TION.—The term ‘‘court of competent ju-
risdiction’’ means a court authorized pur-
suant to section 314(a) to adjudicate liti-
gation arising under this subtitle.
(2) DOMICILE.—The term ‘‘domicile’’
means the State in which an insurer is
incorporated, chartered, or organized.
(3) INSURANCE
LICENSEE.—The term
‘‘insurance licensee’’ means any person
holding a license under State law to act
as insurance agent, subagent, broker, or
consultant.
(4) INSTITUTION.—The term ‘‘institu-
tion’’ means a corporation, joint stock
company, limited liability company, lim-
ited liability partnership, association,
trust, partnership, or any similar entity.
(5) LICENSED
STATE.—The term ‘‘li-
censed State’’ means any State, the Dis-
trict 
of 
Columbia, 
American 
Samoa,
Guam, Puerto Rico, or the United States
Virgin Islands in which the redomesticat-
638
•HR 10 RH2
ing insurer has a certificate of authority
in effect immediately prior to the re-
domestication.
(6) MUTUAL INSURER.—The term ‘‘mu-
tual insurer’’ means a mutual insurer or-
ganized under the laws of any State.
(7) 
PERSON.—The 
term 
‘‘person’’
means an individual, institution, govern-
ment or governmental agency, State or
political subdivision of a State, public
corporation, board, association, estate,
trustee, or fiduciary, or other similar en-
tity.
(8) POLICYHOLDER.—The term ‘‘policy-
holder’’ means the owner of a policy is-
sued by a mutual insurer, except that,
with respect to voting rights, the term
means a member of a mutual insurer or
mutual holding company granted the
right to vote, as determined under appli-
cable State law.
(9) 
REDOMESTICATED
INSURER.—The
term ‘‘redomesticated insurer’’ means a
mutual insurer that has redomesticated
pursuant to this subtitle.
639
•HR 10 RH2
(10) REDOMESTICATING
INSURER.—The
term ‘‘redomesticating insurer’’ means a
mutual insurer that is redomesticating
pursuant to this subtitle.
(11) REDOMESTICATION OR TRANSFER.—
The terms ‘‘redomestication’’ and ‘‘trans-
fer’’ mean the transfer of the domicile of
a mutual insurer from one State to an-
other State pursuant to this subtitle.
(12) STATE
INSURANCE
REGULATOR.—
The term ‘‘State insurance regulator’’
means the principal insurance regulatory
authority of a State, the District of Co-
lumbia, American Samoa, Guam, Puerto
Rico, or the United States Virgin Islands.
(13) STATE LAW.—The term ‘‘State law’’
means the statutes of any State, the Dis-
trict 
of 
Columbia, 
American 
Samoa,
Guam, Puerto Rico, or the United States
Virgin Islands and any regulation, order,
or requirement prescribed pursuant to
any such statute.
(14) TRANSFEREE DOMICILE.—The term
‘‘transferee domicile’’ means the State to
640
•HR 10 RH2
which a mutual insurer is redomesticat-
ing pursuant to this subtitle.
(15) TRANSFEROR DOMICILE.—The term
‘‘transferor domicile’’ means the State
from which a mutual insurer is redomes-
ticating pursuant to this subtitle.
SEC. 316. EFFECTIVE DATE.
This subtitle shall take effect on the date
of enactment of this Act.
Subtitle C—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 by the end of
the 3-year period beginning on the date of the
enactment of this Act at least a majority of the
States—
(1) have enacted uniform laws and
regulations governing the licensure of in-
dividuals and entities authorized to sell
and solicit the purchase of insurance
within the State; or
(2) have enacted reciprocity laws and
regulations governing the licensure of
641
•HR 10 RH2
nonresident individuals and entities au-
thorized to sell and solicit insurance
within those States.
(b) UNIFORMITY REQUIRED.—States shall be
deemed to have established the uniformity
necessary to satisfy subsection (a)(1) if the
States—
(1) establish uniform criteria regard-
ing the integrity, personal qualifications,
education, training, and experience of li-
censed insurance producers, including
the qualification and training of sales
personnel in ascertaining the appro-
priateness of a particular insurance prod-
uct for a prospective customer;
(2) establish uniform continuing edu-
cation requirements for licensed insur-
ance producers;
(3) establish uniform ethics course re-
quirements for licensed insurance pro-
ducers in conjunction with the continu-
ing education requirements under para-
graph (2);
(4) establish uniform criteria to en-
sure that an insurance product, including
642
•HR 10 RH2
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 insurance producer to be li-
censed or otherwise qualified to do busi-
ness as a nonresident that has the effect
of limiting or conditioning that produc-
er’s activities because of its residence or
place of operations, except that counter-
signature requirements imposed on non-
resident 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.
(c) RECIPROCITY REQUIRED.—States shall
be deemed to have established the reciprocity
required to satisfy subsection (a)(2) if the fol-
lowing conditions are met:
(1) ADMINISTRATIVE
LICENSING
PROCE-
DURES.—At least a majority of the States
permit a producer that has a resident li-
cense for selling or soliciting the pur-
643
•HR 10 RH2
chase of insurance in its home State to
receive a license to sell or solicit the pur-
chase of insurance in such majority of
States as a nonresident to the same ex-
tent such producer is permitted to sell or
solicit the purchase of insurance in its
State, without satisfying any additional
requirements 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 li-
censed and in good standing in its
home State; and
(D) the payment of any requisite
fee to the appropriate authority,
if the producer’s home State also awards
such licenses on such a reciprocal basis.
(2) CONTINUING
EDUCATION
REQUIRE-
MENTS.—A majority of the States accept
an insurance producer’s satisfaction of
its home State’s continuing education re-
quirements for licensed insurance pro-
ducers to satisfy the States’ own continu-
644
•HR 10 RH2
ing education requirements if the pro-
ducer’s home State also recognizes the
satisfaction of continuing education re-
quirements on such a reciprocal basis.
(3) NO LIMITING NONRESIDENT REQUIRE-
MENTS.—A majority of the States do not
impose any requirement upon any insur-
ance producer to be licensed or other-
wise 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 oper-
ations, except that countersignature re-
quirements imposed on nonresident pro-
ducers shall not be deemed to have the
effect of limiting or conditioning a pro-
ducer’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.—
645
•HR 10 RH2
(1) NAIC DETERMINATION.—At the end
of the 3-year period beginning on the
date of the enactment of this Act, the Na-
tional Association of Insurance Commis-
sioners shall determine, in consultation
with the insurance commissioners or
chief insurance regulatory officials of the
States, whether the uniformity or reci-
procity required by subsections (b) and
(c) has been achieved.
(2) JUDICIAL REVIEW.—The appropriate
United States district court shall have ex-
clusive jurisdiction over any challenge to
the National Association of Insurance
Commissioners’ determination under this
section 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
within 2 years, unless the uniformity or reci-
procity required by those provisions is satis-
646
•HR 10 RH2
fied before the expiration of that 2-year pe-
riod.
(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 insur-
ance producers, including any such law, regu-
lation, provision, or action which purports to
regulate unfair trade practices or establish
consumer 
protections, 
including 
counter-
signature laws, be altered or amended in
order to 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 ex-
tent of such inconsistency.
SEC. 
322. 
NATIONAL 
ASSOCIATION 
OF 
REGISTERED
AGENTS AND BROKERS.
(a) ESTABLISHMENT.—There is established
the National Association of Registered Agents
and Brokers (hereafter in this subtitle re-
ferred to as the ‘‘Association’’).
(b) STATUS.—The Association shall—
647
•HR 10 RH2
(1) be a nonprofit corporation and be
presumed to have the status of an organi-
zation described in section 501(c)(6) of
the Internal Revenue Code of 1986 unless
the Secretary of the Treasury determines
that the Association does not meet the re-
quirements of such section;
(2) have succession until dissolved by
an Act of Congress;
(3) not be an agency or establishment
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 cor-
poration by the District of Columbia Non-
profit Corporation Act (D.C. Code, sec.
29y–1001 et seq.).
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 qualifica-
tion requirements and conditions can be
adopted and applied on a multistate basis,
while preserving the right of States to license,
648
•HR 10 RH2
supervise, and discipline insurance producers
and to prescribe and enforce laws and regula-
tions 
with 
regard 
to 
insurance-related
consumer protection and unfair trade prac-
tices.
SEC. 324. RELATIONSHIP TO THE FEDERAL GOVERNMENT.
The Association shall be subject to the su-
pervision and oversight of the National Asso-
ciation of Insurance Commissioners (here-
after in this subtitle referred to as the
‘‘NAIC’’) and shall not be an agency or an in-
strumentality of the United States Govern-
ment.
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
REVOCATION OF LICENSE.—Notwithstanding
paragraph (1), a State-licensed insurance
producer shall not be eligible to become
a member if a State insurance regulator
has suspended or revoked such produc-
er’s license in that State during the 3-
649
•HR 10 RH2
year preceding the date such producer
applies for membership.
(3) RESUMPTION OF ELIGIBILITY.—Para-
graph (2) shall cease to apply to any in-
surance 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 subsequently overturned.
(b) AUTHORITY TO ESTABLISH MEMBERSHIP
CRITERIA.—The Association shall have the au-
thority to establish membership criteria
that—
(1) bear a reasonable relationship to
the purposes for which the Association
was established; and
(2) do not unfairly limit the access of
smaller agencies to the Association mem-
bership.
(c) ESTABLISHMENT OF CLASSES AND CAT-
EGORIES.—
(1) CLASSES OF MEMBERSHIP.—The As-
sociation may establish separate classes
650
•HR 10 RH2
of membership, with separate criteria, if
the Association reasonably determines
that performance of different duties re-
quires different levels of education, train-
ing, or experience.
(2) CATEGORIES.—The Association may
establish separate categories of member-
ship for individuals and for other per-
sons. The establishment of any such cat-
egories of membership shall be based ei-
ther on the types of licensing categories
that exist under State laws or on the ag-
gregate amount of business handled by
an insurance producer. No special cat-
egories of membership, and no distinct
membership criteria, shall be established
for members which are insured deposi-
tory institutions or wholesale financial
institutions 
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, per-
651
•HR 10 RH2
sonal qualifications, education, training,
and experience.
(2) MINIMUM STANDARD.—In establish-
ing criteria under paragraph (1), the As-
sociation shall consider the highest levels
of insurance producer qualifications es-
tablished under the licensing laws of the
States.
(e) EFFECT OF MEMBERSHIP.—Membership
in the Association shall entitle the member to
licensure in each State for which the member
pays the requisite fees, including licensing
fees and, where applicable, bonding require-
ments, set by such State.
(f) ANNUAL RENEWAL.—Membership in the
Association shall be renewed on an annual
basis.
(g) CONTINUING EDUCATION.—The Associa-
tion shall establish, as a condition of member-
ship, 
continuing 
education 
requirements
which shall be comparable to or greater than
the continuing education requirements under
the licensing laws of a majority of the States.
(h) SUSPENSION AND REVOCATION.—The As-
sociation may—
652
•HR 10 RH2
(1) inspect and examine the records
and offices of the members of the Asso-
ciation to determine compliance with the
criteria for membership established by
the Association; and
(2) suspend or revoke the member-
ship of an insurance producer if—
(A) the producer fails to meet the
applicable membership criteria of the
Association; or
(B) the producer has been subject
to disciplinary action pursuant to a
final adjudicatory proceeding under
the jurisdiction of a State insurance
regulator, and the Association con-
cludes that retention of membership
in the Association would not be in the
public interest.
(i) OFFICE OF CONSUMER COMPLAINTS.—
(1) IN GENERAL.—The Association shall
establish an office of consumer com-
plaints that shall—
(A) receive and investigate com-
plaints from both consumers and
653
•HR 10 RH2
State insurance regulators related to
members of the Association; and
(B) recommend to the Association
any disciplinary actions that the of-
fice considers appropriate, to the ex-
tent that any such recommendation is
not inconsistent with State law.
(2) RECORDS AND REFERRALS.—The of-
fice of consumer complaints of the Asso-
ciation shall—
(A) maintain records of all com-
plaints received 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 complaint; and
(B) refer, when appropriate, any
such complaint to any appropriate
State insurance regulator.
(3) TELEPHONE
AND
OTHER
ACCESS.—
The office of consumer complaints shall
maintain a toll-free telephone number for
the purpose of this subsection and, as
practicable, other alternative means of
654
•HR 10 RH2
communication with consumers, such as
an Internet home page.
SEC. 326. BOARD OF DIRECTORS.
(a) ESTABLISHMENT.—There is established
the board of directors of the Association
(hereafter in this subtitle referred to as the
‘‘Board’’) for the purpose of governing and su-
pervising the activities of the Association and
the members of the Association.
(b) POWERS.—The Board shall have such
powers and authority as may be specified in
the bylaws of the Association.
(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 signifi-
cant 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.—
655
•HR 10 RH2
(A) IN GENERAL.—If, by the end of
the 2-year period beginning on the
date of the enactment of this Act, the
NAIC has not appointed the initial 7
members of the Board of the Associa-
tion, the initial Board shall consist of
the 7 State insurance regulators of
the 7 States with the greatest total
dollar amount of commercial-lines in-
surance in place as of the end of such
period.
(B) 
ALTERNATE
COMPOSITION.—If
any of the State insurance regulators
described in subparagraph (A) de-
clines to serve on the Board, the State
insurance regulator with the next
greatest total dollar amount of com-
mercial-lines insurance in place, as
determined by the NAIC as of the end
of such period, shall serve as a mem-
ber of the Board.
(C) INOPERABILITY.—If fewer than
7 State insurance regulators accept
appointment to the Board, the Asso-
ciation shall be established without
656
•HR 10 RH2
NAIC oversight pursuant to section
332.
(d) TERMS.—The term of each director
shall, after the initial appointment of the
members of the Board, be for 3 years, with 1⁄3
of the directors to be appointed each year.
(e) BOARD VACANCIES.—A vacancy on the
Board shall be filled in the same manner as
the original appointment of the initial Board
for the remainder of the term of the vacating
member.
(f) MEETINGS.—The Board shall meet at
the call of the chairperson, or as otherwise
provided by the bylaws of the Association.
SEC. 327. OFFICERS.
(a) IN GENERAL.—
(1) POSITIONS.—The officers of the As-
sociation 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 nec-
essary.
(2) MANNER OF SELECTION.—Each offi-
cer of the Board and the Association shall
657
•HR 10 RH2
be elected or appointed 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 in-
dividuals who are members of the National
Association of Insurance Commissioners 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
BY-
LAWS.—
(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 pro-
posed amendment to the bylaws, accom-
panied by a concise general statement of
the basis and purpose of such proposal.
(2) EFFECTIVE
DATE.—Except as pro-
vided in paragraph (3), any proposed
bylaw or proposed amendment shall take
effect—
(A) 30 days after the date of the
filing of a copy with the NAIC;
658
•HR 10 RH2
(B) upon such later date as the
Association may designate; or
(C) such earlier date as the NAIC
may determine.
(3) DISAPPROVAL
BY
THE
NAIC.—Not-
withstanding paragraph (2), a proposed
bylaw or amendment shall not take effect
if, after public notice and opportunity to
participate in a public hearing—
(A) the NAIC disapproves such
proposal as being contrary to the
public interest or contrary to the pur-
poses of this subtitle and provides no-
tice to the Association setting forth
the reasons for such disapproval; or
(B) the NAIC finds that such pro-
posal involves a matter of such sig-
nificant public interest that public
comment 
should 
be 
obtained, 
in
which case it may, after notifying the
Association in writing of such find-
ing, require that the procedures set
forth in subsection (b) be followed
with respect to such proposal, in the
same manner as if such proposed
659
•HR 10 RH2
bylaw change were a proposed rule
change within the meaning of such
paragraph.
(b) ADOPTION AND AMENDMENT OF RULES.—
(1) 
FILING
PROPOSED
REGULATIONS
WITH THE NAIC.—
(A) IN GENERAL.—The board of di-
rectors of the Association shall file
with the NAIC a copy of any proposed
rule or any proposed amendment 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
INEFFECTIVE.—No proposed rule or
amendment shall take effect unless
approved by the NAIC or otherwise
permitted in accordance with this
paragraph.
(2) INITIAL
CONSIDERATION
BY
THE
NAIC.—Within 35 days after the date of
publication of notice of filing of a pro-
posal, or before the end of such longer
period not to exceed 90 days as the NAIC
660
•HR 10 RH2
may designate after such date if the NAIC
finds such longer period to be appro-
priate and sets forth its reasons for so
finding, or as to which the Association
consents, the NAIC shall—
(A) by order approve such pro-
posed rule or amendment; or
(B) institute proceedings to deter-
mine whether such proposed rule or
amendment should be modified or
disapproved.
(3) NAIC PROCEEDINGS.—
(A) IN GENERAL.—Proceedings in-
stituted by the NAIC with respect to
a proposed rule or amendment pursu-
ant to paragraph (2) shall—
(i) 
include 
notice 
of 
the
grounds for disapproval under
consideration;
(ii) provide opportunity for
hearing; and
(iii) be concluded within 180
days after the date of the Associa-
tion’s filing of such proposed rule
or amendment.