109th CONGRESS
2d Session
S. 2509
To authorize the issuance of charters and licenses for carrying
on the sale, solicitation, negotiation, and underwriting of insurance or
any other insurance operations, to provide a comprehensive system for the
regulation and supervision of National Insurers and National Agencies, to
provide for policyholder protections in the event of an insolvency or impairment
of a National Insurer, and for other purposes.
IN THE SENATE OF THE UNITED STATES
April 5, 2006
Mr. SUNUNU (for himself and Mr. JOHNSON) introduced the following bill;
which was read twice and referred to the Committee on Banking, Housing,
and Urban Affairs
A BILL
To authorize the issuance of charters and licenses for carrying
on the sale, solicitation, negotiation, and underwriting of insurance or
any other insurance operations, to provide a comprehensive system for the
regulation and supervision of National Insurers and National Agencies, to
provide for policyholder protections in the event of an insolvency or impairment
of a National Insurer, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title- This Act may be cited as the `National Insurance Act of
2006'.
(b) Table of Contents- The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I--OFFICE OF NATIONAL INSURANCE
Subtitle A--Establishment of Office of National Insurance
Sec. 1101. Establishment.
Sec. 1102. Commissioner of National Insurance.
Sec. 1103. Office personnel matters.
Sec. 1104. Division of Insurance Fraud.
Sec. 1105. Division of Consumer Affairs.
Sec. 1106. Insurance self-regulatory organizations.
Sec. 1107. Office of the Ombudsman.
Subtitle B--Supervision of National Insurers and National Agencies
Sec. 1121. Examination of National Insurers and National Agencies.
Sec. 1122. Examination fees and other assessments.
Sec. 1123. Disclosure of information.
Sec. 1124. Reporting requirement.
Sec. 1125. Relationship to State law.
Subtitle C--Enforcement of Federal Insurance Laws
Sec. 1141. National Insurer license suspension, restriction, or revocation.
Sec. 1142. Suspension, restriction, or revocation of Federal license of
National Agencies and federally licensed insurance producers.
Sec. 1143. Cease-and-desist proceedings.
Sec. 1144. Affirmative action to correct conditions resulting from violations
or conduct.
Sec. 1145. Suspension, removal, and prohibition authority.
Sec. 1146. Suspension or prohibition based on criminal activity.
Sec. 1147. Ancillary provisions.
Sec. 1148. Hearings and judicial review of removal, suspension, or prohibition
order.
Sec. 1149. Civil and criminal penalties.
Sec. 1150. Public disclosures of final orders and agreements.
Sec. 1151. Foreign investigations.
Sec. 1152. Action or proceeding against non-United States Insurers.
Sec. 1153. Cooperation between Commissioner and State commissioners.
Subtitle D--Insurance Fraud
Sec. 1161. Investigation of insurance fraud.
TITLE II--NATIONAL INSURANCE COMPANIES AND NATIONAL INSURANCE AGENCIES
Subtitle A--Organization, Licensing, and Operations
Sec. 1201. Organization, operation, and regulation of National Insurance
Companies and National Insurance Agencies.
Sec. 1202. United States branches of non-United States Insurers.
Sec. 1203. Federal licensing of National Insurers.
Sec. 1204. Corporate governance.
Sec. 1205. Conversion of State Insurer to National Insurer or State Insurance
Agency to National Agency.
Sec. 1206. Conversion of National Insurer to State Insurer or National
Agency to State Agency.
Sec. 1208. Separate accounts of National Life Insurer.
Sec. 1209. Protected cells.
Sec. 1210. Chartering and licensing commencement date.
Subtitle B--Financial, Product, and Market Regulation
Sec. 1211. Transitional financial regulations.
Sec. 1212. Other financial regulations.
Sec. 1213. Product regulation for National Life Insurers.
Sec. 1214. Product regulation for National Property/Casualty Insurers.
Sec. 1215. Regulation of sales and marketing.
Subtitle C--Reinsurance
Sec. 1221. Federal licensing of reinsurers.
Sec. 1222. Credit for reinsurance.
Sec. 1223. Relationship to State law.
Subtitle D--Acquisitions of Control; Mergers; Bulk Transfers; Domestication
Sec. 1231. Acquisition of control of National Insurers and National Agencies.
Sec. 1232. Mergers, consolidations, and acquisitions of National Insurers.
Sec. 1233. Bulk transfers.
Sec. 1234. Domestication of United States branch of a non-United States
Insurer.
Sec. 1235. Mergers, consolidations, and acquisitions of National Agencies.
Subtitle E--Conversions
Sec. 1242. Conversion of stock life insurer to National Life Insurer in
mutual form.
Sec. 1243. Conversion of mutual insurer to National Insurer in stock form.
Subtitle F--State Taxation
Sec. 1251. State taxation of National Insurers.
Sec. 1252. State taxation of National Agencies.
TITLE III--INSURANCE PRODUCERS AND OTHER INSURANCE SERVICING PERSONS
Sec. 1301. Federal licensing of insurance producers.
Sec. 1302. Producer database.
Sec. 1303. Supervision and oversight of federally licensed insurance producers.
Sec. 1304. Relationship to State law.
Sec. 1305. Licensing commencement date.
TITLE IV--HOLDING COMPANIES
Sec. 1403. Standards and management of a National Insurer within an insurance
holding company system.
Sec. 1404. Relationship to State law.
Sec. 1405. Conflict with other Federal laws.
Sec. 1406. No delegation permitted.
TITLE V--RECEIVERSHIP
Sec. 1501. Appointment of Office as receiver.
Sec. 1502. Automatic stay.
Sec. 1503. Powers and duties.
Sec. 1505. Judicial review.
TITLE VI--INSOLVENCY PROTECTION
Sec. 1601. Participation in guaranty associations.
Sec. 1602. Qualified and nonqualified State.
Sec. 1603. Establishment of the National Insurance Guaranty Corporation.
Sec. 1604. Benefits for policy holders of National Insurers.
Sec. 1605. Claims covered for policyholders of National Property/Casualty
Insurers.
Sec. 1606. Powers and duties of the Corporation.
Sec. 1610. State taxation.
Sec. 1611. Examination of the Corporation; annual report.
TITLE VII--CONFORMING AMENDMENTS AND MISCELLANEOUS PROVISIONS
Sec. 1701. Nondiscrimination.
Sec. 1702. Application of the Federal antitrust laws to National Insurers,
National Agencies, and federally licensed insurance producers.
Sec. 1703. Application of State law and regulation to National Insurers,
National Agencies, and federally licensed insurance producers.
Sec. 1704. Federal Court jurisdiction.
Sec. 1705. Federal Court venue.
Sec. 1706. Judicial review.
Sec. 1707. Amendment to Freedom of Information Act.
Sec. 1708. Amendments to the Federal securities laws.
Sec. 1709. Amendments to the Employee Retirement Income Security Act of
1974.
Sec. 1710. Amendments to the Gramm-Leach-Bliley Act.
Sec. 1711. Amendments to the Federal Deposit Insurance Act.
Sec. 1712. Amendments to the Bank Holding Company Act of 1956.
Sec. 1713. Amendments to title 18 (crimes and criminal procedure).
Sec. 1714. Amendments to Americans with Disabilities Act of 1990.
Sec. 1715. Amendment to Age Discrimination in Employment Act.
Sec. 1716. Amendments to the Fair Credit Reporting Act.
SEC. 2. PURPOSE.
The purpose of this Act is to--
(1) establish a comprehensive system of Federal chartering, licensing,
regulation, and supervision for insurers and insurance producers that
is independent of the State system of insurance licensing, regulation,
and supervision, yet that requires federally chartered and licensed insurers
and producers to comply with certain State laws, including State tax laws;
(2) provide for the creation of an Office of National Insurance within
the Department of the Treasury that is funded by assessments imposed upon
federally chartered and licensed insurers and insurance producers; and
(3) provide for the appointment of a Commissioner of National Insurance,
who, among other duties, is authorized to--
(A) issue Federal charters and licenses to insurers and insurance producers;
(B) exclusively regulate and supervise the operations and solvency of
federally chartered or licensed insurers and producers on a uniform,
nationwide basis, including the conduct of such insurers and producers
with policyholders; and
(C) protect the interests of policyholders by establishing a comprehensive
scheme for the receivership for federally chartered insurers that requires
federally chartered insurers to participate in qualified State guaranty
funds.
SEC. 3. DEFINITIONS.
(1) AFFILIATE- The term `affiliate' means any person that controls, is
controlled by, or is under common control with another person.
(2) AFFILIATE INSURER- The term `affiliate insurer' means any person that
controls, is controlled by, or is under common control with, a National
Insurer or a National Agency.
(3) BUSINESS OF INSURANCE- The term `business of insurance' has the meaning
given to such term in section 1033(f) of title 18, United States Code.
(4) COMMISSIONER- The term `Commissioner' means the Commissioner of National
Insurance.
(5) CONTROL- The term `control', including the terms `controlling', `controlled
by', and `under common control with', means the possession, direct or
indirect, of the power to direct or cause the direction of the management
and policies of a business entity, whether through the ownership of voting
securities, by contract or otherwise, unless the power is the result of
an official position with or corporate office held by a person. For purposes
of sections 1204(c), 1231, 1243(g), and title III, control shall be presumed
to exist if any person, directly or indirectly, owns, controls, holds
with the power to vote, or holds proxies representing, 10 percent or more
of the voting securities of any other person.
(6) CORPORATION- The term `Corporation' means the National Insurance Guaranty
Corporation that is established in section 1603.
(7) FEDERAL BANKING AGENCIES- The term `Federal banking agencies' means
the Office of the Comptroller of the Currency, the Board of Governors
of the Federal Reserve System, the Federal Deposit Insurance Corporation,
and the Office of Thrift Supervision.
(8) FEDERALLY LICENSED INSURANCE PRODUCER- The term `federally licensed
insurance producer' means a person, including a National Agency and a
natural person acting on behalf of a National Agency, that is an insurance
producer licensed pursuant to section 1301.
(9) FRAUDULENT INSURANCE ACT- The term `fraudulent insurance act' has
the meaning given to such term in section 1037A(d)(3) of title 18, United
States Code.
(10) FUNCTIONAL REGULATOR- The term `functional regulator' shall mean--
(A) in the case of a broker-dealer, investment advisor or investment
Company, the Securities and Exchange Commission;
(B) in the case of a State insurer or State insurance producer, the
appropriate State insurance regulator of a State that has jurisdiction
over such insurer or insurance producer;
(C) in the case of a bank holding company or financial holding company,
the Federal Reserve Board;
(D) in the case of a savings and loan holding company, the Office of
Thrift Supervision;
(E) in the case of a national bank, the Office of the Comptroller of
the Currency;
(F) in the case of a Federal savings bank or Federal savings association,
the Office of Thrift Supervision;
(G) in the case of a State bank, the appropriate State banking authority
for the State in which the bank is chartered or the Federal Deposit
Insurance Corporation, in the case of a State bank that is not a member
of the Federal Reserve System, or the Federal Reserve Board, in the
case of a State bank that is a member of the Federal Reserve System;
(H) in the case of a State savings bank or State savings association,
the appropriate banking authority for the State in which the thrift
is chartered; and
(I) in the case of a commodities company, the Commodities Exchange Commission.
(11) FUNCTIONALLY REGULATED AFFILIATE- The term `functionally regulated
affiliate' shall mean--
(A) a broker or dealer that is registered under the Securities Exchange
Act of 1934;
(B) a registered investment adviser, registered by or on behalf of either
the Securities and Exchange Commission or any State;
(C) an investment company that is registered under the Investment Company
Act of 1940;
(D) a State insurer or State insurance producer that is subject to supervision
by a State insurance regulator;
(E) a bank holding company or financial holding company registered with
or certified by the Federal Reserve Board;
(F) a national bank subject to the supervision of the Office of the
Comptroller of the Currency;
(G) a State bank subject to the supervision of a State banking regulator;
(H) a Federal savings bank or Federal savings association subject to
the supervision of the Office of Thrift Supervision;
(I) a State savings bank or State savings association subject to the
supervision of a State banking regulator; and
(J) a business entity that is subject to regulation by the Commodity
Futures Trading Commission, with respect to commodities activities of
such entity and activities incidental to such commodities activities.
(12) INSOLVENCY; INSOLVENT-
(A) IN GENERAL- The term `insolvency' or `insolvent' means the inability
of an insurer to pay its obligations when they are due or when assets
do not exceed liabilities plus the greater of--
(i) any capital and surplus required by law for its organization;
or
(ii) the total par or stated value of its authorized and issued capital
stock.
(B) LIABILITIES- In this paragraph, the term `liabilities' shall include
reserves required by statute or by rule or specific requirements imposed
by the Commissioner upon an insurer.
(13) INSURANCE OPERATIONS- The term `insurance operations' includes but
is not limited to--
(A) the business of insurance;
(B) all acts and transactions relating to the sale, solicitation, negotiation,
and underwriting of insurance;
(C) all acts and transactions relating to claims adjustment and settlement;
and
(D) all acts and transactions relating to the establishment of rates,
rules, risk classifications, rating classifications, rating territories
and forms (including, but not limited to, endorsements, addendums and
policy language) for insurance.
(14) INSURANCE PERSON- The term `insurance person' has the meaning given
such term in section 1037A(d)(4) of title 18.
(15) INSURANCE PRODUCER- The term `insurance producer' means any person,
including a National Agency and a natural person acting on behalf of a
National Agency, that sells, solicits or negotiates policies of insurance,
except that none of the following is an insurance producer:
(B) An officer, director, or employee of a National Insurer or of an
insurance producer, provided that the officer, director, or employee
does not receive any commission or other compensation on insurance policies
written or sold by the National Insurer or insurance producer which
commission or other compensation is directly dependent upon the amount
of insurance policies written or sold and--
(i) the officer, director, or employee's activities are executive,
administrative, managerial, clerical or a combination of these, and
are only indirectly related to the sale, solicitation or negotiation
of insurance;
(ii) the officer, director, or employee's function relates to underwriting,
loss control, inspection or the processing, adjusting, investigating,
or settling of a claim on a policy of insurance; or
(iii) the officer, director, or employee is acting in the capacity
of a special agent or agency supervisor assisting insurance producers
where the person's activities are limited to providing technical advice
and assistance to federally licensed insurance producers and do not
include the sale, solicitation or negotiation of insurance.
(C) A person who secures and furnishes information for the purpose of
group insurance policies; or for the purpose of enrolling individuals
under plans, or issuing certificates under plans or otherwise assisting
in administering plans, where no commission or other compensation directly
dependent upon the amount of insurance policies written or sold is paid
to the person for the service.
(D) An employer or association or its officers, directors, employees,
or the trustees of an employee trust plan, to the extent that the employer,
officer, employee, director or trustee is engaged in the administration
or operation of a program of employee benefits for the employer's or
association's own employees or the employees of its subsidiaries or
affiliates, which program involves the use of insurance written by the
National Insurer, as long as the employers, associations, officers,
directors, employees or trustees are not in any manner compensated,
directly or indirectly, by the National Insurer.
(E) An employee of a National Insurer or an organization employed by
a National Insurer that is engaging in the inspection, rating or classification
of risks, or in the supervision of the training of insurance producers
and that is not individually engaged in the sale, solicitation, or negotiation
of insurance.
(F) A person whose activities are limited to advertising without the
intent to solicit insurance through communications in printed publications
or other forms of electronic mass media, provided that the person does
not sell, solicit, or negotiate insurance.
(G) A salaried full-time employee who counsels or advises his or her
employer relative to the insurance interests of the employer or of the
subsidiaries or business affiliates of the employer provided that the
employee does not sell or solicit insurance or receive a commission
or other compensation directly dependent upon the amount of insurance
policies written or sold.
(H) A person that sells, solicits, or negotiates a funding agreement.
(I) Any other kind of person identified by the Commissioner, by regulation,
as not being an insurance producer within the meaning of this definition.
(16) INSURANCE SECURITIZATION- The term `insurance securitization' means
the issuance of debt instruments by a National Insurer, the proceeds from
which support the exposures attributed to a protected cell, where repayment
of principal or interest, or both, to investors under the transaction
terms is contingent upon the occurrence or nonoccurrence of an event with
respect to which the National Insurer is exposed to loss under insurance
policies or reinsurance contracts it has written.
(17) INSURER-AFFILIATED PARTY- The term `insurer-affiliated party' means--
(A) any director, officer, employee, or controlling shareholder (other
than a holding company) of, or agent for, a National Insurer or a National
Agency;
(B) any other person who has filed or is required to file a statement
with the Commissioner under section 1231;
(C) any shareholder (other than a holding company), consultant, joint
venture partner, and any other person as determined by the Commissioner
(by regulation or case-by-case) who participates in the conduct of the
affairs of a National Insurer or a National Agency; and
(D) any independent contractor (including any attorney, actuary, or
accountant) of a National Insurer or a National Agency who in that capacity
knowingly or recklessly participates in any violation of any law or
regulation, any breach of fiduciary duty, or any conduct that involves
an undue risk of loss to a National Insurer's policyholders as a whole,
and which violation, breach or conduct caused or is likely to cause
more than a minimal financial loss to, or a significant adverse effect
on, a National Insurer or the policyholders of a National Insurer.
(18) INSURER IN FRATERNAL FORM- The term `insurer in fraternal form' means
an incorporated society, order or supreme lodge, without capital stock
(generally known as a fraternal benefit society), that--
(A) is conducted solely for the benefit of its members and their beneficiaries
and not for profit;
(B) is operated on a lodge system with ritualistic form of work;
(C) has a representative form of government;
(D) provides benefits to members and their dependents; and
(E) operates for 1 or more social, intellectual, educational, charitable,
benevolent, moral, fraternal, patriotic, or religious purposes for the
benefit of its members, which may also be extended to others.
(19) NAIC- The term `NAIC' means the National Association of Insurance
Commissioners.
(20) NATIONAL AGENCY- The term `National Agency' means a National Insurance
Agency chartered under section 1201.
(21) NATIONAL INSURER- The term `National Insurer' means a National Insurance
Company chartered under section 1201.
(22) NATIONAL LIFE INSURER- The term `National Life Insurer' means a National
Insurer that holds a Federal license to sell, solicit, negotiate, and
underwrite 1 or both of life insurance and annuities, provided that a
National Life Insurer may also sell, solicit, negotiate, and underwrite
disability income insurance, long-term care insurance, health insurance,
and funding agreements.
(23) NATIONAL PROPERTY/CASUALTY INSURER- The term `National Property/Casualty
Insurer' means a National Insurer that holds a Federal license to sell,
solicit, negotiate, and underwrite any combination of lines of property/casualty
insurance, provided that a National Property/Casualty Insurer may also
sell, solicit, negotiate, and underwrite health insurance.
(24) NEGOTIATE- The term `negotiate', in the context of negotiating insurance,
means the act of conferring directly with or offering advice directly
to a purchaser or prospective purchaser of a particular policy of insurance
concerning any of the substantive benefits, terms, or conditions of the
contract, provided that the person engaged in that act either sells insurance
to or obtains insurance coverage for purchasers.
(25) NON-UNITED STATES INSURER- The term `non-United States Insurer' means
a business entity that is chartered or licensed by a foreign country to
sell, solicit, negotiate, and underwrite insurance.
(26) OFFICE- The term `Office' means the Office of National Insurance.
(27) PERSON- The term `person' means any natural person, business entity,
governmental body or entity, voluntary organization, or similar organization.
(28) POLICY OF INSURANCE; INSURANCE POLICY- The term `policy of insurance'
or `insurance policy' means a policy, contract, certificate, or other
evidence of insurance. `Policy of insurance' includes an annuity contract
and a funding agreement.
(29) POLICYHOLDER- The term `policyholder' of an insurance policy means
the person who is identified as the legal owner under the terms of the
insurance policy or who is otherwise vested with legal title to the insurance
policy. An assignment, absolute on its face, completed in accordance with
the terms of the insurance policy and properly recording the assignee
as the policyholder on the books of the insurer vests legal title in the
name of the assignee. The term `policyholder' does not include a person
with a mere beneficial interest in an insurance policy or a person to
whom an insurance policy is assigned for collateral security purposes.
(30) PROPERTY/CASUALTY INSURANCE- The term `property/casualty insurance'--
(A) means a product that insures, guarantees, or indemnifies against
liability, loss of life, loss of health, or loss through damage to or
destruction of property, including surety bonds, private passenger or
commercial automobile, homeowners, mortgage guaranty, financial guaranty,
commercial multiperil, general liability, professional liability, workers'
compensation, fire and allied lines, farm or ranch owners multiperil,
aircraft, fidelity, surety, medical malpractice, ocean marine, inland
marine, and boiler and machinery insurance; and
(B) does not include life insurance, disability income insurance, long-term
care insurance, health insurance, annuities, a funding agreement, or
title insurance.
(31) PROTECTED CELL- The term `protected cell' means an identified pool
of assets and liabilities of a National Insurer segregated and insulated
from the remainder of the National Insurer's assets and liabilities. The
remainder of the National Insurer's assets and liabilities includes general
account assets and liabilities, separate account assets and liabilities,
and assets and liabilities of other protected cells.
(32) PROTECTED CELL ACCOUNT- The term `protected cell account' means a
specifically identified bank or custodial account established by a National
Insurer for the purpose of segregating the protected cell assets of 1
protected cell from the protected cell assets of other protected cells
and from the assets of the National Insurer's general account and separate
accounts.
(33) SELL- The term `sell', in the context of selling a policy of insurance,
includes exchanging a policy of insurance by any means, for money or any
other valuable consideration, on behalf of an insurer.
(34) SEPARATE ACCOUNT- The term `separate account' means an account established
and maintained by a National Life Insurer under which income, gains, and
losses, whether or not realized, from assets allocated to such account,
are, in accordance with the applicable contract, credited to or charged
against such account without regard to other income, gains, or losses
of the National Life Insurer.
(35) SOLICIT- The term `solicit', in the context of soliciting a policy
of insurance, means attempting to sell insurance or asking or urging a
person to apply for a particular kind of insurance from a particular insurer.
(36) STATE- The term `State' means each of the 50 States, the District
of Columbia, the Commonwealth of Puerto Rico, any territory of the United
States, Guam, American Samoa, the Trust Territory of the Pacific Islands,
the United States Virgin Islands, and the Commonwealth of the Northern
Mariana Islands.
(37) STATE INSURANCE AGENCY- The term `State insurance agency' means an
insurance producer that is incorporated under State law.
(38) STATE INSURER- The term `State insurer' means an insurer incorporated
or organized under the laws of a State.
(39) SUBSIDIARY- The term `subsidiary' means a business entity controlled,
directly or indirectly, by another business entity. For the purposes of
this definition--
(A) a business entity is conclusively presumed to be controlled by a
person that, directly or indirectly, with power to vote, owns, controls,
or holds a majority of the outstanding voting securities of such business
entity;
(B) no presumption, either of control or of absence of control, arises
if such ownership, control, or holding of voting securities is less
than a majority but more than 5 percent;
(C) absence of control is presumed if such ownership, control or holding
of voting securities is 5 percent or less; and
(D) in determining control, voting securities held in separate accounts
of a business entity shall be deemed to be owned by the business entity,
but voting securities in an investment advisory account that are not
owned by a business entity but are held in an account as to which the
business entity is an investment adviser shall not be deemed to be controlled
or held by such business entity.
(40) TRUSTEED ASSETS- The term `trusteed assets' means assets required
or permitted by this title to be deposited by a non-United States insurer
with a qualified trustee for the security of its policyholders and creditors
in the United States.
(41) TRUSTEED SURPLUS- The term `trusteed surplus' means, with respect
to a United States branch, the value of the insurer's trusteed assets
deposited with a trustee under section 1202(b), plus accrued investment
income thereon where such income is collectible by the trustee, less the
aggregate net amount of all of its reserves and other liabilities in the
United States as determined under section 1202(b).
(42) UNITED STATES BRANCH- The term `United States branch' means the business
unit through which business is transacted within the United States by
a non-United States insurer and the assets and liabilities of the insurer
within the United States pertaining to such business.
(43) UNITED STATES HOLDING COMPANY- The term `United States holding company'
means, with respect to a National Insurer, a person organized or incorporated
in a State that directly or indirectly controls a National Insurer.
(44) VIOLATION- The term `violation' includes any action or inaction (alone
or with another or others) for or toward causing, bringing about, participating
in, counseling, or aiding or abetting a violation.
(45) VOTING SECURITIES- The term `voting securities' means securities
of any class or any ownership interest having voting power for the election
of directors, trustees, or management of a business entity, other than
securities having such power only by reason of the happening of a contingency.
TITLE I--OFFICE OF NATIONAL INSURANCE
Subtitle A--Establishment of Office of National Insurance
SEC. 1101. ESTABLISHMENT.
(a) In General- There is established, in the Department of the Treasury,
the Office of National Insurance, which shall be headed by the Commissioner
of National Insurance.
(b) Offices- The Commissioner shall establish a main office in Washington,
D.C., not fewer than 6 regional offices, and such additional offices, within
or outside the United States, as the Commissioner determines to be necessary
to carry out the provisions of this Act.
(c) Funding- The operations of the Office, including the compensation of
the Commissioner and all employees of the Office, shall be paid from fees
and assessments imposed under the terms of section 1122.
(d) Applicability of Administrative Procedures Act- The Office shall be
an agency of the United States for purposes of subchapter II of chapter
5 and chapter 6 of title 5, United States Code.
(e) Annual Report- The Commissioner shall prepare and submit to Congress
an annual report on the activities of the Office.
SEC. 1102. COMMISSIONER OF NATIONAL INSURANCE.
(1) IN GENERAL- The Commissioner of National Insurance shall be appointed
by the President, by and with the advice and consent of the Senate, from
among individuals who are citizens of the United States.
(2) TERM- The Commissioner shall be appointed for a term of 5 years.
(3) VACANCY- A vacancy in the position of the Commissioner, which occurs
before the expiration of the term for which the Commissioner was appointed
shall be filled in the manner established under paragraph (1). The Commissioner
appointed to fill the vacancy shall be appointed only for the remainder
of the term of the preceding Commissioner.
(4) SERVICE AFTER TERM- An individual may serve as the Commissioner after
the expiration of the term for which appointed until the earlier of--
(A) such time as a successor has been appointed; or
(B) 1 year after the expiration of the individual's term.
(5) PROHIBITION ON FINANCIAL INTERESTS- The Commissioner may not have
a direct or indirect financial interest in any National Insurer, National
Agency, or other federally licensed insurance producer, except that the
Commissioner may own, directly or indirectly, or may have a direct or
indirect beneficial interest in any insurance policy written or sold by
a National Insurer or National Agency.
(6) OVERSIGHT- The Commissioner shall be subject to the general oversight
of the Secretary of the Treasury, who may not intervene in any matter
or proceeding before the Commissioner unless otherwise specifically provided
by law.
(A) IN GENERAL- The Commissioner shall receive compensation at the rate
prescribed by law under section 5314 of title 5, United States Code,
for positions at level III of the Executive Schedule.
(B) TECHNICAL AMENDMENT- Section 5314 of title 5, United States Code,
is amended by inserting `Commissioner of National Insurance, Department
of the Treasury.' as a new item after `Administrator, Pipeline and Hazardous
Materials Safety Administration.'.
(b) Powers of the Commissioner-
(A) POWERS- The Commissioner shall--
(i) oversee the organization, incorporation, operation, regulation,
and supervision of National Insurers and National Agencies;
(ii) issue charters and licenses for National Insurers and National
Agencies;
(iii) license, regulate, and supervise federally licensed insurance
producers other than National Agencies; and
(iv) have exclusive authority to determine whether a person subject
to this Act has complied with the Act or the application of any State
law to matters regulated under this Act, including the determination
of any complaint raised by any person.
(B) FINAL AGENCY ACTION- A determination of the Commissioner under subparagraph
(A)(iv) shall be the final agency action for purposes of judicial review
of that action.
(A) ISSUANCE OF REGULATIONS AND OTHER ACTIONS- The Commissioner may
issue such rules, regulations, orders, and interpretations as the Commissioner
determines to be necessary to carry out the purposes of this Act.
(B) AUTONOMY- The Secretary of the Treasury may not delay or prevent
the issuance of any rule, regulation, order, or interpretation by the
Commissioner unless otherwise specifically authorized by law.
(C) NO DELEGATION PERMITTED- The Commissioner may not delegate any authority
conferred under subparagraph (A) to any insurance self-regulatory organization.
(3) LITIGATION AUTHORITY-
(A) IN GENERAL- The Commissioner may sue and be sued, complain and defend,
and otherwise litigate, in the Commissioner's name and through the Commissioner's
own attorney, in any Federal or State court, other than the Supreme
Court of the United States in which the Commissioner shall be represented
by the Solicitor General of the United States.
(B) ENFORCEMENT- The Commissioner may apply to the United States district
court for the jurisdiction in which the main office of a National Insurer
or National Agency is located, or in which any other federally licensed
insurance producer or other person is located, for the enforcement of
any effective and outstanding rule, regulation, order, or interpretation
issued pursuant to this Act.
(4) CONSULTATION WITH STATE INSURANCE REGULATORS- The Commissioner may,
as appropriate, consult with State insurance regulators responsible for
the supervision of States insurers, State insurance agencies, and State
licensed insurance producers regarding regulatory and supervisory matters
of common interest.
(5) INTERNATIONAL COORDINATION AND COOPERATION-
(A) IN GENERAL- The Commissioner may engage in international efforts
to secure bilateral and multilateral cooperation and agreements, as
appropriate, with respect to insurance regulation in global markets
in order to promote open and fair competition in such markets and to
improve the quality and uniformity of insurance regulation in all countries.
(B) FOREIGN INSURANCE REGULATORS- The Commissioner may provide appropriate
technical assistance to, and cooperation with, individual foreign insurance
regulators and regional and global regulatory organizations in insurance
matters affecting international commerce, including--
(i) the development and implementation of international regulatory
standards; and
(ii) the development and implementation of bilateral and multilateral
mutual recognition agreements on the licensing of insurance companies
and insurance producers.
(C) CONSULTATION AND COOPERATION- In exercising the authority granted
under subparagraphs (A) and (B), the Commissioner--
(i) shall consult and cooperate with the Executive Office of the President
and the United States Trade Representative; and
(ii) may include a representative of any interested State insurance
regulators as the Commissioner determines to be appropriate.
(6) INDEPENDENCE IN CONGRESSIONAL TESTIMONY AND RECOMMENDATIONS- Section
111 of Public Law 93-495 (12 U.S.C. 250) is amended by inserting `the
Commissioner of the National Insurance,' after `the Director of the Office
of Thrift Supervision,'.
(c) GAO Audit- The Commissioner shall make available to the Comptroller
General of the United States all books and records necessary to audit all
of the activities of the Office.
SEC. 1103. OFFICE PERSONNEL MATTERS.
(a) In General- The Commissioner may employ such examiners, lawyers, accountants,
actuaries and other employees as are necessary to carry out the provisions
of this Act.
(b) Compensation- The Commissioner shall fix the compensation and number
of employees of the Office without regard to chapter 51 or subchapter III
of chapter 53 of title 5, United States Code.
(c) Additional Compensation- The Commissioner may provide additional compensation
and benefits to employees of the Office if the same type of compensation
or benefits are then being provided by any Federal banking agency or, if
not then being provided, could be provided by any such agency under applicable
provisions of law or regulation. In setting and adjusting the total amount
of compensation and benefits for employees of the Office, the Commissioner
shall consult, and seek to maintain comparability with, the Federal banking
agencies.
(d) Acting Commissioner- The Commissioner shall designate an employee of
the Office to serve as the Acting Commissioner during the absence or disability
of the Commissioner.
(e) Delegation of Powers-
(1) EMPLOYEES AND OTHERS- Unless otherwise prohibited by this Act, the
Commissioner may delegate to any employee, representative, or agent any
power of the Commissioner.
(2) SELF-REGULATORY ORGANIZATIONS- Unless otherwise prohibited by this
Act, the Commissioner may, by regulation, delegate to any insurance self-regulatory
organization any power of the Commissioner in accordance with the terms
of section 1106.
SEC. 1104. DIVISION OF INSURANCE FRAUD.
(a) Establishment- There is established, within the Office, a Division of
Insurance Fraud.
(b) Authority- The Division of Insurance Fraud shall have all powers necessary
to enforce the terms of subtitle D, other than the power to execute search
and arrest warrants.
SEC. 1105. DIVISION OF CONSUMER AFFAIRS.
(a) Establishment- There is established, within the Office, a Division of
Consumer Affairs.
(b) Authority- The Division of Consumer Affairs shall support the Commissioner
in the implementation and enforcement of the market conduct regulations
issued pursuant to section 1215.
SEC. 1106. INSURANCE SELF-REGULATORY ORGANIZATIONS.
(a) Authority of the Commissioner- Subject to the terms of this section,
and the regulations issued pursuant to this section, the Commissioner shall
have the authority to--
(1) provide for the registration of an insurance self-regulatory organization;
and
(2) supervise and regulate any registered insurance self-regulatory organization,
which shall include the authority to--
(A) review, approve, abrogate, modify, or add to the operating rules
of an insurance self-regulatory organization;
(B) review, approve, abrogate, or modify any disciplinary action taken
by an insurance self-regulatory organization;
(C) remove, suspend, or bar an individual from serving as an officer
or director of an insurance self-regulatory organization;
(D) remove or suspend a member of an insurance self-regulatory organization;
and
(E) suspend or revoke the registration of an insurance self-regulatory
organization.
(b) Authority of Registered Insurance Self-Regulatory Organizations- An
insurance self-regulatory organization that is registered by the Commissioner
shall have the authority to--
(1) carry out the purpose of this Act; and
(2) enforce compliance by its members with the provisions of this Act,
applicable regulations issued by the Commissioner, and the rules of the
organization.
(c) Membership- An insurance self-regulatory organization may be formed
by, and consist exclusively of--
(3) federally licensed insurance producers; or
(4) any combination of National Insurers, National Agencies and federally
licensed insurance producers.
(d) Regulations- Not later than 2 years after the date of enactment of this
Act, the Commissioner shall issue regulations governing the registration
and operations of insurance self-regulatory organizations. Such regulations
shall establish--
(1) the procedures insurance self-regulatory organizations must follow
to be registered by the Commissioner, which shall provide for public notice
and an opportunity for public comment on the proposed registration;
(2) the standards that the Commissioner shall apply in reviewing a proposed
registration, which shall require an insurance self-regulatory organization
to demonstrate that--
(A) it has the capacity to--
(i) carry out the purpose of this Act; and
(ii) enforce compliance by its members with the provisions of this
Act, applicable regulations, and the rules of the organization; and
(B) its operating rules--
(i) assure a fair representation of its members in the selection of
its directors and the administration of its affairs;
(ii) provide for the equitable allocation of fees, dues, and other
charges among its members;
(iii) provide for the organization to take appropriate disciplinary
actions against members, including the revocation of membership status,
for violations of this Act, the regulations issued pursuant to this
Act, or the operating rules of the organization; and
(iv) include procedures for members that are subject to disciplinary
actions to obtain review of such actions by the Commissioner;
(3) the procedures and standards the Commissioner shall follow in reviewing,
approving, abrogating, or modifying any new operating rule or any amendment
to an existing operating rule that is proposed by an insurance self-regulatory
organization, which shall include procedures for public notice and comment
on such rule or amendment;
(4) the procedures and standards the Commissioner shall follow in abrogating,
modifying, or adding to the operating rules of an insurance self-regulatory
organization;
(5) the procedures and standards the Commissioner shall follow in reviewing,
approving, abrogating, or modifying any disciplinary action by an insurance
self-regulatory organization;
(6) the procedures and standards the Commissioner shall follow in removing,
suspending, or baring any individual from serving as an office, or director
of an insurance self-regulatory organization;
(7) the procedures and standards the Commissioner shall follow in suspending
or revoking the registration of an insurance self-regulatory organization;
and
(8) such other matters as the Commissioner determines appropriate to ensure
and protect the public interest and the interests of policyholders.
SEC. 1107. OFFICE OF THE OMBUDSMAN.
(a) Establishment of the Office of the Ombudsman- There is established within
the Office, an Office of the Ombudsman. The Commissioner shall appoint an
Ombudsman to administer the Office of the Ombudsman. The Ombudsman shall
report directly to the Commissioner.
(b) Duties of the Ombudsman- The Ombudsman shall act as a liaison between
the Office and any person adversely affected by the Office's supervisory
or regulatory activities, including the failure of the Office to take a
requested action. The Ombudsman shall assure that safeguards exist to encourage
complainants to come forward and preserve confidentiality.
(c) Powers of the Ombudsman- The powers of the Ombudsman are the following:
(1) with the prior consent of the Commissioner, the Ombudsman may stay
any appealable decision or action during the resolution of an appealable
matter; and
(2) review and report any weakness in policy or procedures to the Commissioner,
and make recommendations regarding changes in such policies or procedures.
(d) Appealable Matters- Any party adversely affected by an Office decision
or action may seek Ombudsman review of such decision or action, except for
the following:
(1) Appointments of receiver or conservators.
(2) Preliminary examination conclusions communicated to the regulated
entity before a final examination report is issued.
(3) Any formal enforcement-related action or decision, including the issuance
of a formal supervisory agreement, a cease-and-desist order, a civil money
penalty, or to take prompt corrective action, issue a safety and soundness
order, or commence a formal investigation.
(4) Formal and informal rulemakings pursuant to subchapter II of chapter
5 of title 5, United States Code.
(5) Decisions or recommended decisions following formal adjudications
conducted pursuant to subchapter II of chapter 5 of title 5, United States
Code.
(6) Requests for agency records pursuant to section 552 of title 5, United
States Code (commonly referred to as the Freedom of Information Act).
(e) Procedures for Filing an Appeal to the Ombudsman- An aggrieved party
may seek review of an appealable matter by filing a written appeal with
the Office of the Ombudsman. In the case of a National Insurer or National
Agency, the appeal shall be signed by the President or Chief Executive Officer
of the Insurer or Agency. The appeal shall set forth all of the reasons
for the appeal and supporting documentation. The Ombudsman may arrange for
a meeting of Office personnel and the complainants to discuss the appeal.
(f) Effect of Filing an Appeal- Unless the Ombudsman determines otherwise,
and obtains the concurrence of the Commissioner, material supervisory decisions
and actions are not stayed pending an appeal.
(g) Decision of the Ombudsman- After a thorough investigation of the matter,
and after considering all relevant information provided by the complainant
and the Office, the Ombudsman shall issue a written determination of the
appeal. Such determination shall become the final decision of the Office,
unless reversed, modified, or stayed by the Commissioner.
(h) Retaliation Prohibited- The Office and its staff may not take any adverse
action against a complainant for appealing any decision or action to the
Ombudsman. Upon learning of any possible retaliatory actions, the Ombudsman
shall investigate the matter, and if the Ombudsman determines that reasonable
grounds exist to conclude that retaliation has taken place, shall refer
the matter to the Commissioner.
Subtitle B--Supervision of National Insurers and National Agencies
SEC. 1121. EXAMINATION OF NATIONAL INSURERS AND NATIONAL AGENCIES.
(1) EXAMINATION- The Commissioner shall provide for examinations of National
Insurers and National Agencies.
(2) REGULAR AND SPECIAL EXAMINATIONS OF NATIONAL INSURERS- Not less than
once during each 36-month period, the Commissioner shall conduct an on-site
examination of each National Insurer, and may conduct a special examination
of a National Insurer whenever the Commissioner determines that a special
examination is necessary.
(3) EXAMINATION OF NATIONAL AGENCIES- The Commissioner may examine a National
Agency only in response to a complaint or any other evidence that the
National Agency has violated or is about to violate--
(A) a law, rule, or regulation;
(B) any condition imposed in writing by the Commissioner in connection
with issuing a license for a federally licensed insurance producer;
or
(C) any written agreement entered into with the Commissioner.
(A) IN GENERAL- In making examinations of National Insurers or National
Agencies, the Commissioner may, to the extent necessary to discover
information concerning activities of an affiliate that may have a materially
adverse effect on the operations, management, or financial condition
of the National Insurer or National Agency--
(i) require an affiliate to make such reports and provide such material
as the Commissioner may direct; and
(ii) conduct an examination of the affairs of an affiliate, if--
(I) the Commissioner has reasonable cause to believe that the activities
of the affiliate may have such an effect;
(II) the examination is limited to the extent necessary to disclose
information related to such effect; and
(III) the Commissioner is unable to obtain the necessary information
from the National Insurer or National Agency.
(B) ACCEPTANCE OF AVAILABLE INFORMATION- To the extent that the Commissioner
requires an affiliate to make reports or provide material under subparagraph
(A), the Commissioner shall, to the fullest extent possible, accept--
(i) reports that the affiliate has provided or been required to provide
to other Federal or State regulatory authorities or appropriate self-regulatory
organizations;
(ii) information that is otherwise required to be reported publicly;
and
(iii) audited financial statements.
(C) USE OF REGULATORY REPORTS- If the Commissioner determines to conduct
an examination of an affiliate under subparagraph (B) and such affiliate
is a functionally regulated affiliate, the Commissioner shall, to the
fullest extent possible, rely on the examination reports made by the
functional regulator of such affiliate.
(b) Access to People and Records-
(1) IN GENERAL- The Commissioner, upon request, shall be given prompt
and reasonable access to National Insurer or National Agency officers,
employees, and agents, and relevant books, records, and documents in the
course of supervision, oversight, or examination of any National Insurer
or National Agency.
(2) COURT ORDER- If prompt and reasonable access is not given as required
under paragraph (1), the Commissioner may apply to the United States district
court for the judicial district in which the main office of the National
Insurer or the National Agency is located, or in which the person denying
such access resides or carries on business, for an order requiring that
such information be promptly provided.
(3) SUBPOENA POWER- In connection with examinations of National Insurers,
National Agencies, or affiliates under this section and the examination
of federally licensed insurance producers under section 1301, the Commissioner
may--
(A) administer oaths and affirmations;
(B) examine, take, and preserve testimony under oath as to any matter
in respect of the affairs or ownership of any such National Insurer,
National Agency, affiliate, or federally licensed insurance producer;
(D) in order to enforce a subpoena issued under subparagraph (C), apply
to the United States district court for the judicial district--
(i) in which the main office of the National Insurer, National Agency,
or affiliate is located;
(ii) in which the federally licensed insurance producer is located;
or
(iii) in which the witness resides or carries on business.
SEC. 1122. EXAMINATION FEES AND OTHER ASSESSMENTS.
(1) NATIONAL INSURERS, NATIONAL AGENCIES, AND FEDERALLY LICENSED INSURANCE
PRODUCERS- The Commissioner shall assess the cost of conducting examinations
of National Insurers, National Agencies, and federally licensed insurance
producers against each such Insurer, Agency, or producer, as the Commissioner
determines to be appropriate.
(2) AFFILIATES- The Commissioner shall assess the cost of conducting examinations
of affiliates against each such affiliate, as the Commissioner determines
to be appropriate.
(A) IN GENERAL- Subject to subparagraph (B), if any affiliate refuses
to pay an assessment imposed pursuant to paragraph (2), the Commissioner
may assess such cost against the affiliated National Insurer or National
Agency.
(B) SHARED AFFILIATES- If an affiliate is an affiliate of more than
1 National Insurer or National Agency, the assessment with respect to
that affiliate may be assessed against, and collected from, any affiliated
National Insurer or National Agency, in such proportions as the Commissioner
may prescribe.
(b) Processing Fee- The Commissioner may assess a fee against any person
who submits to the Office an application, filing, statement, notice, or
request for approval to cover the cost of processing such submission.
(c) Other Assessments- The Commissioner may assess against National Insurers,
National Agencies, and federally licensed insurance producers such additional
fees as the Commissioner determines to be necessary and appropriate to fund
the expenses of the Office.
(d) Notice- The Commissioner shall notify National Insurers, National Agencies,
and federally licensed insurance producers of--
(1) the initial fees and assessments imposed under this section; and
(2) any change in fees and assessments.
(e) Treatment of Fees and Assessments-
(1) DEPOSITS- Amounts received by the Commissioner from fees and assessments
imposed under this section shall be deposited in the manner provided in
section 5234 of the Revised Statutes (12 U.S.C. 192) with respect to assessments
by the Comptroller of the Currency.
(2) GOVERNMENT FUNDS; APPORTIONMENT- Notwithstanding any other provision
of law, amounts received by the Commissioner from any fee or assessment
imposed under this section--
(A) shall not be considered Government or public funds or appropriated
money; and
(B) shall not be subject to apportionment for purpose of chapter 15
of title 31, United States Code, or under any other authority.
(f) Working Capital Fund-
(1) IN GENERAL- The Commissioner may impose fees and assessments pursuant
to subsections (a), (b), and (c), in excess of actual expenses for any
given year, to maintain an appropriate working capital fund.
(2) REFUNDS- The Commissioner shall remit to the payers of such fees and
assessments any funds collected in excess of what the Commissioner determines
to be necessary to maintain such working capital fund.
(g) Use of Funds- The Commissioner may use the combined resources collected
through fees and assessments imposed pursuant to this section to pay all
direct and indirect operating costs of the Office, including the salary
and administrative expenses of the Office.
(h) Appropriations During Start-Up Period-
(1) AUTHORIZATION- The Commissioner may borrow from the Secretary of the
Treasury such funds as the Commissioner determines to be necessary and
appropriate to organize and begin operations of the Office.
(2) PAYMENT- Any loan extended pursuant to paragraph (1) shall be repaid,
in full (with interest at a rate set by the Secretary of the Treasury),
within 30 years following the date of enactment of this Act, with individual
payments on any loan to be made in such amounts and at such times as the
Commissioner determines to be appropriate.
(i) Rulemaking- The Commissioner shall promulgate regulations with respect
to the computation, assessment, and collection of the fees and assessments
provided for in this section.
SEC. 1123. DISCLOSURE OF INFORMATION.
(a) Regulations Required- The Commissioner shall, by regulation, establish
standards for the disclosure of examination reports, applications, filings,
correspondence, records, and other information prepared by, or submitted
to, the Commissioner.
(b) Supervisory Privilege- The regulation issued pursuant to subsection
(a) shall prohibit the disclosure of confidential supervisory information,
as such information is defined by the Commissioner in such regulation.
(c) Other Privileges- The submission of any information to the Commissioner
shall not waive or otherwise affect any privilege a person may claim with
respect to such information under Federal or State law as to a party other
than the Commissioner.
SEC. 1124. REPORTING REQUIREMENT.
(a) General Authority- The Commissioner is authorized to require National
Insurers and National Agencies to make such reports, containing such information
and in such form, as the Commissioner may prescribe by regulation.
(b) Financial Statements- Each National Insurer holding a Federal license
shall submit annual and quarterly financial statements, in compliance with
the accounting principles and auditing standards specified under section
1211, to the Commissioner at such times and in such form as the Commissioner
may require under regulations promulgated pursuant to subsection (c).
(c) Regulations- The Commissioner shall promulgate regulations that--
(1) specify the information that shall be disclosed in the financial statements
required under subsection (b); and
(2) specify any additional financial schedules that National Insurers
shall make available for examination by the Commissioner upon request.
SEC. 1125. RELATIONSHIP TO STATE LAW.
(a) In General- Except as provided under subsection (b) or otherwise authorized
under Federal law, National Insurers, National Agencies, and federally licensed
insurance producers shall not be subject to any form of State licensing,
examination, reporting, regulation, or other supervision relating to--
(1) the sale, solicitation, or negotiation of insurance;
(2) the underwriting of insurance; or
(3) any other insurance operations, including all products, marketing
and sales practices, claims adjustment and settlement, financial condition
and solvency, and holding company transactions.
(b) Applicable State Laws- Notwithstanding subsection (a), National Insurers,
National Agencies, and federally licensed insurance producers shall be subject
to--
(1) applicable State unclaimed property and escheat laws;
(2) applicable tax laws of a State in accordance with sections 1251 and
1252;
(3) applicable State law relating to participation in an assigned risk
plan, mandatory joint underwriting association, or any other mandatory
residual market mechanism designed to make insurance available to those
unable to obtain insurance in the voluntary market, except to the extent
that such State law--
(A) relates to participation in any voluntary joint underwriting association
or similar arrangement;
(B) results in rates in effect for an assigned risk plan, mandatory
joint underwriting association, or any other mandatory residual market
mechanism that fail to cover the expected value of all future costs
associated with insurance policies written by such residual market mechanism;
(C) requires a National Insurer to use any particular rate, rating element,
price or form; or
(D) is inconsistent with any provision of this Act;
(4) applicable State insurance law that prescribes the compulsory coverage
requirements for workers' compensation or motor vehicle insurance, or
both, that every insurer must provide if the insurer issues insurance
policies in such State, except to the extent that such State law requires
a National Insurer to use any particular rate, rating element, or price;
(5) applicable State insurance law mandating the participation of insurers
in an advisory or statistical organization, except to the extent that
such State law requires a National Insurer to use any particular rate,
rating element, price, or form; and
(6) applicable State law relating to participation in a workers' compensation
administration mechanism, except to the extent that such State law is
inconsistent with any provision of this Act.
Subtitle C--Enforcement of Federal Insurance Laws
SEC. 1141. NATIONAL INSURER LICENSE SUSPENSION, RESTRICTION, OR REVOCATION.
(a) In General- In accordance with the conditions under this section, the
Commissioner may revoke or restrict the Federal license of a National Insurer
if the Commissioner determines that the National Insurer--
(1) has engaged in conduct that is hazardous to the National Insurer and
that involves an undue risk to the National Insurer's policyholders;
(2) is in a financial or other condition that is not consistent with the
continuation of existing operations; or
(A) applicable law or regulation;
(B) order or condition imposed in writing by the Commissioner in connection
with the approval of an application, filing, statement, notice, or other
request by the National Insurer; or
(C) written agreement entered into between the National Insurer and
the Commissioner.
(b) Notice To National Insurer-
(1) IN GENERAL- If the Commissioner determines under subsection (a) that
the Federal license of a National Insurer should be revoked or restricted,
the Commissioner shall--
(A) serve the National Insurer with written notice of the intent of
the Commissioner to revoke or restrict such Federal license;
(B) provide the National Insurer with a statement of the basis for the
determination to revoke or restrict such Federal license; and
(C) notify, not less than 30 days before a hearing under subsection
(c), of the date and place of the hearing.
(2) NOTICE OF SERVICE- Any service required or authorized to be made by
the Commissioner under this section may be made by registered mail, or
in such other manner reasonably calculated to give actual notice as the
Commissioner may by regulation or otherwise provide.
(c) Revocation or Restriction Hearing-
(1) IN GENERAL- Before revoking or restricting a Federal license, the
Commissioner shall conduct a hearing in accordance with section 554 of
title 5, United States Code, to determine if the conditions described
in subsection (a) exist.
(2) AUTHORITY TO REVOKE OR RESTRICT FEDERAL LICENSE- If, on the basis
of the evidence presented at the hearing under paragraph (1) and the written
findings of the Commissioner with respect to such evidence, the Commissioner
establishes the existence of any conduct, condition, or violation specified
in the notice sent to a National Insurer under subsection (b), the Commissioner
may issue an order revoking or restricting the Federal license of the
National Insurer, which shall be effective as of a date subsequent to
such finding.
(3) CONSENT TO REVOCATION OR RESTRICTION- If a duly authorized representative
of the National Insurer fails to appear at the hearing under this subsection,
the National Insurer shall be deemed to have consented to the revocation
or restriction of its Federal license, and the Commissioner may immediately
revoke or restrict such Federal license.
(d) Publication of Notice of Revocation or Restriction-
(1) NOTICE BY NATIONAL INSURER-
(A) IN GENERAL- The National Insurer shall give notice of a revocation
or restriction of its Federal license under this section to each policyholder
affected by the revocation or restriction.
(B) TYPE OF NOTICE.- Notice under this paragraph shall be sent to the
policyholder's last address of record on the books of the National Insurer,
in such manner and at such time as the Commissioner determines to be
necessary for the protection of policyholders.
(2) NOTICE BY COMMISSIONER-
(A) IN GENERAL- The Commissioner shall publish notice of a revocation
or restriction under this section. If the Commissioner determines that
a National Insurer has not given notice of an order under this subsection
in accordance with the requirements of the Commissioner, the Commissioner
may provide such notice in such manner as the Commissioner may find
to be necessary and proper.
(B) COSTS- The cost of any notice provided under subparagraph (A) shall
be paid by the National Insurer.
(e) Temporary Suspension or Restriction-
(1) IN GENERAL- If the Commissioner, in the course of a revocation proceeding
under this section, finds that the National Insurer poses an immediate
threat to the interests of its policyholders or to the public, the Commissioner
shall issue an order temporarily suspending or restricting the Federal
license of the National Insurer.
(2) NOTICE OF TEMPORARY ORDER- A National Insurer whose Federal license
is temporarily suspended or restricted under this subsection shall give
notice of an order issued under this paragraph to each affected policyholder
in such manner and at such times as the Commissioner may find to be necessary
and may order for the protection of policyholders and the public.
(3) EFFECTIVE PERIOD OF TEMPORARY ORDER- A temporary order issued under
paragraph (1) shall--
(A) become effective not earlier than 10 days from the date of service
upon the National Insurer; and
(B) unless set aside, limited, or suspended by a court in proceedings
authorized under paragraph (4), remain effective and enforceable until
the earlier of--
(i) the effective date of an order under subsection (c)(2); or
(ii) the date on which the Commissioner determines that there is insufficient
evidence to revoke or restrict a Federal license under this subsection.
(A) IN GENERAL- During the 10-day period beginning on the date on which
a temporary order has been issued under paragraph (1), the National
Insurer may apply to a court described in subparagraph (B) for an injunction
setting aside, limiting, or suspending the enforcement, operation, or
effectiveness of such order.
(B) JURISDICTION- The United States District Court for the District
of Columbia and the United States district court for the judicial district
in which the main office of the National Insurer is located shall have
jurisdiction to issue an injunction under this paragraph.
(f) Decision To Suspend, Restrict, or Revoke-
(1) IN GENERAL- Except as provided under paragraph (2), any decision by
the Commissioner to suspend, restrict, or revoke a Federal license under
this section shall be made by the Commissioner and may not be delegated.
(2) EXCEPTION- The Commissioner may, by order, designate an employee of
the Office who may make a decision described in paragraph (1) if the Commissioner
is not able to act by reason of recusal or is otherwise disqualified from
acting.
(g) Judicial Review- Any National Insurer whose Federal license has been
revoked or restricted by order of the Commissioner under this section shall
have the right of judicial review of such order only to the same extent
as provided for the review of orders under section 1148.
SEC. 1142. SUSPENSION, RESTRICTION, OR REVOCATION OF FEDERAL LICENSE OF
NATIONAL AGENCIES AND FEDERALLY LICENSED INSURANCE PRODUCERS.
(a) In General- In accordance with the provisions of this section, the Commissioner
may revoke or restrict the Federal producer license, including lines of
insurance covered by such license, of a National Agency or other federally
licensed insurance producer if the Commissioner determines that the Agency
or producer has--
(1) violated any applicable law, regulation, order, condition imposed
in writing by the Commissioner in connection with the approval of an application,
filing, statement, notice or other request by the producer, or written
agreement entered into between the producer and the Commissioner;
(2) provided incorrect, misleading, incomplete or materially untrue information
in an application for a Federal charter or a Federal producer license;
(3) used fraudulent, coercive, or dishonest practices; or
(4) demonstrated incompetence, untrustworthiness, or financial irresponsibility
as an insurance producer.
(b) Notice to Federally Licensed Insurance Producer- If the Commissioner
determines that any conduct, breach, or violation specified in subsection
(a) requires revocation or restriction of the Federal producer license of
a National Agency or other federally licensed insurance producer, the Commissioner
shall--
(1) serve written notice on the National Agency or other federally licensed
insurance producer of the Commissioner's intention to revoke or restrict
the Federal producer license;
(2) provide the National Agency or other federally licensed insurance
producer with a statement of the basis for the determination to revoke
or restrict the Federal producer license; and
(3) notify the National Agency or other federally licensed insurance producer,
not less than 30 days before a hearing under subsection (c), of the date
and place of the hearing.
(c) Revocation or Restriction Hearing-
(1) IN GENERAL- Before revoking or restricting a Federal producer license,
the Commissioner shall conduct a hearing in accordance with section 554
of title 5, United States Code, to determine if the conditions described
in subsection (a) exist.
(2) AUTHORITY TO REVOKE OR RESTRICT FEDERAL LICENSE- If, on the basis
of the evidence presented at the hearing under paragraph (1) and the written
findings of the Commissioner with respect to such evidence, the Commissioner
finds any conduct, condition, or violation specified in the notice sent
to a National Agency or other federally licensed insurance producer under
subsection (b), the Commissioner may issue an order revoking or restricting
the Federal producer license of the National Agency or other federally
licensed insurance producer, which shall be effective as of a date subsequent
to such finding.
(3) CONSENT TO REVOCATION OR RESTRICTION- If a duly authorized representative
of the National Agency or other federally licensed insurance producer
fails to appear at the hearing under this subsection, the National Agency
or other federally licensed insurance producer shall be deemed to have
consented to the revocation or restriction of its Federal producer license,
and the Commissioner may immediately revoke or restrict such Federal producer
license.
(d) Notice of Revocation or Restriction-
(1) NOTICE BY FEDERALLY LICENSED INSURANCE PRODUCER- Each National Agency
or other federally licensed insurance producer shall give written notice
of such revocation or restriction to each National Insurer, State insurer,
or United States branch of a non-United States insurer for which such
producer acts as an insurance producer.
(2) NOTICE BY COMMISSIONER-
(A) IN GENERAL- The Commissioner shall publish notice of a revocation
or restriction under this section. If the Commissioner determines that
a National Agency or other federally licensed insurance producer has
not given notice of an order under this subsection in accordance with
the requirements of the Commissioner, the Commissioner may provide such
notice in any manner the Commissioner determines to be necessary and
proper.
(B) COSTS- The cost of any notice provided under subparagraph (A) shall
be paid by the National Agency or other federally licensed insurance
producer.
(e) Temporary Suspension or Restriction-
(1) IN GENERAL- If the Commissioner, in the course of a revocation or
restriction proceeding under this section, finds that the National Agency
or other federally licensed insurance producer poses an immediate threat
to the interests of the policyholders of a National Insurer, a State insurer,
or a United States branch of a non-United States insurer or to the public,
the Commissioner may issue a temporary order suspending or restricting
the Agency's or other producer's Federal producer license.
(2) NOTICE OF TEMPORARY ORDER- The National Agency or other federally
licensed insurance producer shall give notice of a temporary order issued
under this paragraph in such manner and at such times as the Commissioner
may find to be necessary and may order for the protection of policyholders
and the public.
(3) EFFECTIVE PERIOD OF TEMPORARY ORDER- Any temporary order issued under
paragraph (1) shall--
(A) become effective not earlier than 10 days from the date of service
upon the National Agency or other federally licensed insurance producer;
and
(B) unless set aside, limited, or suspended by a court under paragraph
(4), remain effective and enforceable until an order of the Commissioner
under subsection (c) becomes final or until the Commissioner dismisses
the proceedings under paragraph (4).
(A) IN GENERAL- During the 10-day period beginning on the date on which
a temporary order has been issued under paragraph (1), the National
Agency or other federally licensed insurance producer may apply to a
court described in subparagraph (B) for an injunction setting aside,
limiting, or suspending the enforcement, operation, or effectiveness
of such order.
(B) JURISDICTION- The United States District Court for the District
of Columbia and the United States district court for the judicial district
in which the federally licensed insurance producers (or the main office
of the National Agency) is located shall have jurisdiction to issue
an injunction under this paragraph.
(f) Judicial Review- Any National Agency or other federally licensed insurance
producer whose Federal producer license has been revoked or restricted by
order of the Commissioner under this subsection shall have the right of
judicial review of such order only to the same extent as provided for the
review of orders under section 1148.
SEC. 1143. CEASE-AND-DESIST PROCEEDINGS.
(1) ISSUANCE- The Commissioner may issue and serve upon a National Insurer,
National Agency, federally licensed insurance producer, or insurer-affiliated
party a notice of charges if the Commissioner determines that such Insurer,
Agency, producer, or party--
(A) has engaged, or is about to engage, in conduct that is hazardous
to a National Insurer, a State insurer, or a United States branch of
a non-United States insurer and involves an undue risk to the policyholders,
as a whole, of a National Insurer, a State insurer, or a United States
branch of a non-United States insurer; or
(B) has violated, or is about to violate--
(i) a law, rule, or regulation;
(ii) any condition imposed in writing by the Commissioner in connection
with the granting of any application, filing, statement, notice, or
other request by the National Insurer, National Agency or the federally
licensed insurance producer; or
(iii) any written agreement entered into with the Commissioner.
(2) CONTENTS- The notice issued under paragraph (1) shall--
(A) contain a statement of the facts constituting the alleged violations;
and
(B) state the time and place at which a hearing will be held to determine
whether an order to cease and desist should be issued against the National
Insurer, National Agency, federally licensed insurance producer, or
insurer-affiliated party.
(1) TIMING- A hearing under this section shall be scheduled for a date
which is not earlier than 30 days nor later than 60 days after the service
of notice under subsection (a) unless another date is set by the Commissioner
at the request of any party so served.
(2) CONSENT- If a duly authorized representative of a party served notice
under subsection (a) fails to appear at a hearing under this section,
the party shall be deemed to have consented to the issuance of the cease-and-desist
order.
(c) Cease-and-Desist Order-
(1) IN GENERAL- If the Commissioner finds, upon the record made at a hearing
under this section, that any violation or conduct specified in the notice
of charges has been established, or if the party consents, the Commissioner
may issue and serve upon the National Insurer, National Agency, federally
licensed insurance producer, or insurer-affiliated party, an order to
cease and desist from any such violation or conduct.
(2) CONTENTS- A cease-and-desist order under this section may--
(A) require the National Insurer, National Agency, federally licensed
insurance producer, or insurer-affiliated party to cease and desist
from the alleged violation or conduct; and
(B) take affirmative action to correct the conditions resulting from
any such violation or conduct.
(3) EFFECTIVE DATE- A cease-and-desist order shall--
(A) take effect on the expiration of the date which is 30 days after
the service of such order upon the party or on another date, if issued
upon consent; and
(B) remain in effect and enforceable as provided therein, unless stayed,
modified, terminated, or set aside by action of the Commissioner or
a reviewing court.
(4) AUTHORITY TO LIMIT ACTIVITIES- The authority to issue an order under
this section includes the authority to place limitations on the activities
or functions of a National Insurer, National Agency, a federally licensed
insurance producer or an insurer-affiliated party.
(5) STANDARD FOR CERTAIN ORDERS- No authority under this section to prohibit
any insurer-affiliated party from withdrawing, transferring, removing,
dissipating, or disposing of any funds, assets, or other property may
be exercised unless the Commissioner meets the standards of Rule 65 of
the Federal Rules of Civil Procedure, without regard to the requirement
of such rule that the applicant show that the injury, loss, or damage
is irreparable and immediate.
(d) Temporary Cease-and-Desist Orders-
(1) IN GENERAL- If the Commissioner determines that the violation, threatened
violation, or conduct specified in the notice of charges served under
subsection (c)(1) is likely to cause insolvency or significant dissipation
of assets or earnings of a National Insurer, a State insurer, a United
States branch of a non-United States insurer or is likely to weaken the
condition of a National Insurer, a State insurer, or a United States branch
of a non-United States insurer or otherwise prejudice the interests of
the policyholders of a National Insurer, a State insurer, or a United
States branch of a non-United States insurer before the completion of
the proceedings conducted under subsection (c)(1), the Commissioner may
issue a temporary order requiring the National Insurer, National Agency,
