S. 40 - National Insurance Act of 2007

S 40

110th CONGRESS
1st Session

S. 40

To authorize the issuance of Federal 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 Federal regulation and supervision of national insurers and national agencies, to provide for policyholder protections in the event of an insolvency or the impairment of a national insurer, and for other purposes.

IN THE SENATE OF THE UNITED STATES

May 24, 2007

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

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 2007'.

(b) Table of Contents- The table of contents for this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Purposes.

Sec. 3. Definitions.

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. Regulatory supervision and relationship to State law.

Sec. 1126. Preservation of office records.

Sec. 1127. Compliance with anti-money laundering requirements.

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 suspension, removal, 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.

Sec. 1162. Penalties.

Sec. 1163. Civil remedy.

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. Participating policy procedures.

Sec. 1206. Conversion of State insurer to national insurer or State insurance agency to national agency.

Sec. 1207. Conversion of national insurer to State insurer or national agency to State agency.

Sec. 1208. Powers.

Sec. 1209. Separate accounts of national life insurer.

Sec. 1210. Protected cells.

Sec. 1211. Chartering and licensing commencement date.

Subtitle B--Financial, Product, and Market Regulations

Sec. 1212. Transitional financial regulations.

Sec. 1213. Other financial regulations.

Sec. 1214. Product regulation for national life insurers.

Sec. 1215. Product regulation for national property/casualty insurers.

Sec. 1216. Regulation of sales and marketing.

Sec. 1217. Prompt corrective action.

Subtitle C--Reinsurance

Sec. 1221. Federal licensing of reinsurers.

Sec. 1222. Credit for insurance ceded by a national insurer or federally licensed reinsurer.

Sec. 1223. Relationship to State law.

Sec. 1224. Freedom of commercial contract.

Sec. 1225. Review by the Commissioner.

Subtitle D--Acquisitions of Control; Mergers; Bulk Transfers; Domestication

Sec. 1231. Acquisition of control of national insurers.

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. 1241. Definitions.

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.

Sec. 1253. State taxation of non-admitted and surplus lines insurance.

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. 1401. Definitions.

Sec. 1402. Registration.

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. Effect of receivership proceeding.

Sec. 1503. Powers and duties.

Sec. 1504. Rulemaking.

Sec. 1505. Judicial review.

TITLE VI--INSOLVENCY PROTECTION

Sec. 1601. Participation in guaranty associations.

Sec. 1602. Qualified and nonqualified associations.

Sec. 1603. Establishment of the National Insurance Guaranty Corporation.

Sec. 1604. Benefits for policyholders of national life insurers.

Sec. 1605. Claims covered for policyholders of national property/casualty insurers.

Sec. 1606. Powers and duties of the Corporation.

Sec. 1607. Subrogation.

Sec. 1608. Assessments.

Sec. 1609. Regulations.

Sec. 1610. State taxation.

Sec. 1611. Examination of the Corporation; annual report.

Sec. 1612. Immunity.

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 the 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 the Americans with Disabilities Act of 1990.

Sec. 1715. Amendment to the Age Discrimination in Employment Act.

Sec. 1716. Amendments to the Fair Credit Reporting Act.

SEC. 2. PURPOSES.

The purposes of this Act are--

(1) to 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) to 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) to provide for the appointment of a Commissioner of National Insurance, who, among other duties, is authorized--

(A) to issue Federal charters and licenses to insurers and insurance producers;

(B) to 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) to 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.

In this Act, the following definitions shall apply:

(1) AFFILIATE- The term `affiliate' means any person that controls, is controlled by, or is under common control with another person.

(2) BUSINESS ENTITY- The term `business entity' means a corporation, association, partnership, trust, limited liability company, limited liability partnership, or other legal entity.

(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-

(A) IN GENERAL- 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 person, 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.

(B) SPECIAL RULE- For purposes of sections 1204(c), 1231, 1243(g), and title IV, 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) CORPORATE GOVERNANCE PROCEDURES- The term `corporate governance procedures' includes rules governing--

(A) corporate finance;

(B) shareholders, members, policyholders, directors, and officers and meetings, elections, voting, and notice relating to such persons;

(D) the duties of shareholders, directors, and officers (including any duty of care or duty of fair dealing and any business judgment rule).

(7) CORPORATION- The term `Corporation' means the National Insurance Guaranty Corporation established under section 1603.

(8) 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.

(9) 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.

(10) 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.

(11) FUNCTIONAL REGULATOR- The term `functional regulator' means--

(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;

(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.

(12) FUNCTIONALLY REGULATED AFFILIATE- The term `functionally regulated affiliate' means--

(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;

(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.

(13) 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 the 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.

(14) INSURANCE OPERATIONS- The term `insurance operations' includes--

(A) the business of insurance;

(B) all acts and transactions relating to the sale, solicitation, negotiation, and underwriting of insurance;

(D) all acts and transactions relating to the establishment of rates, rules, risk classifications, rating classifications, rating territories, and forms (including, endorsements, addendums, and policy language) for insurance;

(E) all acts and transactions relating to marketing and sales practices;

(F) financial condition and solvency;

(G) holding company transactions; and

(H) corporate governance.

(15) INSURANCE PERSON- The term `insurance person' has the same meaning as in section 1037A(d)(4) of title 18, United States Code.

(16) INSURANCE PRODUCER- The term `insurance producer'--

(A) 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, non-admitted insurance, and surplus lines of insurance; and

(B) does not include--

(i) a national insurer;

(ii) an officer, director, or employee of a national insurer or of an insurance producer--

(I) if 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

(II) if--

(aa) the activities of the officer, director, or employee are executive, administrative, managerial, clerical, or a combination thereof, and are only indirectly related to the sale, solicitation, or negotiation of insurance;

(bb) the functions of the officer, director, or employee relate to underwriting, loss control, inspection, or the processing, adjusting, investigating, or settling of a claim on a policy of insurance; or

(cc) 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;

(iii) 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;

(iv) an employer or association or its officers, directors, employees, or the trustees of an employee trust plan, to the extent that the employer, association, officer, director, employee, 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 employer, association, officer, director, employee, or trustee is not in any manner compensated, directly or indirectly, by the national insurer;

(v) 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;

(vi) 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;

(vii) 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;

(viii) a person that sells, solicits, or negotiates a funding agreement; or

(ix) any other kind of person identified by the Commissioner, by regulation, as not being an insurance producer for purposes of this Act.

(17) 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.

(18) INSURER-AFFILIATED PARTY- The term `insurer-affiliated party' means--

(A) any director, officer, employee, or controlling shareholder 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, consultant, joint venture partner, and any other person as determined by the Commissioner (by regulation or order) 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 the policyholders of a national insurer 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 as a whole of a national insurer.

(19) 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;

(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.

(20) NAIC- The term `NAIC' means the National Association of Insurance Commissioners.

(21) NATIONAL AGENCY- The term `national agency' means a national insurance agency chartered under section 1201.

(22) NATIONAL INSURER- The term `national insurer' means a national insurance company chartered under section 1201.

(23) 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, and funding agreements.

(24) 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.

(25) 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.

(26) NON-ADMITTED INSURANCE- The term `non-admitted insurance' means any property/casualty insurance permitted to be placed directly or through an insurance producer with a non-admitted insurer eligible to accept such insurance.

(27) NON-ADMITTED INSURER- The term `non-admitted insurer' means an insurer that is not licensed to engage in the business of insurance in a State and that--

(A) satisfies the eligibility requirements of the State in which an insured maintains its principal place of business, or, in the case of an individual, maintains a principal residence; and

(B) is not a national insurer.

(28) NON-UNITED STATES INSURER- The term `non-United States insurer' means a business entity that is organized under the law of a foreign country to sell, solicit, negotiate, and underwrite insurance, but is not so organized under the laws of a State, and is not a national insurer.

(29) OFFICE- The term `Office' means the Office of National Insurance.

(30) PARTICIPATING POLICY PROCEDURES- The term `participating policy procedures'--

(A) means the rules applicable to a life insurer in mutual form, by which the insurer ascertains divisible surplus and apportions an amount of divisible surplus to participating insurance policies; and

(B) does not include any limitation on the amount of surplus that may be retained by a life insurer in mutual form.

(31) PERSON- The term `person' means any natural person, business entity, governmental body or entity, voluntary organization, or similar organization.

(32) 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' or `insurance policy' includes an annuity contract and a funding agreement, but does not include a reinsurance contract.

(33) 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.

(34) 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.

(35) 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.

(36) 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.

(37) 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.

(38) 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.

(39) 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.

(40) 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.

(41) STATE INSURANCE AGENCY- The term `State insurance agency' means an insurance producer that is organized under the laws of a State.

(42) STATE INSURER- The term `State insurer' means an insurer incorporated or organized under the laws of a State.

(43) SUBSIDIARY- The term `subsidiary' means a business entity controlled, directly or indirectly, by another business entity. For 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;

(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.

(44) SURPLUS LINES OF INSURANCE- The term `surplus lines of insurance' means insurance on properties, risks, or exposures located or to be performed in a State with a non-admitted insurer that is sold, solicited, or negotiated by a national agency, federally licensed insurance producer, or other insurance producer.

(45) TITLE INSURANCE- The term `title insurance' or `business of title insurance' means any of the following:

(A) A contract insuring or indemnifying the owners of real or personal property, or other persons lawfully interested therein, against loss or damage arising from any of the following conditions, or the reinsurance thereof:

(i) Defects in or any liens or encumbrances on the insured title.

(ii) Unmarketability of the insured title.

(iii) Invalidity, lack of priority, or unenforceability of any liens or encumbrances on the stated property.

(iv) Lack of legal right of access to the land.

(v) Unenforceability of rights in title to the real or personal property.

(B) Insuring the correctness of searches and examinations of all instruments, liens, or charges affecting the title to real or personal property.

(C) Procuring and furnishing information relative to the title to real or personal property, including abstracting, searching, and examining titles.

(D) Handling escrows, settlements, or closings done in conjunction with subparagraph (A), (B), (C), (E), or (F).

(E) Any product or service defined by the laws of any State, whether by statute, regulation, or administrative determination, as title insurance.

(F) Doing or proposing to do any business substantially equivalent to any of the activities described in this paragraph, in a manner designed to evade the provisions of this Act.

(46) TITLE INSURER- The term `title insurer' means a company organized under the laws of a State for the purpose of conducting the business of title insurance.

(47) TRUSTEED ASSETS- The term `trusteed assets' means, with respect to a United States branch, 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.

(48) 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).

(49) 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.

(50) 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.

(51) 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.

(52) 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.

(a) Appointment-

(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.

(7) EXECUTIVE SCHEDULE-

(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-

(1) IN GENERAL-

(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.

(2) RULEMAKING-

(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 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 1216.

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.

(1) national insurers;

(2) national agencies;

(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 officer 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-

(1) IN GENERAL- The Ombudsman shall act as a liaison between the Office and any regulated person adversely affected by the supervisory or regulatory activities of the Office, 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.

(2) DEFINITION- For purposes of this section the term, a `regulated person' means a national insurer, a national agency, a federally licensed insurance producer, or an insurer-affiliated party.

(1) with the prior consent of the Commissioner, may stay any appealable decision or action during the resolution of an appealable matter; and

(2) shall review and report any weakness in policy or procedures to the Commissioner, and make recommendations to the Commissioner regarding changes in such policies or procedures.

(d) Appealable Matters- Any regulated person adversely affected by an Office decision or action may seek Ombudsman review of such decision or action, other than--

(1) the appointment of a receiver or conservator;

(2) any preliminary examination conclusions communicated to the regulated person before a final examination report is issued;

(3) any formal enforcement-related action or decision, including the issuance of a cease-and-desist order, assessment of a civil money penalty, or commencement of a formal investigation;

(4) any formal or informal rulemaking pursuant to subchapter II of chapter 5 of title 5, United States Code;

(5) any decision or recommended decision following a formal adjudication conducted pursuant to subchapter II of chapter 5 of title 5, United States Code; or

(6) any request 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- A regulated person may seek review of an appealable matter by filing a written appeal with the Office of the Ombudsman. In the case of a regulated person that is an entity, the appeal shall be signed by the President or Chief Executive Officer of the regulated person. 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) Decisions 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.

(g) 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.

(a) In General-

(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

(4) AFFILIATES-

(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- In the course of examining a national insurer, national agency, or affiliate of a national insurer or national agency, the Commissioner, upon request, shall be given prompt and reasonable access to officers, employees, agents, books, records, and documents of such insurer, agency, or affiliate.

(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 affiliate or person denying such access resides or conducts 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.

(a) Examination Fee-

(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.

(3) REFUSAL TO PAY-

(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 for in section 5234 of the Revised Statutes of the United States (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, notice, 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, other reports, applications, filings, correspondence, records, and other information prepared by, reported to, obtained by, or submitted to, the Commissioner. The regulation shall exclude matters to be addressed under regulations required under section 1161.

(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 by any person of any information to the Commissioner for any purpose in the course of any supervisory or regulatory process of the Commissioner shall not be construed as waiving, destroying, or otherwise affecting any privilege that such person may claim with respect to such information under Federal or State law as to any person or entity 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).

(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. REGULATORY SUPERVISION AND RELATIONSHIP TO STATE LAW.

(a) In General- Except as authorized by this Act or otherwise authorized under Federal law, national insurers, national agencies, and federally licensed insurance producers shall not be subject to any form of 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.

(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, 1252, and 1253;

(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;

(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, price, or form;

(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.

(1) `advisory or statistical organization' does not include the National Association of Insurance Commissioners;

(2) `compulsory coverage' does not include any State statutory requirement other than those prescribing the minimum extent of insurance protection afforded by a policy of insurance; and

(3) `mandatory residual market' means a facility, entity, or plan required by and established pursuant to State law to provide coverage for persons that cannot obtain insurance in the private market.

SEC. 1126. PRESERVATION OF OFFICE RECORDS.

(a) In General- The Commissioner may cause any and all records, papers, or documents kept by the Office or in the possession or custody of the Office to be--

(1) photographed or microphotographed or otherwise reproduced upon film; or

(2) preserved in any electronic medium or format which is capable of--

(A) being read or scanned by computer; and

(B) being reproduced from such electronic medium or format by printing any other form or reproduction of electronically stored data.

(b) Treatment as Original Records- Any photographs, microphotographs, or photographic film or copies thereof described in subsection (a)(1) or reproduction or electronically stored data described in subsection (a)(2) shall be deemed to be an original record for all purposes, including introduction in evidence in all State and Federal courts or administrative agencies, and shall be admissible to prove any act, transaction, occurrence, or event therein recorded.

(c) Authority of the Commissioner- Any photographs, microphotographs, or photographic film or copies thereof described in subsection (a)(1) or reproduction of electronically stored data described in subsection (a)(2) shall be preserved in such manner as the Commissioner shall prescribe, and the original records, papers, or documents may be destroyed or otherwise disposed of, as the Commissioner may direct.

SEC. 1127. COMPLIANCE WITH ANTI-MONEY LAUNDERING REQUIREMENTS.

(a) Compliance Required- The Commissioner shall prescribe regulations requiring national life insurers to establish and maintain procedures reasonably designed to assure and monitor compliance with the requirements of subchapter II of chapter 53 of title 31, United States Code, to the extent applicable.

(b) Examinations- Each examination of a national life insurer shall include a review of the procedures required to be established and maintained under subsection (a).

(c) Order- The Commissioner shall issue an order, in the manner prescribed in subsection (c) or (d) of section 1142, requiring such insurer to cease and desist from a violation of this section or regulations prescribed under this section, if the Commissioner determines that a national life insurer--

(1) has failed to establish and maintain the procedures described in subsection (a); or

(2) has failed to correct any problem with the procedures maintained by such national life insurer which was previously reported to such insurer by the Commissioner.

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 policyholders of the national insurer, as a whole;

(2) is in a financial or other condition that is not consistent with the continuation of existing operations; or

(3) has violated any--

(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

(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

(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.

(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) Notice of Revocation or Restriction Required-

(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 last address of record of the policyholder 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 as a whole or to the public, the Commissioner may 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.

(4) JUDICIAL REVIEW-

(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.

(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 Required-

(1) NOTICE BY FEDERALLY LICENSED INSURANCE PRODUCER- Each national agency or other federally licensed insurance producer shall give written notice of revocation or restriction under this section to each national insurer or State insurer for which such agency or 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 that 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 or a State insurer as a whole, or to the public, the Commissioner may issue a temporary order suspending or restricting the Federal producer license of the agency or other producer.

(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).

(4) JUDICIAL REVIEW-

(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.

(a) Notice-

(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 or a State insurer and involves an undue risk to the policyholders as a whole of a national insurer or a State 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, federally licensed insurance producer, or party; or

(iii) any written agreement entered into with the Commissioner by such insurer, agency, producer, or party.

(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.

(b) Hearing-

(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.

(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 issued under this subsection 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 issued under this subsection 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 or a State insurer, or is likely to weaken the condition of a national insurer or a State insurer or otherwise prejudice the interests of the policyholders, as a whole, of a national insurer or a State 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, producer, or party to--

(A) cease and desist from any such violation or conduct; and

(B) take affirmative action to prevent or remedy such insolvency, dissipation, condition, or prejudice pending completion of such proceedings.

(2) CONTENTS OF ORDER; EFFECTIVE DATE- A temporary cease-and-desist order issued under paragraph (1)--

(A) may include any action authorized under section 1144(2);

(B) shall become effective upon service to the national insurer, national agency, producer, or party; and

(C) unless set aside, limited, or suspended by a court under paragraph (3), shall remain in effect and enforceable until the date on which--

(i) administrative proceedings pursuant to such order are completed;

(ii) the Commissioner dismisses the charges specified in such order; or

(iii) if a cease-and-desist order is issued against such national insurer, national agency, producer, or party, such order is effective.

(3) INJUNCTION-

(A) IN GENERAL- A national insurer, national agency, federally licensed insurance producer, or insurer-affiliated party that has been served with a temporary cease-and-desist order under this subsection may, not later than 10 days after the date of such service, apply to a court described in subparagraph (B) for an injunction setting aside, limiting, or suspending the enforcement, operation, or effectiveness of such order until the completion of administrative proceedings under this section.

(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 producer, party, or main office of the national insurer or national agency is located shall have jurisdiction to issue an injunction under this paragraph.

(4) INCOMPLETE OR INACCURATE RECORDS-

(A) TEMPORARY ORDER- If a notice of charges served under subsection (a) specifies, on the basis of particular facts and circumstances, that the books and records of a national insurer are so incomplete or inaccurate that the Commissioner is unable, through the normal supervisory process, to determine the financial condition of that national insurer or the details or purpose of any transaction or transactions that may have a material effect on the financial condition of that national insurer, the Commissioner may issue a temporary order requiring--

(i) the cessation of any activity or practice which gave rise to the incomplete or inaccurate state of the books or records; or

(ii) affirmative action to restore such books or records to a complete and accurate state.

(B) EFFECTIVE PERIOD- A temporary order issued under subparagraph (A)--

(i) shall become effective upon service; and

(ii) unless set aside, limited, or suspended by a court in proceedings under paragraph (2), shall remain in effect and enforceable until the earlier of--

(I) the completion of the proceeding initiated under subsection (a) in connection with the notice of charges; or

(II) the date the Commissioner determines, by examination or otherwise, that the books and records of the national insurer accurately reflect the financial condition of the national insurer.

SEC. 1144. AFFIRMATIVE ACTION TO CORRECT CONDITIONS RESULTING FROM VIOLATIONS OR CONDUCT.

The authority granted to the Commissioner under this subtitle to issue an order that requires a national insurer, national agency, federally licensed insurance producer, or insurer-affiliated party to take affirmative action to correct or remedy any condition resulting from any violation or conduct with respect to which such order is issued includes the authority to require such national insurer, national agency, producer, or party to--

(1) restrict the growth of the national insurer;

(2) dispose of any asset or insurance policy or reinsurance contract;

(3) rescind any other agreements or contracts, other than insurance policies or reinsurance contracts, to which the national insurer is the issuer;

(4) employ qualified officers or employees, subject to approval by the Commissioner; and

(5) take such other action as the Commissioner determines to be appropriate if--

(A) such national insurer, national agency, producer, or party was unjustly enriched in connection with such violation or conduct; or

(B) the violation or conduct involved a reckless disregard for the law or any applicable regulations or prior order of the Commissioner.

SEC. 1145. SUSPENSION, REMOVAL, AND PROHIBITION AUTHORITY.

(a) Authority To Issue Order- The Commissioner may serve a written notice of the Commissioner's intention to suspend or remove an insurer-affiliated party from office or to prohibit any further participation by such party in the conduct of the affairs of any national insurer or national agency, if the Commissioner determines that--

(1) an insurer-affiliated party has--

(A) violated--

(i) any law or regulation;

(ii) any final cease-and-desist order issued under section 1143;

(iii) any condition imposed in writing by the Commissioner in connection with the grant of any application, filing, statement, notice, or other request by such national insurer or national agency; or

(iv) any written agreement between such national insurer or national agency and the Commissioner;

(B) engaged or participated in any conduct that--

(i) is hazardous to the national insurer or national agency; and

(ii) involves an undue risk to the policyholders of such national insurer, as a whole, or the policyholders, as a whole, serviced by such national agency; or

(C) committed or engaged in any act, omission, or practice, which constitutes a breach of the fiduciary duty of such party;

(2) through any violation, conduct, practice, or breach described in paragraph (1)--

(A) such national insurer or national agency has suffered, or will probably suffer, financial loss or other damage;

(B) the interests of the policyholders of the national insurer or the policyholders serviced by the national agency have been, or could be, prejudiced; or

(3) the violation, conduct, practice, or breach--

(A) involves personal dishonesty on the part of such party; or

(B) demonstrates willful or continuing disregard by such party for the condition of such national insurer or national agency or the interests of the national insurer's policyholders or the policyholders serviced by the national agency.

(b) Temporary Suspension Order-

(1) SUSPENSION OR PROHIBITION AUTHORIZED- If the Commissioner serves written notice under subsection (a) on any insurer-affiliated party of the Commissioner's intention to issue an order under such subsection, the Commissioner may issue a temporary order suspending such party from office or prohibiting such party from further participation in any manner in the conduct of the affairs of the national insurer or national agency, if the Commissioner--

(A) determines that such action is necessary for the protection of the national insurer or its policyholders or the national agency or the policyholders serviced by such Agency; and

(B) serves such party with the temporary order of suspension or prohibition.

(2) EFFECTIVE PERIOD- Any temporary order issued under paragraph (1)--

(A) shall become effective upon service; and

(B) unless a court issues a stay of such order under subsection (e), shall remain in effect and enforceable until--

(i) the date the Commissioner dismisses the charges contained in the notice served under subsection (a) with respect to such party; or

(ii) the effective date of an order issued by the Commissioner to such party under subsection (a).

(3) COPY OF ORDER- If the Commissioner issues a temporary order under paragraph (1) to any insurer-affiliated party, the Commissioner shall serve a copy of such order on any national insurer or national agency with which such party is affiliated at the time such order is issued.

(1) CONTENTS OF NOTICE- A notice served under subsection (a) shall include--

(A) a statement of the grounds for facts underlying such notice; and

(B) the time and place of a hearing to be held thereon.

(2) HEARING- The hearing referred to in paragraph (1)(B) shall take place not earlier than 30 days nor later than 60 days after the date of service of notice under subsection (a), unless another date is set by the Commissioner at the request of such party.

(3) SUSPENSION OR REMOVAL-

(A) FAILURE TO APPEAR- If a duly authorized representative of the party receiving notice of a hearing under this subsection fails to appear at such hearing, such party shall be deemed to have consented to the issuance of an order of such removal or prohibition.

(B) SUSPENSION OR REMOVAL- In the event of such consent, or if upon the record made at any hearing under this subsection the Commissioner finds that any of the grounds specified in such notice have been established, the Commissioner may issue such orders of suspension or removal from office, or prohibition from participation in the conduct of the affairs of the national insurer or national agency, as the Commissioner determines to be appropriate.

(C) EFFECTIVE DATE- Any order issued under subparagraph (B) shall become effective on the expiration of 30 days after service upon the national insurer or national agency and such party (except in the case of an order issued upon consent, which shall become effective at the time specified in such order). Such order shall remain effective and enforceable as provided therein, except to such extent as it is stayed, modified, terminated, or set aside by action of the Commissioner or a reviewing court.

(d) Industrywide Prohibition-

(1) IN GENERAL- Except as provided under paragraph (2), any person who, pursuant to any order issued under this section or section 1146, has been removed or suspended from office in a national insurer or national agency or prohibited from participating in the conduct of the affairs of a national insurer or national agency may not, while such order is in effect--

(A) continue or commence to hold any office in, or participate in any manner in the conduct of the affairs of any national insurer or national agency;

(B) solicit, procure, transfer, attempt to transfer, vote, or attempt to vote any proxy, consent, or authorization with respect to any voting rights in any national insurer or national agency;

(D) act as a federally licensed insurance producer.

(2) EXCEPTION- If, on or after the date on which an order is issued under this subsection that removes or suspends from office any insurer-affiliated party or prohibits such party from participating in the conduct of the affairs of a national insurer or national agency, such party receives the written consent of the Commissioner, paragraph (1) shall, to the extent of such consent, cease to apply to such party with respect to the national insurer or national agency described in each written consent.

(3) VIOLATION OF ORDER- Any violation of paragraph (1) by any person who is subject to an order described in such subparagraph shall be treated as a violation of the order.

(e) Stay of Suspension or Prohibition- Not later than 10 days after any insurer-affiliated party has been suspended from office or prohibited from participation in the conduct of the affairs of a national insurer or national agency by a temporary order issued under subsection (b), such party may apply to the United States district court for the judicial district in which the main office of the national insurer or national agency is located, or the United States District Court for the District of Columbia, for a stay of such suspension or prohibition pending the completion of the administrative proceedings pursuant to the notice served upon such party under subsection (a), and such court shall have jurisdiction to stay such suspension or prohibition.

SEC. 1146. SUSPENSION OR PROHIBITION BASED ON CRIMINAL ACTIVITY.

(a) Suspension or Prohibition-

(1) IN GENERAL- The Commissioner may suspend an insurer-affiliated party from office or prohibit such party from further participation in any manner in the conduct of the affairs of a national insurer or national agency, by written notice served upon such party and the national insurer or national agency, if--

(A) continued service or participation by such party may pose a threat to the national insurer or national agency or the interests of the policyholders of the national insurer, as a whole, or the policyholders, as a whole, serviced by the national agency; and

(B) such party is charged in any information, indictment, or complaint, with the commission of or participation in--

(i) a crime involving dishonesty or breach of trust which is punishable by imprisonment for a term exceeding 1 year under Federal or State law; or

(ii) a criminal violation of section 1956, 1957, or 1960 of title 18, United States Code, or section 5322 or 5324 of title 31, United States Code.

(2) EFFECTIVE PERIOD- A suspension or prohibition under paragraph (1) shall remain in effect until the information, indictment, or complaint referred to in paragraph (1)(B) is resolved or otherwise terminated by the Commissioner.

(b) Removal or Prohibition-

(1) IN GENERAL- If a judgment of conviction or an agreement to enter a pretrial diversion or other similar program is entered against an insurer-affiliated party in connection with a crime described in subsection (a)(1)(B)(i), the Commissioner may issue and serve upon such party and the national insurer or national agency an order removing such party from office or prohibiting such party from further participation in any manner in the conduct of the affairs of the national insurer or national agency without the prior written consent of the Commissioner if--

(A) such judgment is not subject to further appellate review; and

(B) continued service or participation by such party may pose a threat to the national insurer or the interests of the policyholders of the national insurer or a national agency or the policyholders serviced by such agency.

(2) REQUIRED FOR CERTAIN OFFENSES- In the case of a judgment of conviction or agreement against an insurer-affiliated party in connection with a violation described in subsection (a)(1)(B)(ii), the Commissioner shall issue and serve upon such party and the national insurer or national agency an order removing such party from office or prohibiting such party from further participation in any manner in the conduct of the affairs of the national insurer or national agency without the prior written consent of the Commissioner.

(3) EFFECT ON DIRECTOR OR OFFICER- An insurer-affiliated party who is a director or officer and who is subject to an order under this subsection, shall cease to be a director or officer of such national insurer or national agency.

(4) EFFECT OF ACQUITTAL- A finding of not guilty or other disposition of the charge shall not preclude the Commissioner from instituting proceedings after such finding or disposition to remove such party from office or to prohibit further participation in national insurer or national agency affairs under subsection (a) or (b) of section 1145.

(5) EFFECTIVE PERIOD- A notice of suspension or order of removal issued under this subsection shall remain effective and outstanding until the completion of any hearing or appeal under subsection (c) or unless the suspension or order of removal is otherwise terminated by the Commissioner.

(1) REQUEST- Not later than 30 days after the date on which a notice of suspension or order of removal is received by an insurer-affiliated party under this subsection, such party may submit a written request to the Commissioner for an opportunity to appear before the Commissioner to show that the continued service to, or participation in, the conduct of the affairs of the national insurer or national agency by such party will not pose a threat to the national insurer or to the interests of its policyholders or to a national agency or the policyholders serviced by such Agency.

(2) TIME AND PLACE- Upon receipt of a request under paragraph (1), the Commissioner shall set a time and place at which the requesting party may appear, personally or through counsel, before 1 or more designated employees of the Commissioner to submit written materials or, at the discretion of the Commissioner, oral testimony, and oral argument. A hearing under this subsection shall take place not later than 30 days after the receipt of a request under paragraph (1), unless extended at the request of the party.

(3) NOTIFICATION OF DECISION- Not later than 60 days after a hearing under this subsection, the Commissioner shall provide written notification to the insurer-affiliated party that indicates--

(A) whether the suspension or prohibition from participation in any manner in the conduct of the affairs of the national insurer or national agency will be continued, terminated, or otherwise modified;

(B) whether the order removing such party from office or prohibiting such party from further participation in any manner in the conduct of the affairs of the national insurer or national agency will be rescinded or otherwise modified; and

SEC. 1147. ANCILLARY PROVISIONS.

(a) Powers Related to Hearings- In the course of or in connection with any proceeding or other action under this subtitle, the Commissioner, and any person designated to conduct any hearing under this section, may--

(1) administer oaths and affirmations;

(2) take depositions or cause depositions to be taken; and

(3) issue, revoke, quash, or modify subpoenas and subpoenas duces tecum.

(b) Subpoena Power-

(1) IN GENERAL- The Commissioner, or designee of the Commissioner, may require the attendance of witnesses and the production of documents provided for in this section from any place in any State or other place subject to the jurisdiction of the United States at any designated place where such proceeding or other action is being conducted.

(2) ENFORCEMENT- The Commissioner or any party to proceedings under this section may apply for the enforcement of any subpoena or subpoena duces tecum issued under this section to--

(A) the United States District Court for the District of Columbia; or

(B) the United States district court for the judicial district in which--

(i) such proceeding or other action is being conducted; or

(ii) the witness resides or conducts business.

(3) JURISDICTION- The courts described under paragraph (2) shall have jurisdiction and power to order and require compliance with any subpoena or subpoena duces tecum issued under this section.

(4) FEES AND MILEAGE- Any witness subpoenaed under this subsection shall be paid the same fees and mileage that are paid witnesses in the district courts of the United States.

(5) PENALTY FOR NONCOMPLIANCE- Any person who willfully fails or refuses to attend and testify or to answer any lawful inquiry or to produce books, papers, correspondence, memoranda, contracts, agreements, or other records, if in such person's power so to do, in obedience to the subpoena of the Commissioner, shall be guilty of a misdemeanor and, upon conviction, shall be subject to a fine of not more than $1,000 or to imprisonment for a term of not more than 1 year or both.

(1) IN GENERAL- Any court having jurisdiction of any proceeding or other action instituted under this section by a national insurer or national agency, a federally licensed insurance producer, or an insurer-affiliated party may allow any such insurer, agency, producer, or party to receive such reasonable expenses and attorney fees, as it determines to be just and proper.

(2) PAYMENT OF EXPENSES AND FEES- Expenses and fees awarded under paragraph (1) shall be paid by the national insurer or national agency, the federally licensed insurance producer, or the insurer-affiliated party from the assets of such insurer, agency, producer, or party.

(d) Rulemaking- The Commissioner may promulgate such regulations as may be necessary with respect to any proceedings, claims, examinations, investigations, or other actions authorized by this subtitle.

(e) Effect on Board of Directors-

(1) LACK OF QUORUM- If the suspension of 1 or more directors under this subtitle reduces the board of directors of a national insurer or national agency below a quorum, all powers and functions vested in or exercisable by such board shall vest in, and be exercisable by, the director or directors on the board not so suspended, until a quorum is reestablished.

(2) TEMPORARY APPOINTMENTS- If all of the directors of a national insurer or national agency are suspended under this subtitle, the Commissioner shall appoint persons to serve temporarily as directors in their place until the earlier of the date on which--

(A) the suspensions are terminated; or

(B) the suspended directors are replaced on the board of directors of the national insurer or national agency.

(f) Notice After Separation From Service- The resignation, termination of employment or participation, or separation of an insurer-affiliated party (including a separation caused by the closing of a national insurer or national agency) shall not affect the jurisdiction and authority of the Commissioner to issue any notice against any such party under this subtitle if such notice is served before the end of the 6-year period beginning on the date on which such party ceased to be an insurer-affiliated party with respect to such national insurer or national agency.

SEC. 1148. HEARINGS AND JUDICIAL REVIEW OF SUSPENSION, REMOVAL, OR PROHIBITION ORDER.

(a) Judicial Hearing-

(1) IN GENERAL- A hearing under this subtitle (except for a hearing under section 1146(c))--

(A) shall be conducted in accordance with the provisions of chapter 5 of title 5, United States Code; and

(B) shall be held in the Federal judicial district in which the main office of the national insurer or national agency is located or in which the federally licensed insurance producer or the insurer-affiliated party is located, unless the party afforded the hearing consents to another place.

(2) JUDGMENT- After a hearing under this subsection and not later than 90 days after the Commissioner has notified the parties that the case has been submitted to the Commissioner for final decision, the Commissioner shall--

(A) render a decision;

(B) issue and serve upon each party to the proceeding an order or orders consistent with the provisions of this subtitle; and

(b) Judicial Review-

(1) IN GENERAL- Judicial review of any order