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H.R.1112 - National Association of Registered Agents and Brokers Reform Act of 2011
To reform the National Association of Registered Agents and Brokers, and for other purposes.
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Mr. NEUGEBAUER (for himself, Mr. DAVID SCOTT of Georgia, Mr. BACHUS, Mrs. BIGGERT, Mrs. CAPITO, Mr. GARRETT, Mr. DAVIS of Kentucky, Mr. AKIN, Mrs. BACHMANN, Mr. BOREN, Mr. BOSWELL, Mr. BRALEY of Iowa, Mr. CANSECO, Mr. CAPUANO, Mr. CARSON of Indiana, Mr. CHANDLER, Mr. CLAY, Mr. DOLD, Mr. DONNELLY of Indiana, Ms. FOXX, Mr. GERLACH, Mr. AL GREEN of Texas, Ms. HAYWORTH, Mr. HOLDEN, Mr. HUIZENGA of Michigan, Mr. JONES, Mr. KINZINGER of Illinois, Mr. LANCE, Mr. LARSON of Connecticut, Mr. LOEBSACK, Mr. LUETKEMEYER, Mrs. MALONEY, Mr. MANZULLO, Mr. MARCHANT, Mr. MCHENRY, Mr. MILLER of North Carolina, Ms. MOORE, Mr. MURPHY of Connecticut, Mrs. MYRICK, Mr. PERLMUTTER, Mr. POSEY, Mr. RENACCI, Mr. ROSS of Arkansas, Mr. SCHRADER, Mr. STIVERS, Mr. TERRY, Mr. WALSH of Illinois, and Ms. WASSERMAN SCHULTZ) introduced the following bill; which was referred to the Committee on Financial ServicesCommentsClose CommentsPermalink
SECTION 1. SHORT TITLE.
SEC. 2. REESTABLISHMENT OF THE NATIONAL ASSOCIATION OF REGISTERED AGENTS AND BROKERS.
‘SEC. 321. NATIONAL ASSOCIATION OF REGISTERED AGENTS AND BROKERS.
‘(4) except as otherwise provided in this subtitle, be subject to, and have all the powers conferred upon a nonprofit corporation by the District of Columbia Nonprofit Corporation Act (D.C. Code, sec. 29-301.01 et seq.).CommentsClose CommentsPermalink
‘SEC. 322. PURPOSE.
‘The purpose of the Association shall be to provide a mechanism through which licensing, continuing education, and other nonresident insurance producer qualification requirements and conditions can be adopted and applied on a multi-state basis (without affecting the laws, rules, and regulations pertaining to resident insurance producers or appointments or producing a net loss of producer licensing revenues to States), while preserving the right of States to license, supervise, discipline, and establish licensing fees for insurance producers, and to prescribe and enforce laws and regulations with regard to insurance-related consumer protection and unfair trade practices.CommentsClose CommentsPermalink
‘SEC. 323. MEMBERSHIP.
‘(2) INELIGIBILITY FOR SUSPENSION OR REVOCATION OF LICENSE- Subject to paragraph (3), an insurance producer is not eligible to become a member of the Association if a State insurance regulator has suspended or revoked such producer’s license in that State during the 3-year period preceding the date on which such producer applies for membership.CommentsClose CommentsPermalink
‘(A) IN GENERAL- An insurance producer shall not be eligible to become a member of the Association unless the producer has undergone a national criminal background record check that complies with regulations prescribed by the Attorney General under subparagraph (L).CommentsClose CommentsPermalink
‘(B) CRIMINAL BACKGROUND RECORD CHECK REQUESTED BY HOME STATE- An insurance producer who is licensed in a State and who has undergone a national criminal background record check in compliance with such requirements as a condition for such licensure shall be deemed to have undergone a national criminal background record check for purposes of subparagraph (A).CommentsClose CommentsPermalink
‘(i) IN GENERAL- The Association shall, upon request by an insurance producer licensed in a State, submit identification information obtained from such producer, and a request for a national criminal background record check of such producer, to the Federal Bureau of Investigation.CommentsClose CommentsPermalink
‘(ii) BYLAWS OR RULES- The board of directors of the Association shall prescribe bylaws or rules for obtaining and utilizing identification information and criminal history record information, including the establishment of reasonable fees required to perform a criminal background record check and appropriate safeguards for maintaining confidentiality and security of the information.CommentsClose CommentsPermalink
‘(D) FORM OF REQUEST- A submission under subparagraph (C)(i) shall include such identification information as required by the Attorney General concerning the person about whom the record is requested and a statement signed by the person authorizing the Association to obtain the information.CommentsClose CommentsPermalink
‘(E) PROVISION OF INFORMATION BY ATTORNEY GENERAL- Upon receiving a submission under subparagraph (C)(ii) from the Association, the Attorney General shall search all records of the Criminal Justice Information Services Division of the Federal Bureau of Investigation that the Attorney General deems appropriate for criminal history records corresponding to the identification information provided under subparagraph (D) and provide all information contained in such records that pertains to the request to the Association.CommentsClose CommentsPermalink
‘(G) APPLICANT ACCESS TO CRIMINAL HISTORY RECORDS- Notwithstanding subparagraph (F), a producer shall have the right to obtain from the Association a copy of any criminal history record information concerning the producer that is provided to the Association under subparagraph (E).CommentsClose CommentsPermalink
‘(H) PENALTY FOR IMPROPER USE OR DISCLOSURE- Whoever knowingly uses any information provided under subparagraph (E) for a purpose not authorized in subparagraph (F), or discloses any such information to anyone not authorized to receive it, shall be fined under title 18, United States Code, imprisoned for not more than 2 years, or both.CommentsClose CommentsPermalink
‘(I) RELIANCE ON INFORMATION- Neither the Association nor any of its directors, officers, or employees shall be liable in any action for using information provided under subparagraph (E) as permitted under subparagraph (F) in good faith and in reasonable reliance on its accuracy.CommentsClose CommentsPermalink
‘(J) FEES- The Attorney General may charge a reasonable fee to defray the expense of conducting the search and providing the information under subparagraph (E), and any such fee shall be collected and remitted by the Association.CommentsClose CommentsPermalink
‘(i) IN GENERAL- The Association may, under reasonably consistently applied standards, deny membership to an insurance producer on the basis of criminal history information provided under subparagraph (E).CommentsClose CommentsPermalink
‘(ii) RIGHTS OF APPLICANTS DENIED MEMBERSHIP- The Association shall notify any producer who is denied membership on the basis of criminal history record information provided under subparagraph (E) of the right of the producer to--CommentsClose CommentsPermalink
‘(2) do not unfairly limit the access of smaller agencies to the Association membership, including imposing discriminatory membership fees on smaller insurance producers.CommentsClose CommentsPermalink
‘(1) CLASSES OF MEMBERSHIP- The Association may establish separate classes of membership, with separate criteria, if the Association reasonably determines that performance of different duties requires different levels of education, training, experience, or other qualifications.CommentsClose CommentsPermalink
‘(A) SEPARATE CATEGORIES FOR PRODUCERS PERMITTED- The Association may establish separate categories of membership for producers and for other persons within each class, based on the types of licensing categories that exist under State laws.CommentsClose CommentsPermalink
‘(B) SEPARATE TREATMENT FOR DEPOSITORY INSTITUTIONS PROHIBITED- No special categories of membership, and no distinct membership criteria, shall be established for members which are depository institutions or for employees, agents, or affiliates of depository institutions.CommentsClose CommentsPermalink
‘(2) QUALIFICATIONS- In establishing criteria under paragraph (1), the Association shall consider the NAIC Producer Licensing Model Act and the highest levels of insurance producer qualifications established under the licensing laws of the States.CommentsClose CommentsPermalink
‘(A) IN GENERAL- The Association may request a State to provide assistance in investigating and evaluating a prospective member’s eligibility for membership in the Association.CommentsClose CommentsPermalink
‘(B) RULE OF CONSTRUCTION- Subparagraph (A) shall not be construed as requiring or authorizing any State to adopt new or additional requirements concerning the licensing or evaluation of insurance producers.CommentsClose CommentsPermalink
‘(4) DENIAL OF MEMBERSHIP- The Association may, based on reasonably consistently applied standards, deny membership to any State-licensed insurance producer for failure to meet the membership criteria established by the Association.CommentsClose CommentsPermalink
‘(A) authorize an insurance producer to sell, solicit, negotiate, effect, procure, deliver, renew, continue, or bind insurance in any State for which the member pays the licensing fee set by such State for any line or lines of insurance specified in such producer’s home State license, and exercise all such incidental powers, as shall be necessary to carry out such activities, including claims adjustments and settlement, risk management, employee benefits advice, retirement planning, and any other insurance-related consulting activities;CommentsClose CommentsPermalink
‘(C) subject an insurance producer to all laws, regulations, provisions or other action of any State concerning revocation or suspension of a member’s ability to engage in any activity within the scope of authority granted under this subsection and to all State laws, regulations, provisions and actions preserved under paragraph (5).CommentsClose CommentsPermalink
‘(2) DUPLICATIVE LICENSES- No State, other than the member’s home State, may require an individual member to obtain a business entity license or membership in order to engage in any activity within the scope of authority granted in paragraph (1) or in order for the member or any employer, employee, or affiliate of the member to receive compensation for the member’s performance of any such activity.CommentsClose CommentsPermalink
‘(4) REGULATOR NOTIFICATION- The Association shall notify the National Association of Insurance Commissioners (hereinafter in this subtitle referred to as the ‘NAIC’) or its designee when a producer becomes a member and identify, on an ongoing basis, the States in which the member is authorized to operate.CommentsClose CommentsPermalink
‘(5) PRESERVATION OF STATE CONSUMER PROTECTION AND MARKET CONDUCT REGULATION- No provision of this section shall be construed as altering or affecting the continuing effectiveness of any law, regulation, provision, or other action of any State which purports to regulate market conduct or unfair trade practices or establish consumer protections to the extent that such law, regulation, provision, or other action is not inconsistent with the provisions of this subtitle, and then only to the extent of such inconsistency.CommentsClose CommentsPermalink
‘(1) IN GENERAL- The Association shall establish, as a condition of membership, continuing education requirements which shall be comparable to the continuing education requirements under the licensing laws of a majority of the States.CommentsClose CommentsPermalink
‘(2) STATE CONTINUING EDUCATION REQUIREMENTS- A member may not be required to satisfy continuing education requirements imposed under the laws, regulations, provisions, or actions of any State other than such member’s home State.CommentsClose CommentsPermalink
‘(3) RECIPROCITY- The Association shall not require a member to satisfy continuing education requirements that are equivalent to any continuing education requirements of the member’s home State that have been satisfied by the member during the applicable licensing period.CommentsClose CommentsPermalink
‘(1) DISCIPLINARY ACTION- The Association may place an insurance producer that is a member of the Association on probation or suspend or revoke such producer’s membership in the Association, as the Association determines to be appropriate, if--CommentsClose CommentsPermalink
‘(2) REPORTING TO STATE REGULATORS- The Association shall notify the NAIC or its designee when a producer’s membership has been suspended, revoked, and otherwise terminated.CommentsClose CommentsPermalink
‘(B) refer any proper complaint received in accordance with subparagraph (A) and make any related records and information available to the NAIC or its designee and to each State insurance regulator for the State of residence of the consumer who filed the complaint; andCommentsClose CommentsPermalink
‘(2) TELEPHONE AND OTHER ACCESS- The Association shall maintain a toll-free telephone number for the purpose of this subsection and, as practicable, other alternative means of communication with consumers, such as an Internet web page.CommentsClose CommentsPermalink
‘SEC. 324. BOARD OF DIRECTORS.
‘(a) Establishment- There is established the board of directors of the Association (hereafter in this subtitle referred to as the ‘Board’), which shall have authority to govern and supervise all activities of the Association.CommentsClose CommentsPermalink
‘(A) Before making any appointments pursuant to subparagraph (A) of paragraph (1), the President shall request a list of recommended candidates from the NAIC, which shall not be binding on the President. If the NAIC fails to submit a list of recommendations within 15 days of the request, the President may make the requisite appointments without considering the views of the NAIC.CommentsClose CommentsPermalink
‘(C) If fewer than 6 State insurance commissioners accept appointment to the Board, the President may appoint the remaining State insurance commissioner members of the Board from among individuals who are former State insurance commissioners, provided that any former insurance commissioner so appointed shall not be employed by or have a present direct or indirect financial interest in any insurer or other entity in the insurance industry other than direct or indirect ownership of, or beneficial interest in, an insurance policy or annuity contract written or sold by an insurer.CommentsClose CommentsPermalink
‘(3) PRIVATE SECTOR REPRESENTATIVES- In making any appointments pursuant to subparagraphs (B) through (E) of paragraph (1), the President may seek recommendations for candidates from national trade associations representing the category of individuals described, which shall not be binding on the President.CommentsClose CommentsPermalink
‘(4) STATE INSURANCE COMMISSIONER DEFINED- For purposes of this subsection, the term ‘State insurance commissioner’ means a person who serves in the position in State government, or on the board, commission, or other body that is the principal insurance regulatory authority for the State.CommentsClose CommentsPermalink
‘(C) any member of the Board appointed to fill a vacancy occurring before the expiration of the term for which the member’s predecessor was appointed shall be appointed only for the remainder of that term.CommentsClose CommentsPermalink
‘(1) IN GENERAL- The Board shall meet at the call of the chairperson, as requested in writing to the chairperson by at least four members of the Board, or as otherwise provided by the bylaws of the Association.CommentsClose CommentsPermalink
‘SEC. 325. OFFICERS.
‘(a) Positions- The officers of the Association shall consist of a chairperson and a vice chairperson of the Board, an executive director, secretary, and treasurer of the Association, and such other officers and assistant officers as may be deemed necessary.CommentsClose CommentsPermalink
‘(b) Manner of Selection- Each officer of the Board and the Association shall be elected or appointed at such time, in such manner, and for such terms as may be prescribed in the bylaws of the Association.CommentsClose CommentsPermalink
‘SEC. 326. BYLAWS, RULES, AND DISCIPLINARY ACTION.
‘(1) COPY REQUIRED TO BE FILED- The board of directors of the Association shall submit to the President and the NAIC any proposed bylaw or rules of the Association or any proposed amendment to the bylaws or rules, accompanied by a concise general statement of the basis and purpose of such proposal.CommentsClose CommentsPermalink
‘(2) EFFECTIVE DATE- Any proposed bylaw or rule or proposed amendment to the bylaws or rules shall take effect, after notice published in the Federal Register and opportunity for comment, upon such date as the Association may designate, unless suspended under subsection (c) of section 330.CommentsClose CommentsPermalink
‘(1) SPECIFICATION OF CHARGES- In any proceeding to determine whether membership shall be denied, suspended, revoked, or not renewed (hereafter in this section referred to as a ‘disciplinary action’) or to determine whether a member of the Association should be placed on probation, the Association shall bring specific charges, notify such member of such charges, give the member an opportunity to defend against the charges, and keep a record.CommentsClose CommentsPermalink
‘(B) the specific provision of this subtitle, the rules or regulations under this subtitle, or the rules of the Association which any such act or practice is deemed to violate; andCommentsClose CommentsPermalink
‘SEC. 327. POWERS.
‘In addition to all the powers conferred upon a nonprofit corporation by the District of Columbia Nonprofit Corporation Act, the Association shall have the following powers:CommentsClose CommentsPermalink
‘(5) To hire employees, professionals or specialists, and elect or appoint officers, and to fix their compensation, define their duties and give them appropriate authority to carry out the purposes of this subtitle, and determine their qualification; and to establish the Association’s personnel policies and programs relating to, among other things, conflicts of interest, rates of compensation, and qualifications of personnel.CommentsClose CommentsPermalink
‘(7) To secure funding from board member organizations and other industry associations for such amounts that the Association determines to be necessary and appropriate to organize and begin operations of the Association, which shall be treated as loans to be repaid by the Association with interest at market rate.CommentsClose CommentsPermalink
‘SEC. 328. REPORT BY ASSOCIATION.
‘(a) In General- As soon as practicable after the close of each fiscal year, the Association shall submit to the President and the NAIC a written report regarding the conduct of its business, and the exercise of the other rights and powers granted by this subtitle, during such fiscal year.CommentsClose CommentsPermalink
‘(b) Financial Statements- Each report submitted under subsection (a) with respect to any fiscal year shall include financial statements setting forth the financial position of the Association at the end of such fiscal year and the results of its operations (including the source and application of its funds) for such fiscal year.CommentsClose CommentsPermalink
‘SEC. 329. LIABILITY OF THE ASSOCIATION AND THE DIRECTORS, OFFICERS, AND EMPLOYEES OF THE ASSOCIATION.
‘(a) In General- The Association shall not be deemed to be an insurer or insurance producer within the meaning of any State law, rule, regulation, or order regulating or taxing insurers, insurance producers, or other entities engaged in the business of insurance, including provisions imposing premium taxes, regulating insurer solvency or financial condition, establishing guaranty funds and levying assessments, or requiring claims settlement practices.CommentsClose CommentsPermalink
‘(b) Liability of Directors, Officers, and Employees- No director, officer, or employee of the Association shall be personally liable to any person for any action taken or omitted in good faith in any matter within the scope of their responsibilities in connection with the Association.CommentsClose CommentsPermalink
‘SEC. 330. PRESIDENTIAL OVERSIGHT.
‘(a) Removal of Board- If the President determines that the Association is acting in a manner contrary to the interests of the public or the purposes of this subtitle or has failed to perform its duties under this subtitle, the President may remove the entire existing Board for the remainder of the term to which the members of the Board were appointed and appoint, in accordance with section 324 and with the advice and consent of the Senate, new members to fill the vacancies on the Board for the remainder of such terms.CommentsClose CommentsPermalink
‘(c) Suspension of Rules or Actions- The President, or a person designated by the President for such purpose, may suspend the effectiveness of any rule, or prohibit any action, of the Association which the President or the designee determines is contrary to the purposes of this subtitle.CommentsClose CommentsPermalink
‘SEC. 331. RELATIONSHIP TO STATE LAW.
‘(a) Preemption of State Laws- State laws, regulations, provisions, or other actions purporting to regulate insurance producers shall be preempted to the extent provided in subsection (b).CommentsClose CommentsPermalink
‘(A) impede the activities of, take any action against, or apply any provision of law or regulation arbitrarily or discriminatorily to, any insurance producer because that insurance producer or any affiliate plans to become, has applied to become, or is a member of the Association;CommentsClose CommentsPermalink
‘(B) impose any requirement upon a member of the Association that it pay fees different from those required to be paid to that State were it not a member of the Association;CommentsClose CommentsPermalink
‘(D) impose any licensing, registration, or appointment requirements upon any nonresident insurance producer that sells, solicits, negotiates, effects, procures, delivers, renews, continues, or binds insurance for commercial property and casualty risks to an insured with risks located in more than 1 State, if such nonresident insurance producer is otherwise licensed as an insurance producer in the State where the insured maintains its principal place of business and the contract of insurance insures risks located in that State.CommentsClose CommentsPermalink
‘(A) impose any licensing, integrity, personal or corporate qualifications, education, training, experience, residency, continuing education, or bonding requirement upon a member of the Association that is different from the criteria for membership in the Association or renewal of such membership;CommentsClose CommentsPermalink
‘(B) impose any requirement upon a member of the Association that it be licensed, registered, or otherwise qualified to do business or remain in good standing in such State, including any requirement that such insurance producer register as a foreign company with the secretary of state or equivalent State official; orCommentsClose CommentsPermalink
‘SEC. 332. COORDINATION WITH OTHER REGULATORS.
‘(1) establish a central clearinghouse, or utilize the NAIC or any other appropriate entity as a central clearinghouse, through which members of the Association may pursuant to section 323(e) disclose their intent to operate in 1 or more States and pay the licensing fees to the appropriate States; andCommentsClose CommentsPermalink
‘(2) establish a national database for the collection of regulatory information concerning the activities of insurance producers or contract with the NAIC or any other entity to utilize such a database.CommentsClose CommentsPermalink
‘(b) Coordination With the Financial Industry Regulatory Authority- The Association shall coordinate with the Financial Industry Regulatory Authority in order to ease any administrative burdens that fall on persons that are members of both associations, consistent with the requirements of this subtitle and the Federal securities laws.CommentsClose CommentsPermalink
‘SEC. 333. RIGHT OF ACTION.
‘(a) Right of Action- Any person aggrieved by a decision or action of the Association may, after reasonably exhausting available avenues for resolution within the Association, commence a civil action in an appropriate United States district court, and obtain all appropriate relief.CommentsClose CommentsPermalink
‘SEC. 334. DEFINITIONS.
‘(1) HOME STATE- The term ‘home State’ means the State in which the insurance producer maintains its principal place of residence or business and is licensed to act as an insurance producer.CommentsClose CommentsPermalink
‘(2) INSURANCE- The term ‘insurance’ means any product, other than title insurance, defined or regulated as insurance by the appropriate State insurance regulatory authority.CommentsClose CommentsPermalink
‘(3) INSURANCE PRODUCER- The term ‘insurance producer’ means any insurance agent or broker, excess or surplus lines broker or agent, insurance consultant, limited insurance representative, and any other individual or entity that solicits, negotiates, effects, procures, delivers, renews, continues or binds policies of insurance or offers advice, counsel, opinions or services related to insurance.CommentsClose CommentsPermalink
‘(4) STATE- The term ‘State’ includes any State, the District of Columbia, any territory of the United States, and Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, and the Northern Mariana Islands.CommentsClose CommentsPermalink
‘(B) LAWS APPLICABLE IN THE DISTRICT OF COLUMBIA- A law of the United States applicable only to or within the District of Columbia shall be treated as a State law rather than a law of the United States.’.CommentsClose CommentsPermalink
(b) Clerical Amendment- The table of contents for the Gramm-Leach-Bliley Act is amended by striking the items relating to subtitle C of title III and inserting the following new items:CommentsClose CommentsPermalink
‘Subtitle C--National Association of Registered Agents and Brokers