Library / Laws / 113th / s / S. 534 / Reported in Senate
II
Calendar No. 151
113th CONGRESS
1st Session
S. 534
[Report No. 113–82]
IN THE SENATE OF THE UNITED STATES
March 12, 2013
Mr. Tester (for himself,
Mr. Johanns, Mr. Bennet, Mr.
Crapo, Mr. Murphy,
Mr. Chambliss, Mr. Warner, Ms.
Heitkamp, Mr. Wicker,
Mr. Carper, Mr.
Moran, Mr. Menendez,
Mr. Nelson, Mr.
Heller, Mr. Blunt,
Mr. Udall of Colorado,
Mr. Baucus, Mrs. Shaheen, Mr.
Harkin, Mr. Thune,
Mr. Brown, Mr.
Coons, Ms. Ayotte, and
Ms. Klobuchar) introduced the following
bill; which was read twice and referred to the
Committee on Banking, Housing, and Urban
Affairs
July 29, 2013
Reported by Mr. Johnson of South
Dakota, with an amendment
Strike out all after the enacting clause and insert
the part printed in italic
A BILL
To reform the National Association of Registered Agents
and Brokers, and for other purposes.
1.
Short title
This Act may be cited as the
National Association of Registered
Agents and Brokers Reform Act of 2013.
2.
Reestablishment
of the National Association of Registered Agents and Brokers
(a)
In
general
Subtitle C of title
III of the Gramm-Leach-Bliley Act (15 U.S.C. 6751 et seq.) is amended to read
as follows:
C
National
Association of Registered Agents and Brokers
321.
National
Association of Registered Agents and Brokers
(a)
Establishment
There
is established the National Association of Registered Agents and Brokers
(hereafter in this subtitle referred to as the
Association).
(b)
Status
The
Association shall—
(1) be a nonprofit
corporation;
(2) have succession
until dissolved by an Act of Congress;
(3) not be an agent or
instrumentality of the United States Government; and
(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.).
(c)
Effective
date
The provisions of this subtitle shall take effect upon the
expiration of the 24-month period beginning on the date of enactment of the
National Association of Registered Agents and Brokers Reform Act of 2013.
Notwithstanding the effective date, such persons as are required to establish
the Association shall take such actions as are necessary to establish the
operations of the Association by the effective date.
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 may be
adopted and applied on a multi-state basis without affecting the laws, rules,
and regulations, and preserving the rights of a State, pertaining to—
(1) licensing,
continuing education, and other qualification requirements of insurance
producers who are not members of the Association;
(2) resident or
nonresident insurance producer appointment requirements;
(3) supervising and
disciplining resident and nonresident insurance producers;
(4) establishing
licensing fees for resident and nonresident insurance producers so that there
is no loss of insurance producer licensing revenue to the State; and
(5) prescribing and
enforcing laws and regulations regulating the conduct of resident and
nonresident insurance producers.
323.
Membership
(a)
Eligibility
(1)
In
general
Any insurance producer licensed in its home State shall,
subject to paragraphs (2) and (4), be eligible to become a member of the
Association.
(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 the insurance license of
the insurance producer in that State.
(3)
Resumption of
eligibility
Paragraph (2) shall cease to apply to any insurance
producer if—
(A) the State
insurance regulator reissues or renews the license of the insurance producer in
the State in which the license was suspended or revoked, or otherwise
terminates or vacates the suspension or revocation; or
(B) the suspension or
revocation expires or is subsequently overturned by a court of competent
jurisdiction.
(4)
Criminal
background record check required
(A)
In
general
An insurance producer shall not be eligible to become a
member of the Association unless the insurance producer has undergone a
national criminal background record check of its Federal Bureau of
Investigation identification record that complies with regulations prescribed
by the Attorney General under subparagraph (L).
(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 of its Federal Bureau of Investigation identification
record during the 2-year period preceding the date of submission of an
application to become a member of the Association, 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).
(C)
Criminal
background record check requested by Association
(i)
In
general
The Association shall, upon request by an insurance
producer licensed in a State, submit identification information obtained from
the insurance producer, and a request for a national criminal background record
check of the insurance producer, to the Federal Bureau of Investigation.
(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.
(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.
(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 the
records that pertains to the request to the Association.
(F)
Limitation on
permissible uses of information
The Association may use
information provided under subparagraph (E) only—
(i) for purposes of
determining compliance with membership criteria established by the Association;
or
(ii) to disclose to
State insurance regulators, or Federal or State law enforcement agencies, in
conformance with applicable law.
(G)
Applicant access
to criminal history records
Notwithstanding subparagraph (F), an
insurance producer shall have the right to obtain from the Association a copy
of any criminal history record information concerning the insurance producer
that is provided to the Association under subparagraph (E).
(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.
(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.
(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.
(K)
Rule of
construction
Nothing in this paragraph shall be construed
as—
(i) requiring a State
insurance regulator to perform criminal background checks under this section;
or
(ii) limiting any
other authority that allows access to criminal background records.
(L)
Regulations
The
Attorney General shall prescribe regulations to carry out this paragraph, which
shall include—
(i) appropriate
protections for ensuring the confidentiality of information provided under
subparagraph (E); and
(ii) procedures
providing a reasonable opportunity for an insurance producer to contest the
accuracy of information regarding the insurance producer provided under
subparagraph (E).
(M)
Ineligibility
for membership
(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), or where the
insurance producer has been subject to disciplinary action, as described in
paragraph (2).
(ii)
Rights of
applicants denied membership
The Association shall notify any
insurance producer who is denied membership on the basis of criminal history
record information provided under subparagraph (E) of the right of the
insurance producer to—
(I) obtain a copy of
all criminal history record information provided to the Association under
subparagraph (E) with respect to the insurance producer; and
(II) challenge the
accuracy and completeness of the information.
(b)
Authority To
establish membership criteria
The Association may establish
membership criteria that bear a reasonable relationship to the purposes for
which the Association was established.
(c)
Establishment of
classes and categories of membership
(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.
(2)
Business
entities
The Association shall establish a class of membership
and membership criteria for business entities. A business entity that applies
for membership shall be required to designate an individual Association member
responsible for the compliance of the business entity with Association rules
and the insurance laws, rules, and regulations of any State in which the
business entity seeks to do business on the basis of Association
membership.
(3)
Categories
(A)
Separate
categories for insurance producers permitted
The Association may
establish separate categories of membership for insurance producers and for
other persons within each class, based on the types of licensing categories
that exist under State laws.
(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.
(d)
Membership
criteria
(1)
In
general
The Association may establish criteria for membership
which shall include standards for personal qualifications, education, training,
and experience. The Association shall not establish criteria that unfairly
limit the ability of a small insurance producer to become a member of the
Association, including imposing discriminatory membership fees.
(2)
Qualifications
In
establishing criteria under paragraph (1), the Association shall not adopt any
qualification less protective to the public than that contained in the NAIC
Producer Licensing Model Act in effect as of the date of enactment of the
National Association of Registered Agents and
Brokers Reform Act of 2013, and shall consider the highest levels
of insurance producer qualifications established under the licensing laws of
the States.
(3)
Assistance from
States
(A)
In
general
The Association may request a State to provide assistance
in investigating and evaluating the eligibility of a prospective member for
membership in the Association.
(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.
(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.
(e)
Effect of
membership
(1)
Authority of
association members
Membership in the Association shall—
(A) authorize an
insurance producer to sell, solicit, or negotiate insurance in any State for
which the member pays the licensing fee set by the State for any line or lines
of insurance specified in the home State license of the insurance producer, and
exercise all such incidental powers as shall be necessary to carry out such
activities, including claims adjustments and settlement to the extent
permissible under the laws of the State, risk management, employee benefits
advice, retirement planning, and any other insurance-related consulting
activities;
(B) be the equivalent
of a nonresident insurance producer license for purposes of authorizing the
insurance producer to engage in the activities described in subparagraph (A) in
any State where the member pays the licensing fee; and
(C) be the equivalent
of a nonresident insurance producer license for the purpose of subjecting an
insurance producer to all laws, regulations, provisions or other action of any
State concerning revocation, suspension, or other enforcement action related to
the ability of a member 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).
(2)
Violent Crime
Control and Law Enforcement Act of 1994
Nothing in this subtitle
shall be construed to alter, modify, or supercede any requirement established
by section 1033 of title 18, United States Code.
(3)
Agent for
remitting fees
The Association shall act as an agent for any
member for purposes of remitting licensing fees to any State pursuant to
paragraph (1).
(4)
Regulator
notification
(A)
In
general
The Association shall notify the States and National
Association of Insurance Commissioners (hereinafter referred to in this
subtitle as NAIC) or its designee when an insurance producer has
satisfied the membership criteria of this section. The States and NAIC or its
designee shall have10 business days after the notification to provide the
Association with evidence that the insurance producer does not satisfy the
criteria for membership for consideration by the Association in its final
membership determination.
(B)
Ongoing
disclosures required
On an ongoing basis, the Association shall
disclose to the States and NAIC or its designee the States in which each member
is authorized to operate. The Association shall immediately notify the States
and NAIC or its designee when a member is newly authorized to operate in one or
more States, or is no longer authorized to operate in one or more States on the
basis of Association membership.
(5)
Preservation of
state consumer protection and market conduct regulation
No
provision of this section shall be construed as altering or affecting the
applicability or continuing effectiveness of any law, regulation, provision, or
other action of any State, including any law, regulation, provision, or other
action that—
(A) regulates market
conduct, insurance producer conduct, or unfair trade practices;
(B) establishes
consumer protections; or
(C) requires insurance
producers to be appointed by a licensed or authorized insurer,
to the extent that the law,
regulation, provision, or other action is not inconsistent with the provisions
of this subtitle related to market entry for nonresident insurance producers,
and then only to the extent of the inconsistency.
(f)
Biennial
renewal
Membership in the Association shall be renewed on a
biennial basis.
(g)
Continuing
education
(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.
(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 the home State of the
member.
(3)
Reciprocity
The
Association shall not require a member to satisfy continuing education
requirements that are equivalent to any continuing education requirements of
the home State of the member that have been satisfied by the member during the
applicable licensing period.
(4)
Limitation on
Association
The Association shall not directly or indirectly
offer any continuing education courses for insurance producers.
(h)
Probation,
suspension and revocation
(1)
Disciplinary
action
The Association may place an insurance producer that is a
member of the Association on probation or suspend or revoke the membership of
the insurance producer in the Association, or assess monetary fines or
penalties, as the Association determines to be appropriate, if—
(A) the insurance
producer fails to meet the applicable membership criteria or other rules of the
Association;
(B) the insurance
producer has been subject to disciplinary action pursuant to a final
adjudicatory proceeding under the jurisdiction of a State insurance
regulator;
(C) an insurance
license held by the insurance producer has been suspended or revoked by a State
insurance regulator; or
(D) the insurance
producer has been convicted of a crime that would have resulted in the denial
of membership pursuant to subsection (a)(4)(M)(i) at the time of application
and the Association has received a copy of the final disposition from a court
of competent jurisdiction.
(2)
Violations of
Association rules
The Association shall have the power to
investigate alleged violations of Association rules.
(3)
Reporting
The
Association shall immediately notify NAIC or its designee when the membership
of an insurance producer has been placed on probation or has been suspended,
revoked, or otherwise terminated, or when the Association has assessed monetary
fines or penalties.
(i)
Consumer
complaints
(1)
In
general
The Association shall—
(A) refer any
complaint against a member of the Association from a consumer relating to
alleged misconduct or violations of State insurance laws to the State insurance
regulator where the consumer resides and, when appropriate, to any additional
State insurance regulator, as determined by rules adopted by the Association;
and
(B) make any related
records and information available to NAIC or its designee and to each State
insurance regulator to whom the complaint is forwarded.
(2)
Telephone and
other access
The Association shall maintain a toll-free number
for purposes of this subsection and, as practicable, other alternative means of
communication with consumers, such as an Internet webpage.
(3)
Final
disposition of investigation
State insurance regulators shall
provide the Association with information regarding the final disposition of a
complaint referred pursuant to paragraph (1)(A), but nothing shall be construed
to compel a State to release confidential investigation reports or other
information protected by State law to the Association.
(j)
Information
sharing
The Association may share documents, materials, or other
information, including confidential and privileged documents, with a State,
Federal, or international regulatory agency or enforcement authority, or with
NAIC or its designee, provided that the recipient has the authority and agrees
to maintain the confidentiality or privileged status of the document, material,
or other information.
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.
(b)
Powers
The
Board shall have such of the powers and authority of the Association as may be
specified in the bylaws of the Association.
(c)
Composition
(1)
In
general
The Board shall consist of 13 members who shall be
appointed by the President, by and with the advice and consent of the Senate,
of whom—
(A) 8 shall be State
insurance commissioners appointed in the manner provided in paragraph
(2);
(B) 2 shall be
representatives of property and casualty insurance producers;
(C) 1 shall be a
representative of life or health insurance producers;
(D) 1 shall be a
representative of property and casualty insurers; and
(E) 1 shall be a
representative of life or health insurers.
(2)
State insurance
regulator representatives
(A) Before making any
appointments pursuant to subparagraph (A) of paragraph (1), the President shall
request a list of recommended candidates from NAIC, which shall not be binding
on the President. If NAIC fails to submit a list of recommendations within 15
business days of the request, the President may make the requisite appointments
without considering the views of NAIC.
(B) Not more than 4
members appointed to membership on the Board pursuant to subparagraph (A) of
paragraph (1) shall belong to the same political party.
(C) If fewer than 8
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, insurance
producer, 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.
(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.
(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.
(d)
Terms
(1)
In
general
The term of each Board member shall be for 2 years,
except that—
(A) the term
of—
(i) 4 of the State
insurance commissioner members of the Board initially appointed under
subparagraph (A) of paragraph (1);
(ii) 1 of the property
and casualty insurance producer members of the Board initially appointed under
subparagraph (B) of paragraph (1); and
(iii) 1 of the insurer
representative members of the Board initially appointed under subparagraphs (D)
and (E) of paragraph (1),
shall be 1 year, as designated by
the President at the time of the nomination of the members;
(B) a member of the
Board may continue to serve after the expiration of the term to which the
member was appointed until a successor is qualified; and
(C) any member of the
Board appointed to fill a vacancy occurring before the expiration of the term
for which the predecessor of the member was appointed shall be appointed only
for the remainder of that term.
(2)
Successive
terms
Board members may be reappointed to successive
terms.
(e)
Initial
appointments
The appointment of initial Board members shall be
made no later than 90 days after the date of enactment of the
National Association of Registered Agents and
Brokers Reform Act of 2013.
(f)
Meetings
(1)
In
general
The Board shall meet at the call of the chairperson, as
requested in writing to the chairperson by at least 5 members of the Board, or
as otherwise provided by the bylaws of the Association.
(2)
Quorum
required
A majority of directors shall constitute a
quorum.
(3)
Voting
Decisions
of the Board shall require the approval of a majority of all directors present
at a meeting, a quorum being present.
(4)
Initial
meeting
The Board shall hold its first meeting not later than 45
days after the date on which all initial members of the Board have been
appointed.
(g)
Restriction on
confidential information
Members of the Board appointed pursuant
to paragraph (3) of subsection (c) shall not have access to confidential
information received by the Association in connection with complaints,
investigations, or disciplinary proceedings involving insurance
producers.
(h)
Ethics and
conflicts of interest
The Board shall issue and enforce an
ethical conduct code to address permissible and prohibited activities of Board
members and Association officers, employees, agents, or consultants. The code
shall, at a minimum, include provisions that prohibit any Board member or
Association officer, employee, agent or consultant from—
(1) engaging in
unethical conduct in the course of performing Association duties;
(2) participating in
the making or influencing the making of any Association decision, the outcome
of which he or she knows or had reason to know would have a reasonably
foreseeable material financial effect, distinguishable from its effect on the
publicly generally, on the person or a member of his or her immediate
family;
(3) accepting any gift
from any person or entity other than the Association that is given because of
the position held by the person in the Association;
(4) making political
contributions to any person or entity on behalf of the Association; and
(5) lobbying or paying
someone to lobby on behalf of the Association.
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.
(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.
326.
Bylaws, rules,
and disciplinary action
(a)
Adoption and
amendment of bylaws and rules
(1)
Copy required to
be filed
The Board shall submit to the President and 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. Rules shall be promulgated in accordance with the
Federal Administrative Procedure Act.
(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.
(b)
Disciplinary
action by the Association
(1)
Specification of
charges
In any proceeding to determine whether membership shall
be denied, suspended, revoked, or not renewed or to determine whether a member
of the Association should be placed on probation (in this section referred to
as a disciplinary action) or whether to assess fines or monetary
penalties, the Association shall bring specific charges, notify the member of
the charges, give the member an opportunity to defend against the charges, and
keep a record.
(2)
Supporting
statement
A determination to take disciplinary action shall be
supported by a statement setting forth—
(A) any act or
practice in which the member has been found to have been engaged;
(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; and
(C) the sanction
imposed and the reason for the sanction.
(3)
Ineligibility of
private sector representatives
Members of the Board appointed
pursuant to section 324(c)(3) shall not participate in any disciplinary action,
and shall not have access to confidential information concerning the
actions.
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:
(1) To establish and
collect such membership fees as the Association finds necessary to impose to
cover the costs of its operations.
(2) To adopt, amend,
and repeal bylaws and rules governing the conduct of Association business and
performance of its duties.
(3) To establish
procedures for providing notice and opportunity for comment pursuant to section
326(a).
(4) To enter into and
perform such agreements as necessary to carry out its duties.
(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.
(6) To borrow
money.
(7) To secure funding
for such amounts as 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, except that
the Board shall not secure funding from an insurer, insurance producer, or
insurance association, but may secure funding from NAIC.
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 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.
(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.
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.
(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.
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 the terms.
(b)
Removal of Board
member
The President may remove a member of the Board only for
neglect of duty or malfeasance in office.
(c)
Suspension of
rules or actions
Following notice to the Board, 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.
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).
(b)
Prohibited
actions
(1)
In
general
No State shall—
(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;
(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; or
(C) impose any
continuing education requirements on any nonresident insurance producer that is
a member of the Association.
(2)
States other
than a home State
No State, other than a member’s home State,
shall—
(A) impose any
licensing, 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;
(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 the State,
including any requirement that the insurance producer register as a foreign
company with the secretary of state or equivalent State official;
(C) require that a
member of the Association submit to a criminal history record check as a
condition of doing business in the State; or
(D) impose any
licensing, registration, or appointment requirements upon a member of the
Association, or require a member of the Association to be authorized to operate
as an insurance producer, in order to sell, solicit, or negotiate insurance for
commercial property and casualty risks to an insured with risks located in more
than one State, if the member is licensed or otherwise authorized to operate in
the State where the insured maintains its principal place of business and the
contract of insurance insures risks located in that State.
(3)
Preservation of
State disciplinary authority
Nothing in this section may be
construed to prohibit a State from investigating and taking appropriate
disciplinary action, including suspension or revocation of authority of an
insurance producer to do business in a State, in accordance with State law and
that is not inconsistent with the provisions of this section, against a member
of the Association as a result of a complaint or for any alleged activity,
regardless of whether the activity occurred before or after the insurance
producer commenced doing business in the State pursuant to Association
membership.
332.
Coordination
with other regulators
(a)
Coordination
with State insurance regulators
The Association may—
(1) establish a
central clearinghouse, or utilize 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; and
(2) establish a
national database for the collection of regulatory information concerning the
activities of insurance producers or contract with NAIC or any other entity to
utilize such a database.
(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.
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.
(b)
Association
interpretations
In any such action, the court shall give
appropriate weight to the Association’s interpretation of its bylaws and this
subtitle.
334.
Definitions
For purposes of this subtitle, the following
definitions shall apply:
(1)
Business
entity
The term business entity means a corporation,
association, partnership, limited liability company, limited liability
partnership, or other legal entity.
(2)
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.
(3)
Insurance
The
term insurance means any product, other than title insurance or
bail bonds, defined or regulated as insurance by the appropriate State
insurance regulatory authority.
(4)
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 sells, solicits, or negotiates policies of insurance or offers
advice, counsel, opinions or services related to insurance.
(5)
Principal place
of business
The term principal place of business
means the State in which an insurance producer maintains the headquarters of
the insurance producer and, in the case of a business entity, where high-level
officers of the entity direct, control, and coordinate the business activities
of the business entity.
(6)
Principal place
of residence
The term principal place of residence
means the State in which an insurance producer resides for the greatest number
of days during a calendar year.
(7)
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.
(8)
State
law
(A)
In
general
The term State law includes all laws,
decisions, rules, regulations, or other State action having the effect of law,
of any State.
(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.
.
(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:
Subtitle C—National Association of
Registered Agents and Brokers
Sec. 321. National Association of
Registered Agents and Brokers.
Sec. 322. Purpose.
Sec. 323. Membership.
Sec. 324. Board of
directors.
Sec. 325. Officers.
Sec. 326. Bylaws, rules, and
disciplinary action.
Sec. 327. Powers.
Sec. 328. Report by
Association.
Sec. 329. Liability of the Association
and the directors, officers, and employees of the Association.
Sec. 330. Presidential
oversight.
Sec. 331. Relationship to State
law.
Sec. 332. Coordination with other
regulators.
Sec. 333. Right of action.
Sec. 334.
Definitions.
.
1.
Short title
This Act may be cited as the
National Association of Registered
Agents and Brokers Reform Act of 2013.
2.
Reestablishment of the
National Association of Registered Agents and Brokers
(a)
In
general
Subtitle C of title
III of the Gramm-Leach-Bliley Act (15 U.S.C. 6751 et seq.) is amended to read
as follows:
C
National Association of
Registered Agents and Brokers
321.
National Association
of Registered Agents and Brokers
(a)
Establishment
There
is established the National Association of Registered Agents and Brokers
(referred to in this subtitle as the Association).
(b)
Status
The
Association shall—
(1) be a nonprofit
corporation;
(2) not be an agent or
instrumentality of the Federal Government;
(3) be an independent
organization that may not be merged with or into any other private or public
entity; and
(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.) or any successor thereto.
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 may be
adopted and applied on a multi-state basis without affecting the laws, rules,
and regulations, and preserving the rights of a State, pertaining to—
(1) licensing, continuing
education, and other qualification requirements of insurance producers that are
not members of the Association;
(2) resident or nonresident
insurance producer appointment requirements;
(3) supervising and
disciplining resident and nonresident insurance producers;
(4) establishing licensing
fees for resident and nonresident insurance producers so that there is no loss
of insurance producer licensing revenue to the State; and
(5) prescribing and enforcing
laws and regulations regulating the conduct of resident and nonresident
insurance producers.
323.
Membership
(a)
Eligibility
(1)
In
general
Any insurance producer licensed in its home State shall,
subject to paragraphs (2) and (4), be eligible to become a member of the
Association.
(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 the insurance license of the
insurance producer in that State.
(3)
Resumption of
eligibility
Paragraph (2) shall cease to apply to any insurance
producer if—
(A) the State insurance
regulator reissues or renews the license of the insurance producer in the State
in which the license was suspended or revoked, or otherwise terminates or
vacates the suspension or revocation; or
(B) the suspension or
revocation expires or is subsequently overturned by a court of competent
jurisdiction.
(4)
Criminal history record
check required
(A)
In
general
An insurance producer who is an individual shall not be
eligible to become a member of the Association unless the insurance producer
has undergone a criminal history record check that complies with regulations
prescribed by the Attorney General of the United States under subparagraph
(K).
(B)
Criminal history record
check requested by home State
An insurance producer who is
licensed in a State and who has undergone a criminal history record check
during the 2-year period preceding the date of submission of an application to
become a member of the Association, in compliance with a requirement to undergo
such criminal history record check as a condition for such licensure in the
State, shall be deemed to have undergone a criminal history record check for
purposes of subparagraph (A).
(C)
Criminal history record
check requested by Association
(i)
In
general
The Association shall, upon request by an insurance
producer licensed in a State, submit identification information obtained from
the insurance producer, and a request for a criminal history record check of
the insurance producer, to the Federal Bureau of Investigation.
(ii)
Procedures
The
board of directors of the Association (referred to in this subtitle as the
Board) shall prescribe procedures for obtaining and utilizing
identification information and criminal history record information, including
the establishment of reasonable fees required to perform a criminal history
record check and appropriate safeguards for maintaining confidentiality and
security of the information.
(D)
Form of
request
A submission under subparagraph (C)(i) shall include such
identification information as is required by the Attorney General concerning
the person about whom the criminal history record check is requested, and a
statement signed by the person authorizing the Attorney General to provide the
information to the Association and for the Association to receive the
information.
(E)
Provision of
information by Attorney General
Upon receiving a submission under
subparagraph (C)(i) from the Association, the Attorney General shall search all
criminal history records of the Federal Bureau of Investigation, including
records of the Criminal Justice Information Services Division of the Federal
Bureau of Investigation, that the Attorney General determines appropriate for
criminal history records corresponding to the identification information
provided under subparagraph (D) and provide all criminal history record
information included in the request to the Association.
(F)
Limitation on
permissible uses of information
Any information provided to the
Association under subparagraph (E) may only—
(i) be used for purposes of
determining compliance with membership criteria established by the
Association;
(ii) be disclosed to State
insurance regulators, or Federal or State law enforcement agencies, in
conformance with applicable law; or
(iii) be disclosed, upon
request, to the insurance producer to whom the criminal history record
information relates.
(G)
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.
(H)
Reliance on
information
Neither the Association nor any of its Board members,
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.
(I)
Fees
The
Attorney General may charge a reasonable fee for conducting the search and
providing the information under subparagraph (E), and any such fee shall be
collected and remitted by the Association to the Attorney General.
(J)
Rule of
construction
Nothing in this paragraph shall be construed
as—
(i) requiring a State
insurance regulator to perform criminal history record checks under this
section; or
(ii) limiting any other
authority that allows access to criminal history records.
(K)
Regulations
The
Attorney General shall prescribe regulations to carry out this paragraph, which
shall include—
(i) appropriate protections
for ensuring the confidentiality of information provided under subparagraph
(E); and
(ii) procedures providing a
reasonable opportunity for an insurance producer to contest the accuracy of
information regarding the insurance producer provided under subparagraph
(E).
(L)
Ineligibility for
membership
(i)
In
general
The Association may, under reasonably consistently
applied standards, deny membership to an insurance producer on the basis of
criminal history record information provided under subparagraph (E), or where
the insurance producer has been subject to disciplinary action, as described in
paragraph (2).
(ii)
Rights of applicants
denied membership
The Association shall notify any insurance
producer who is denied membership on the basis of criminal history record
information provided under subparagraph (E) of the right of the insurance
producer to—
(I) obtain a copy of all
criminal history record information provided to the Association under
subparagraph (E) with respect to the insurance producer; and
(II) challenge the denial of
membership based on the accuracy and completeness of the information.
(M)
Definition
For
purposes of this paragraph, the term criminal history record check
means a national background check of criminal history records of the Federal
Bureau of Investigation.
(b)
Authority to establish
membership criteria
The Association may establish membership
criteria that bear a reasonable relationship to the purposes for which the
Association was established.
(c)
Establishment of
classes and categories of membership
(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.
(2)
Business
entities
The Association shall establish a class of membership
and membership criteria for business entities. A business entity that applies
for membership shall be required to designate an individual Association member
responsible for the compliance of the business entity with Association
standards and the insurance laws, rules, and regulations of any State in which
the business entity seeks to do business on the basis of Association
membership.
(3)
Categories
(A)
Separate categories for
insurance producers permitted
The Association may establish
separate categories of membership for insurance producers and for other persons
or entities within each class, based on the types of licensing categories that
exist under State laws.
(B)
Separate treatment for
depository institutions prohibited
No special categories of
membership, and no distinct membership criteria, shall be established for
members that are depository institutions or for employees, agents, or
affiliates of depository institutions.
(d)
Membership
criteria
(1)
In
general
The Association may establish criteria for membership
which shall include standards for personal qualifications, education, training,
and experience. The Association shall not establish criteria that unfairly
limit the ability of a small insurance producer to become a member of the
Association, including imposing discriminatory membership fees.
(2)
Qualifications
In
establishing criteria under paragraph (1), the Association shall not adopt any
qualification less protective to the public than that contained in the National
Association of Insurance Commissioners (referred to in this subtitle as the
NAIC) Producer Licensing Model Act in effect as of the date of
enactment of the National Association of Registered Agents and Brokers Reform
Act of 2013, and shall consider the highest levels of insurance producer
qualifications established under the licensing laws of the States.
(3)
Assistance from
States
(A)
In
general
The Association may request a State to provide assistance
in investigating and evaluating the eligibility of a prospective member for
membership in the Association.
(B)
Authorization of
information sharing
A submission under subsection (a)(4)(C)(i)
made by an insurance producer licensed in a State shall include a statement
signed by the person about whom the assistance is requested authorizing—
(i) the State to share
information with the Association; and
(ii) the Association to
receive the information.
(C)
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.
(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.
(e)
Effect of
membership
(1)
Authority of
association members
Membership in the Association shall—
(A) authorize an insurance
producer to sell, solicit, or negotiate insurance in any State for which the
member pays the licensing fee set by the State for any line or lines of
insurance specified in the home State license of the insurance producer, and
exercise all such incidental powers as shall be necessary to carry out such
activities, including claims adjustments and settlement to the extent
permissible under the laws of the State, risk management, employee benefits
advice, retirement planning, and any other insurance-related consulting
activities;
(B) be the equivalent of a
nonresident insurance producer license for purposes of authorizing the
insurance producer to engage in the activities described in subparagraph (A) in
any State where the member pays the licensing fee; and
(C) be the equivalent of a
nonresident insurance producer license for the purpose of subjecting an
insurance producer to all laws, regulations, provisions or other action of any
State concerning revocation, suspension, or other enforcement action related to
the ability of a member 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).
(2)
Violent Crime Control
and Law Enforcement Act of 1994
Nothing in this subtitle shall be
construed to alter, modify, or supercede any requirement established by section
1033 of title 18, United States Code.
(3)
Agent for remitting
fees
The Association shall act as an agent for any member for
purposes of remitting licensing fees to any State pursuant to paragraph
(1).
(4)
Notification of
action
(A)
In
general
The Association shall notify the States (including State
insurance regulators) and the NAIC when an insurance producer has satisfied the
membership criteria of this section. The States (including State insurance
regulators) shall have 10 business days after the date of the notification in
order to provide the Association with evidence that the insurance producer does
not satisfy the criteria for membership in the Association.
(B)
Ongoing disclosures
required
On an ongoing basis, the Association shall disclose to
the States (including State insurance regulators) and the NAIC a list of the
States in which each member is authorized to operate. The Association shall
immediately notify the States (including State insurance regulators) and the
NAIC when a member is newly authorized to operate in one or more States, or is
no longer authorized to operate in one or more States on the basis of
Association membership.
(5)
Preservation of
consumer protection and market conduct regulation
(A)
In
general
No provision of this section shall be construed as
altering or affecting the applicability or continuing effectiveness of any law,
regulation, provision, or other action of any State, including those described
in subparagraph (B), to the extent that the State law, regulation, provision,
or other action is not inconsistent with the provisions of this subtitle
related to market entry for nonresident insurance producers, and then only to
the extent of the inconsistency.
(B)
Preserved
regulations
The laws, regulations, provisions, or other actions
of any State referred to in subparagraph (A) include laws, regulations,
provisions, or other actions that—
(i) regulate market conduct,
insurance producer conduct, or unfair trade practices;
(ii) establish consumer
protections; or
(iii) require insurance
producers to be appointed by a licensed or authorized insurer.
(f)
Biennial
renewal
Membership in the Association shall be renewed on a
biennial basis.
(g)
Continuing
education
(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.
(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 the home State of the
member.
(3)
Reciprocity
The
Association shall not require a member to satisfy continuing education
requirements that are equivalent to any continuing education requirements of
the home State of the member that have been satisfied by the member during the
applicable licensing period.
(4)
Limitation on the
Association
The Association shall not directly or indirectly
offer any continuing education courses for insurance producers.
(h)
Probation, suspension
and revocation
(1)
Disciplinary
action
The Association may place an insurance producer that is a
member of the Association on probation or suspend or revoke the membership of
the insurance producer in the Association, or assess monetary fines or
penalties, as the Association determines to be appropriate, if—
(A) the insurance producer
fails to meet the applicable membership criteria or other standards established
by the Association;
(B) the insurance producer
has been subject to disciplinary action pursuant to a final adjudicatory
proceeding under the jurisdiction of a State insurance regulator;
(C) an insurance license held
by the insurance producer has been suspended or revoked by a State insurance
regulator; or
(D) the insurance producer
has been convicted of a crime that would have resulted in the denial of
membership pursuant to subsection (a)(4)(L)(i) at the time of application, and
the Association has received a copy of the final disposition from a court of
competent jurisdiction.
(2)
Violations of
Association standards
The Association shall have the power to
investigate alleged violations of Association standards.
(3)
Reporting
The
Association shall immediately notify the States (including State insurance
regulators) and the NAIC when the membership of an insurance producer has been
placed on probation or has been suspended, revoked, or otherwise terminated, or
when the Association has assessed monetary fines or penalties.
(i)
Consumer
complaints
(1)
In
general
The Association shall—
(A) refer any complaint
against a member of the Association from a consumer relating to alleged
misconduct or violations of State insurance laws to the State insurance
regulator where the consumer resides and, when appropriate, to any additional
State insurance regulator, as determined by standards adopted by the
Association; and
(B) make any related records
and information available to each State insurance regulator to whom the
complaint is forwarded.
(2)
Telephone and other
access
The Association shall maintain a toll-free number for
purposes of this subsection and, as practicable, other alternative means of
communication with consumers, such as an Internet webpage.
(3)
Final disposition of
investigation
State insurance regulators shall provide the
Association with information regarding the final disposition of a complaint
referred pursuant to paragraph (1)(A), but nothing shall be construed to compel
a State to release confidential investigation reports or other information
protected by State law to the Association.
(j)
Information
sharing
The Association may—
(1) share documents,
materials, or other information, including confidential and privileged
documents, with a State, Federal, or international governmental entity or with
the NAIC or other appropriate entity referenced in paragraphs (3) and (4),
provided that the recipient has the authority and agrees to maintain the
confidentiality or privileged status of the document, material, or other
information;
(2) limit the sharing of
information as required under this subtitle with the NAIC or any other
non-governmental entity, in circumstances under which the Association
determines that the sharing of such information is unnecessary to further the
purposes of this subtitle;
(3) establish a central
clearinghouse, or utilize the NAIC or another appropriate entity, as determined
by the Association, as a central clearinghouse, for use by the Association and
the States (including State insurance regulators), through which members of the
Association may disclose their intent to operate in 1 or more States and pay
the licensing fees to the appropriate States; and
(4) establish a database, or
utilize the NAIC or another appropriate entity, as determined by the
Association, as a database, for use by the Association and the States
(including State insurance regulators) for the collection of regulatory
information concerning the activities of insurance producers.
(k)
Effective
Date
The provisions of this section shall take effect on the
later of—
(1) the expiration of the
2-year period beginning on the date of enactment of the National Association of
Registered Agents and Brokers Reform Act of 2013; and
(2) the date of incorporation
of the Association.
324.
Board of
directors
(a)
Establishment
There
is established a board of directors of the Association, which shall have
authority to govern and supervise all activities of the Association.
(b)
Powers
The
Board shall have such of the powers and authority of the Association as may be
specified in the bylaws of the Association.
(c)
Composition
(1)
In
general
The Board shall consist of 13 members who shall be
appointed by the President, by and with the advice and consent of the Senate,
in accordance with the procedures established under Senate Resolution 116 of
the 112th Congress, of whom—
(A) 8 shall be State
insurance commissioners appointed in the manner provided in paragraph (2), 1 of
whom shall be designated by the President to serve as the chairperson of the
Board until the Board elects one such State insurance commissioner Board member
to serve as the chairperson of the Board;
(B) 3 shall have demonstrated
expertise and experience with property and casualty insurance producer
licensing; and
(C) 2 shall have demonstrated
expertise and experience with life or health insurance producer
licensing.
(2)
State insurance
regulator representatives
(A)
Recommendations
Before
making any appointments pursuant to paragraph (1)(A), the President shall
request a list of recommended candidates from the States through the NAIC,
which shall not be binding on the President. If the NAIC fails to submit a list
of recommendations not later than 15 business days after the date of the
request, the President may make the requisite appointments without considering
the views of the NAIC.
(B)
Political
affiliation
Not more than 4 Board members appointed under
paragraph (1)(A) shall belong to the same political party.
(C)
Former State insurance
commissioners
(i)
In
general
If, after offering each currently serving State insurance
commissioner an appointment to the Board, fewer than 8 State insurance
commissioners have accepted appointment to the Board, the President may appoint
the remaining State insurance commissioner Board members, as required under
paragraph (1)(A), of the appropriate political party as required under
subparagraph (B), from among individuals who are former State insurance
commissioners.
(ii)
Limitation
A
former State insurance commissioner appointed as described in clause (i) may
not be employed by or have any present direct or indirect financial interest in
any insurer, insurance producer, 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.
(D)
Service through
term
If a Board member appointed under paragraph (1)(A) ceases to
be a State insurance commissioner during the term of the Board member, the
Board member shall cease to be a Board member.
(3)
Private sector
representatives
In making any appointment pursuant to
subparagraphs (B) and (C) of paragraph (1), the President may seek
recommendations for candidates from groups representing the category of
individuals described, which shall not be binding on the President.
(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 primary insurance regulatory authority for the State.
(d)
Terms
(1)
In
general
Except as provided under paragraph (2), the term of
service for each Board member shall be 2 years.
(2)
Exceptions
(A)
1-year
terms
The term of service shall be 1 year, as designated by the
President at the time of the nomination of the subject Board members
for—
(i) 4 of the State insurance
commissioner Board members initially appointed under paragraph (1)(A), of whom
not more than 2 shall belong to the same political party;
(ii) 1 of the Board members
initially appointed under paragraph (1)(B); and
(iii) 1 of the Board members
initially appointed under paragraph (1)(C).
(B)
Expiration of
Term
A Board member may continue to serve after the expiration of
the term to which the Board member was appointed for the earlier of 2 years or
until a successor is appointed.
(C)
Mid-term
appointments
A Board member appointed to fill a vacancy occurring
before the expiration of the term for which the predecessor of the Board member
was appointed shall be appointed only for the remainder of that term.
(3)
Successive
terms
Board members may be reappointed to successive
terms.
(e)
Initial
appointments
The appointment of initial Board members shall be
made no later than 90 days after the date of enactment of the
National Association of Registered Agents and
Brokers Reform Act of 2013.
(f)
Meetings
(1)
In
general
The Board shall meet—
(A) at the call of the
chairperson;
(B) as requested in writing
to the chairperson by not fewer than 5 Board members; or
(C) as otherwise provided by
the bylaws of the Association.
(2)
Quorum
required
A majority of all Board members shall constitute a
quorum.
(3)
Voting
Decisions
of the Board shall require the approval of a majority of all Board members
present at a meeting, a quorum being present.
(4)
Initial
meeting
The Board shall hold its first meeting not later than 45
days after the date on which all initial Board members have been
appointed.
(g)
Restriction on
confidential information
Board members appointed pursuant to
subparagraphs (B) and (C) of subsection (c)(1) shall not have access to
confidential information received by the Association in connection with
complaints, investigations, or disciplinary proceedings involving insurance
producers.
(h)
Ethics and conflicts of
interest
The Board shall issue and enforce an ethical conduct
code to address permissible and prohibited activities of Board members and
Association officers, employees, agents, or consultants. The code shall, at a
minimum, include provisions that prohibit any Board member or Association
officer, employee, agent or consultant from—
(1) engaging in unethical
conduct in the course of performing Association duties;
(2) participating in the
making or influencing the making of any Association decision, the outcome of
which the Board member, officer, employee, agent, or consultant knows or had
reason to know would have a reasonably foreseeable material financial effect,
distinguishable from its effect on the public generally, on the person or a
member of the immediate family of the person;
(3) accepting any gift from
any person or entity other than the Association that is given because of the
position held by the person in the Association;
(4) making political
contributions to any person or entity on behalf of the Association; and
(5) lobbying or paying a
person to lobby on behalf of the Association.
(i)
Compensation
(1)
In
general
Except as provided in paragraph (2), no Board member may
receive any compensation from the Association or any other person or entity on
account of Board membership.
(2)
Travel expenses and per
diem
Board members may be reimbursed only by the Association for
travel expenses, including per diem in lieu of subsistence, at rates consistent
with rates authorized for employees of Federal agencies under subchapter I of
chapter 57 of title 5, United States Code, while away from home or regular
places of business in performance of services for the Association.
325.
Bylaws, standards, and
disciplinary actions
(a)
Adoption and amendment
of bylaws and standards
(1)
Procedures
The
Association shall adopt procedures for the adoption of bylaws and standards
that are similar to procedures under subchapter II of chapter 5 of title 5,
United States Code (commonly known as the Administrative Procedure
Act).
(2)
Copy required to be
filed
The Board shall submit to the President, through the
Department of the Treasury, and the States (including State insurance
regulators), and shall publish on the website of the Association, all proposed
bylaws and standards of the Association, or any proposed amendment to the
bylaws or standards of the Association, accompanied by a concise general
statement of the basis and purpose of such proposal.
(3)
Effective
date
Any proposed bylaw or standard of the Association, and any
proposed amendment to the bylaws or standards of the Association, shall take
effect, after notice under paragraph (2) and opportunity for public comment, on
such date as the Association may designate, unless suspended under section
329(c).
(4)
Rule of
construction
Nothing in this section shall be construed to
subject the Board or the Association to the requirements of subchapter II of
chapter 5 of title 5, United States Code (commonly known as the
Administrative Procedure Act).
(b)
Disciplinary action by
the Association
(1)
Specification of
charges
In any proceeding to determine whether membership shall
be denied, suspended, revoked, or not renewed, or to determine whether a member
of the Association should be placed on probation (referred to in this section
as a disciplinary action) or whether to assess fines or monetary
penalties, the Association shall bring specific charges, notify the member of
the charges, give the member an opportunity to defend against the charges, and
keep a record.
(2)
Supporting
statement
A determination to take disciplinary action shall be
supported by a statement setting forth—
(A) any act or practice in
which the member has been found to have been engaged;
(B) the specific provision of
this subtitle or standard of the Association that any such act or practice is
deemed to violate; and
(C) the sanction imposed and
the reason for the sanction.
(3)
Ineligibility of
private sector representatives
Board members appointed pursuant
to section 324(c)(3) may not—
(A) participate in any
disciplinary action or be counted toward establishing a quorum during a
disciplinary action; and
(B) have access to
confidential information concerning any disciplinary action.
326.
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 power to—
(1) establish and collect
such membership fees as the Association finds necessary to impose to cover the
costs of its operations;
(2) adopt, amend, and repeal
bylaws, procedures, or standards governing the conduct of Association business
and performance of its duties;
(3) establish procedures for
providing notice and opportunity for comment pursuant to section 325(a);
(4) enter into and perform
such agreements as necessary to carry out the duties of the Association;
(5) 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;
(6) establish personnel
policies of the Association and programs relating to, among other things,
conflicts of interest, rates of compensation, where applicable, and
qualifications of personnel;
(7) borrow money; and
(8) secure funding for such
amounts as 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.
327.
Report by the
Association
(a)
In
general
As soon as practicable after the close of each fiscal
year, the Association shall submit to the President, through the Department of
the Treasury, and the States (including State insurance regulators), and shall
publish on the website of the Association, 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.
(b)
Financial
statements
Each report submitted under subsection (a) with
respect to any fiscal year shall include audited 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.
328.
Liability of the
Association and the Board members, 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.
(b)
Liability of Board
members, officers, and employees
No Board member, 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.
329.
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
Board members were appointed and appoint, in accordance with section 324 and
with the advice and consent of the Senate, in accordance with the procedures
established under Senate Resolution 116 of the 112th
Congress, new Board members to fill the vacancies on the Board for the
remainder of the terms.
(b)
Removal of Board
member
The President may remove a Board member only for neglect
of duty or malfeasance in office.
(c)
Suspension of bylaws
and standards and prohibition of actions
Following notice to the
Board, the President, or a person designated by the President for such purpose,
may suspend the effectiveness of any bylaw or standard, or prohibit any action,
of the Association that the President or the designee determines is contrary to
the purposes of this subtitle.
330.
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).
(b)
Prohibited
actions
(1)
In
general
No State shall—
(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;
(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; or
(C) impose any continuing
education requirements on any nonresident insurance producer that is a member
of the Association.
(2)
States other than a
home State
No State, other than the home State of a member of the
Association, shall—
(A) impose any licensing,
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;
(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 the State, including any
requirement that the insurance producer register as a foreign company with the
secretary of state or equivalent State official;
(C) require that a member of
the Association submit to a criminal history record check as a condition of
doing business in the State; or
(D) impose any licensing,
registration, or appointment requirements upon a member of the Association, or
require a member of the Association to be authorized to operate as an insurance
producer, in order to sell, solicit, or negotiate insurance for commercial
property and casualty risks to an insured with risks located in more than one
State, if the member is licensed or otherwise authorized to operate in the
State where the insured maintains its principal place of business and the
contract of insurance insures risks located in that State.
(3)
Preservation of State
disciplinary authority
Nothing in this section may be construed
to prohibit a State from investigating and taking appropriate disciplinary
action, including suspension or revocation of authority of an insurance
producer to do business in a State, in accordance with State law and that is
not inconsistent with the provisions of this section, against a member of the
Association as a result of a complaint or for any alleged activity, regardless
of whether the activity occurred before or after the insurance producer
commenced doing business in the State pursuant to Association
membership.
331.
Coordination with
Financial Industry Regulatory Authority
The Association shall coordinate with the
Financial Industry Regulatory Authority in order to ease any administrative
burdens that fall on members of the Association that are subject to regulation
by the Financial Industry Regulatory Authority, consistent with the
requirements of this subtitle and the Federal securities laws .
332.
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.
(b)
Association
interpretations
In any action under subsection (a), the court
shall give appropriate weight to the interpretation of the Association of its
bylaws and standards and this subtitle.
333.
Federal Funding
Prohibited
The Association may
not receive, accept, or borrow any amounts from the Federal Government to pay
for, or reimburse the Association for, the costs of establishing or operating
the Association.
334.
Definitions
For purposes of this subtitle, the following
definitions shall apply:
(1)
Business
entity
The term business entity means a corporation,
association, partnership, limited liability company, limited liability
partnership, or other legal entity.
(2)
Depository
institution
The term depository institution has the
meaning as in section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813).
(3)
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.
(4)
Insurance
The
term insurance means any product, other than title insurance or
bail bonds, defined or regulated as insurance by the appropriate State
insurance regulatory authority.
(5)
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 sells, solicits, or negotiates policies of insurance or offers
advice, counsel, opinions or services related to insurance.
(6)
Insurer
The
term insurer has the meaning as in section 313(e)(2)(B) of title
31, United States Code .
(7)
Principal place of
business
The term principal place of business means
the State in which an insurance producer maintains the headquarters of the
insurance producer and, in the case of a business entity, where high-level
officers of the entity direct, control, and coordinate the business activities
of the business entity.
(8)
Principal place of
residence
The term principal place of residence
means the State in which an insurance producer resides for the greatest number
of days during a calendar year.
(9)
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.
(10)
State law
(A)
In
general
The term State law includes all laws,
decisions, rules, regulations, or other State action having the effect of law,
of any State.
(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.
.
(b)
Technical
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:
Subtitle C—National Association of Registered
Agents and Brokers
Sec. 321. National Association of Registered
Agents and Brokers.
Sec. 322. Purpose.
Sec. 323. Membership.
Sec. 324. Board of directors.
Sec. 325. Bylaws, standards, and disciplinary
actions.
Sec. 326. Powers.
Sec. 327. Report by the
Association.
Sec. 328. Liability of the Association and the
Board members, officers, and employees of the Association.
Sec. 329. Presidential oversight.
Sec. 330. Relationship to State
law.
Sec. 331. Coordination with Financial Industry
Regulatory Authority.
Sec. 332. Right of action.
Sec. 333. Federal funding
prohibited.
Sec. 334.
Definitions.
.
July 29, 2013
Reported with an amendment