H. R. 2554
IN THE SENATE OF THE UNITED STATES
March 4, 2010
Received; read twice and referred to the Committee on Banking, Housing, and Urban Affairs
To reform the National Association of Registered Agents and Brokers, and for other purposes.
This Act may be cited as the
National Association of Registered
Agents and Brokers Reform Act of 2010.
Reestablishment of the National Association of Registered Agents and Brokers
Subtitle C of title III of the Gramm-Leach-Bliley Act (15 U.S.C. 6751 et seq.) is amended to read as follows:
National Association of Registered Agents and Brokers
National association of registered agents and brokers
There is established the National
Association of Registered Agents and Brokers (hereafter in this subtitle
referred to as the
The Association shall—
be a nonprofit corporation;
have succession until dissolved by an Act of Congress;
not be an agent or instrumentality of the United States Government; and
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.).
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.
Any insurance producer licensed in its home State shall, subject to paragraphs (2) and (4), be eligible to become a member of the Association.
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.
Resumption of eligibility
Paragraph (2) shall cease to apply to any insurance producer if—
the State insurance regulator reissues or renews the license of such producer in the State in which the license was suspended or revoked; or
the suspension or revocation is subsequently overturned.
Criminal background record check required
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).
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).
Criminal background record check requested by association
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.
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.
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.
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.
Limitation on permissible uses of information
The Association may use information provided under subparagraph (E) only—
for purposes of determining compliance with membership criteria established by the Association;
to disclose to State insurance regulators, or Federal or State law enforcement agencies, in conformance with applicable law.
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).
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.
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.
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.
Rule of construction
Nothing in this paragraph shall be construed as—
requiring a State insurance regulator to perform criminal background checks under this section; or
limiting any other authority that allows access to criminal background records.
The Attorney General shall prescribe regulations to carry out this paragraph, which shall include—
appropriate protections for ensuring the confidentiality of information provided under subparagraph (E); and
procedures providing a reasonable opportunity for a producer to contest the accuracy of information regarding the producer provided under subparagraph (E).
Ineligibility for membership
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).
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—
obtain a copy of all criminal history record information provided to the Association under subparagraph (E) with respect to the producer; and
challenge the accuracy and completeness of the information.
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; and
do not unfairly limit the access of smaller agencies to the Association membership, including imposing discriminatory membership fees on smaller insurance producers.
Establishment of classes and categories of membership
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.
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.
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.
The Association may establish criteria for membership which shall include standards for personal qualifications, education, training, and experience.
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.
Assistance from states
The Association may request a State to provide assistance in investigating and evaluating a prospective member’s eligibility for membership in the Association.
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.
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.
Effect of membership
Authority of association members
Membership in the Association shall—
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;
be the equivalent of a nonresident insurance producer license issued in any State where the member pays the licensing fee; and
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).
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.
Agent for remitting fees
The Association shall act as any member’s agent for purposes of remitting licensing fees to any State pursuant to paragraph (1).
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
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.
Membership in the Association shall be renewed on a biennial basis.
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.
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.
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.
Limitation on association
The Association shall not directly or indirectly offer any continuing education courses for insurance producers.
Probation, suspension and revocation
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—
the producer fails to meet the applicable membership criteria of the Association; or
the producer has been subject to disciplinary action pursuant to a final adjudicatory proceeding under the jurisdiction of a State insurance regulator.
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.
The Association shall—
receive and, when appropriate, investigate complaints from both consumers and State insurance regulators related to members of the Association;
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; and
refer, when appropriate, any such complaint to any additional appropriate State insurance regulator.
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.
Board of directors
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.
The Board shall have such of the Association’s powers and authority as may be specified in the bylaws of the Association.
The Board shall consist of 11 members who shall be appointed by the President, by and with the advice and consent of the Senate, of whom—
6 shall be State insurance commissioners appointed in the manner provided in paragraph (2);
2 shall be representatives of property and casualty insurance producers;
1 shall be a representative of life or health insurance producers;
1 shall be a representative of property and casualty insurers; and
1 shall be a representative of life or health insurers.
State insurance regulator representatives
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 list of recommendations within 15 days of the request, the President may make the requisite appointments without considering the views of the NAIC.
Not more than 3 members appointed to membership on the Board pursuant to subparagraph (A) of paragraph (1) shall belong to the same political party.
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.
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.
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
The term of each Board member shall be for 2 years, except that—
the term of—
3 of the State insurance commissioner members of the Board initially appointed under subparagraph (A) of paragraph (1);
1 of the property and casualty insurance producer members of the Board initially appointed under subparagraph (B) of paragraph (1); and
1 of the insurer representative members of the Board initially appointed under subparagraphs (D) and (E) of paragraph (1),
a member of the Board may continue to serve after the expiration of the term to which such member was appointed until a successor is qualified; and
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.
Board members may be reappointed to successive terms.
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.
A majority of directors shall constitute a quorum.
Decisions of the Board shall require the approval of a majority of all directors present at a meeting, a quorum being present.
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.
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.
Bylaws, rules, and disciplinary action
Adoption and amendment of bylaws
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.
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.
Disciplinary action by the association
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 determination to take disciplinary action shall be supported by a statement setting forth—
any act or practice in which such member has been found to have been engaged;
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
the sanction imposed and the reason for such sanction.
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:
To establish and collect such membership fees as the Association finds necessary to impose to cover the costs of its operations.
To adopt, amend, and repeal bylaws and rules governing the conduct of Association business and performance of its duties.
To establish procedures for providing notice and opportunity for comment pursuant to section 326(a).
To enter into and perform such agreements as necessary to carry out its duties.
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.
To borrow money.
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.
Report by Association
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.
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.
Liability of the association and the directors, officers, and employees of the association
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.
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.
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.
Removal of Board Member
The President may remove a member of the Board only for neglect of duty or malfeasance in office.
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.
Relationship to State law
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).
No State shall—
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;
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;
impose any continuing education requirements on nonresident insurance producers; or
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.
States other than a home state
No State, other than a member’s home State, shall—
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;
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; or
require that a member of the Association submit to a criminal history record check as a condition of doing business in such State.
Coordination with other regulators
Coordination with state insurance regulators
The Association may—
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; and
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.
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.
Right of action
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.
In any such action, the court shall give appropriate weight to the Association’s interpretation of its bylaws and this subtitle.
For purposes of this subtitle, the following definitions shall apply:
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.
insurance means any
product, other than title insurance, defined or regulated as insurance by the
appropriate State insurance regulatory authority.
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.
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.
State law includes
all laws, decisions, rules, regulations, or other State action having the
effect of law, of any State.
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.
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. Judicial review and enforcement.
Sec. 334. Definitions.
The budgetary effects of this Act, for the
purpose of complying with the Statutory Pay-As-You-Go-Act of 2010, shall be
determined by reference to the latest statement titled
of PAYGO Legislation for this Act, submitted for printing in the
Congressional Record by the Chairman of the Committee on the Budget of the
House of Representatives, provided that such statement has been submitted prior
to the vote on passage.
Passed the House of Representatives March 3, 2010.
Lorraine C. Miller,