[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 534 Reported in Senate (RS)]
Calendar No. 151
113th CONGRESS
1st Session
S. 534
[Report No. 113-82]
To reform the National Association of Registered Agents and Brokers,
and for other purposes.
_______________________________________________________________________
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
<DELETED>SECTION 1. SHORT TITLE.</DELETED>
<DELETED> This Act may be cited as the ``National Association of
Registered Agents and Brokers Reform Act of 2013''.</DELETED>
<DELETED>SEC. 2. REESTABLISHMENT OF THE NATIONAL ASSOCIATION OF
REGISTERED AGENTS AND BROKERS.</DELETED>
<DELETED> (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:</DELETED>
<DELETED>``Subtitle C--National Association of Registered Agents and
Brokers</DELETED>
<DELETED>``SEC. 321. NATIONAL ASSOCIATION OF REGISTERED AGENTS AND
BROKERS.</DELETED>
<DELETED> ``(a) Establishment.--There is established the National
Association of Registered Agents and Brokers (hereafter in this
subtitle referred to as the `Association').</DELETED>
<DELETED> ``(b) Status.--The Association shall--</DELETED>
<DELETED> ``(1) be a nonprofit corporation;</DELETED>
<DELETED> ``(2) have succession until dissolved by an Act of
Congress;</DELETED>
<DELETED> ``(3) not be an agent or instrumentality of the
United States Government; and</DELETED>
<DELETED> ``(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.).</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED>``SEC. 322. PURPOSE.</DELETED>
<DELETED> ``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--</DELETED>
<DELETED> ``(1) licensing, continuing education, and other
qualification requirements of insurance producers who are not
members of the Association;</DELETED>
<DELETED> ``(2) resident or nonresident insurance producer
appointment requirements;</DELETED>
<DELETED> ``(3) supervising and disciplining resident and
nonresident insurance producers;</DELETED>
<DELETED> ``(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</DELETED>
<DELETED> ``(5) prescribing and enforcing laws and
regulations regulating the conduct of resident and nonresident
insurance producers.</DELETED>
<DELETED>``SEC. 323. MEMBERSHIP.</DELETED>
<DELETED> ``(a) Eligibility.--</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(3) Resumption of eligibility.--Paragraph (2)
shall cease to apply to any insurance producer if--</DELETED>
<DELETED> ``(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</DELETED>
<DELETED> ``(B) the suspension or revocation expires
or is subsequently overturned by a court of competent
jurisdiction.</DELETED>
<DELETED> ``(4) Criminal background record check required.--
</DELETED>
<DELETED> ``(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).</DELETED>
<DELETED> ``(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).</DELETED>
<DELETED> ``(C) Criminal background record check
requested by association.--</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(F) Limitation on permissible uses of
information.--The Association may use information
provided under subparagraph (E) only--</DELETED>
<DELETED> ``(i) for purposes of determining
compliance with membership criteria established
by the Association; or</DELETED>
<DELETED> ``(ii) to disclose to State
insurance regulators, or Federal or State law
enforcement agencies, in conformance with
applicable law.</DELETED>
<DELETED> ``(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).</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(K) Rule of construction.--Nothing in
this paragraph shall be construed as--</DELETED>
<DELETED> ``(i) requiring a State insurance
regulator to perform criminal background checks
under this section; or</DELETED>
<DELETED> ``(ii) limiting any other
authority that allows access to criminal
background records.</DELETED>
<DELETED> ``(L) Regulations.--The Attorney General
shall prescribe regulations to carry out this
paragraph, which shall include--</DELETED>
<DELETED> ``(i) appropriate protections for
ensuring the confidentiality of information
provided under subparagraph (E); and</DELETED>
<DELETED> ``(ii) procedures providing a
reasonable opportunity for an insurance
producer to contest the accuracy of information
regarding the insurance producer provided under
subparagraph (E).</DELETED>
<DELETED> ``(M) Ineligibility for membership.--
</DELETED>
<DELETED> ``(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).</DELETED>
<DELETED> ``(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--
</DELETED>
<DELETED> ``(I) obtain a copy of all
criminal history record information
provided to the Association under
subparagraph (E) with respect to the
insurance producer; and</DELETED>
<DELETED> ``(II) challenge the
accuracy and completeness of the
information.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(c) Establishment of Classes and Categories of
Membership.--</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(3) Categories.--</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(d) Membership Criteria.--</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(3) Assistance from states.--</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(e) Effect of Membership.--</DELETED>
<DELETED> ``(1) Authority of association members.--
Membership in the Association shall--</DELETED>
<DELETED> ``(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;</DELETED>
<DELETED> ``(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</DELETED>
<DELETED> ``(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).</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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).</DELETED>
<DELETED> ``(4) Regulator notification.--</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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--</DELETED>
<DELETED> ``(A) regulates market conduct, insurance
producer conduct, or unfair trade practices;</DELETED>
<DELETED> ``(B) establishes consumer protections;
or</DELETED>
<DELETED> ``(C) requires insurance producers to be
appointed by a licensed or authorized
insurer,</DELETED>
<DELETED>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.</DELETED>
<DELETED> ``(f) Biennial Renewal.--Membership in the Association
shall be renewed on a biennial basis.</DELETED>
<DELETED> ``(g) Continuing Education.--</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(4) Limitation on association.--The Association
shall not directly or indirectly offer any continuing education
courses for insurance producers.</DELETED>
<DELETED> ``(h) Probation, Suspension and Revocation.--</DELETED>
<DELETED> ``(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--</DELETED>
<DELETED> ``(A) the insurance producer fails to meet
the applicable membership criteria or other rules of
the Association;</DELETED>
<DELETED> ``(B) the insurance producer has been
subject to disciplinary action pursuant to a final
adjudicatory proceeding under the jurisdiction of a
State insurance regulator;</DELETED>
<DELETED> ``(C) an insurance license held by the
insurance producer has been suspended or revoked by a
State insurance regulator; or</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(2) Violations of association rules.--The
Association shall have the power to investigate alleged
violations of Association rules.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(i) Consumer Complaints.--</DELETED>
<DELETED> ``(1) In general.--The Association shall--
</DELETED>
<DELETED> ``(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</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED>``SEC. 324. BOARD OF DIRECTORS.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(c) Composition.--</DELETED>
<DELETED> ``(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--</DELETED>
<DELETED> ``(A) 8 shall be State insurance
commissioners appointed in the manner provided in
paragraph (2);</DELETED>
<DELETED> ``(B) 2 shall be representatives of
property and casualty insurance producers;</DELETED>
<DELETED> ``(C) 1 shall be a representative of life
or health insurance producers;</DELETED>
<DELETED> ``(D) 1 shall be a representative of
property and casualty insurers; and</DELETED>
<DELETED> ``(E) 1 shall be a representative of life
or health insurers.</DELETED>
<DELETED> ``(2) State insurance regulator representatives.--
</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(d) Terms.--</DELETED>
<DELETED> ``(1) In general.--The term of each Board member
shall be for 2 years, except that--</DELETED>
<DELETED> ``(A) the term of--</DELETED>
<DELETED> ``(i) 4 of the State insurance
commissioner members of the Board initially
appointed under subparagraph (A) of paragraph
(1);</DELETED>
<DELETED> ``(ii) 1 of the property and
casualty insurance producer members of the
Board initially appointed under subparagraph
(B) of paragraph (1); and</DELETED>
<DELETED> ``(iii) 1 of the insurer
representative members of the Board initially
appointed under subparagraphs (D) and (E) of
paragraph (1),</DELETED>
<DELETED>shall be 1 year, as designated by the
President at the time of the nomination of the
members;</DELETED>
<DELETED> ``(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</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(2) Successive terms.--Board members may be
reappointed to successive terms.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(f) Meetings.--</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(2) Quorum required.--A majority of directors
shall constitute a quorum.</DELETED>
<DELETED> ``(3) Voting.--Decisions of the Board shall
require the approval of a majority of all directors present at
a meeting, a quorum being present.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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--</DELETED>
<DELETED> ``(1) engaging in unethical conduct in the course
of performing Association duties;</DELETED>
<DELETED> ``(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;</DELETED>
<DELETED> ``(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;</DELETED>
<DELETED> ``(4) making political contributions to any person
or entity on behalf of the Association; and</DELETED>
<DELETED> ``(5) lobbying or paying someone to lobby on
behalf of the Association.</DELETED>
<DELETED>``SEC. 325. OFFICERS.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED>``SEC. 326. BYLAWS, RULES, AND DISCIPLINARY ACTION.</DELETED>
<DELETED> ``(a) Adoption and Amendment of Bylaws and Rules.--
</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(b) Disciplinary Action by the Association.--</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(2) Supporting statement.--A determination to
take disciplinary action shall be supported by a statement
setting forth--</DELETED>
<DELETED> ``(A) any act or practice in which the
member has been found to have been engaged;</DELETED>
<DELETED> ``(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</DELETED>
<DELETED> ``(C) the sanction imposed and the reason
for the sanction.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED>``SEC. 327. POWERS.</DELETED>
<DELETED> ``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:</DELETED>
<DELETED> ``(1) To establish and collect such membership
fees as the Association finds necessary to impose to cover the
costs of its operations.</DELETED>
<DELETED> ``(2) To adopt, amend, and repeal bylaws and rules
governing the conduct of Association business and performance
of its duties.</DELETED>
<DELETED> ``(3) To establish procedures for providing notice
and opportunity for comment pursuant to section
326(a).</DELETED>
<DELETED> ``(4) To enter into and perform such agreements as
necessary to carry out its duties.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(6) To borrow money.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED>``SEC. 328. REPORT BY ASSOCIATION.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED>``SEC. 329. LIABILITY OF THE ASSOCIATION AND THE DIRECTORS,
OFFICERS, AND EMPLOYEES OF THE ASSOCIATION.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED>``SEC. 330. PRESIDENTIAL OVERSIGHT.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(b) Removal of Board Member.--The President may remove a
member of the Board only for neglect of duty or malfeasance in
office.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED>``SEC. 331. RELATIONSHIP TO STATE LAW.</DELETED>
<DELETED> ``(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).</DELETED>
<DELETED> ``(b) Prohibited Actions.--</DELETED>
<DELETED> ``(1) In general.--No State shall--</DELETED>
<DELETED> ``(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;</DELETED>
<DELETED> ``(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</DELETED>
<DELETED> ``(C) impose any continuing education
requirements on any nonresident insurance producer that
is a member of the Association.</DELETED>
<DELETED> ``(2) States other than a home state.--No State,
other than a member's home State, shall--</DELETED>
<DELETED> ``(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;</DELETED>
<DELETED> ``(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;</DELETED>
<DELETED> ``(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</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED>``SEC. 332. COORDINATION WITH OTHER REGULATORS.</DELETED>
<DELETED> ``(a) Coordination With State Insurance Regulators.--The
Association may--</DELETED>
<DELETED> ``(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</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED>``SEC. 333. RIGHT OF ACTION.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(b) Association Interpretations.--In any such action,
the court shall give appropriate weight to the Association's
interpretation of its bylaws and this subtitle.</DELETED>
<DELETED>``SEC. 334. DEFINITIONS.</DELETED>
<DELETED> ``For purposes of this subtitle, the following definitions
shall apply:</DELETED>
<DELETED> ``(1) Business entity.--The term `business entity'
means a corporation, association, partnership, limited
liability company, limited liability partnership, or other
legal entity.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(8) State law.--</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.''.</DELETED>
<DELETED> (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:</DELETED>
<DELETED>``Subtitle C--National Association of Registered Agents and
Brokers
<DELETED>``Sec. 321. National Association of Registered Agents and
Brokers.
<DELETED>``Sec. 322. Purpose.
<DELETED>``Sec. 323. Membership.
<DELETED>``Sec. 324. Board of directors.
<DELETED>``Sec. 325. Officers.
<DELETED>``Sec. 326. Bylaws, rules, and disciplinary action.
<DELETED>``Sec. 327. Powers.
<DELETED>``Sec. 328. Report by Association.
<DELETED>``Sec. 329. Liability of the Association and the directors,
officers, and employees of the Association.
<DELETED>``Sec. 330. Presidential oversight.
<DELETED>``Sec. 331. Relationship to State law.
<DELETED>``Sec. 332. Coordination with other regulators.
<DELETED>``Sec. 333. Right of action.
<DELETED>``Sec. 334. Definitions.''.
</DELETED>SECTION 1. SHORT TITLE.
This Act may be cited as the ``National Association of Registered
Agents and Brokers Reform Act of 2013''.
SEC. 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:
``Subtitle C--National Association of Registered Agents and Brokers
``SEC. 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.
``SEC. 322. PURPOSE.
``The purpose of the Association shall be to provide a mechanism
through which licensing, continuing education, and other nonresident
insurance producer qualification requirements and conditions 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.
``SEC. 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.
``SEC. 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.
``SEC. 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.
``SEC. 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.
``SEC. 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.
``SEC. 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.
``SEC. 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.
``SEC. 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.
``SEC. 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 .
``SEC. 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.
``SEC. 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.
``SEC. 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.''.
Calendar No. 151
113th CONGRESS
1st Session
S. 534
[Report No. 113-82]
_______________________________________________________________________
A BILL
To reform the National Association of Registered Agents and Brokers,
and for other purposes.
_______________________________________________________________________
July 29, 2013
Reported with an amendment