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[From the U.S. Government Publishing Office]


113th Congress  }                                            {   Report
  2d Session    }        HOUSE OF REPRESENTATIVES            {  113-523

=======================================================================
 
                        TRIA REFORM ACT OF 2014 

                                _______
                                

 July 16, 2014.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 4871]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 4871) to reauthorize the Terrorism Risk 
Insurance Act of 2002, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``TRIA Reform Act of 
2014''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.

                          TITLE I--TRIA REFORM

Sec. 101. References.
Sec. 102. Extension of program.
Sec. 103. Certification of acts of terrorism.
Sec. 104. Separate treatment of conventional terrorism from NBCR 
terrorism.
Sec. 105. Availability of coverage.
Sec. 106. Terrorism loss risk-spreading premiums amount.
Sec. 107. Increase of aggregate retention amount; mandatory recoupment.
Sec. 108. Terrorism loss risk-spreading premium.
Sec. 109. Risk-sharing mechanisms.
Sec. 110. Reporting of terrorism insurance data.
Sec. 111. Delivery of notices to policyholders.
Sec. 112. Definition of control.
Sec. 113. Annual study of small insurer market competitiveness.
Sec. 114. CBO and OMB studies regarding budgeting for costs of Federal 
insurance programs.
Sec. 115. GAO study on upfront premiums and capital reserve fund.

 TITLE II--NATIONAL ASSOCIATION OF REGISTERED AGENTS AND BROKERS REFORM

Sec. 201. Short title.
Sec. 202. Reestablishment of the National Association of Registered 
Agents and Brokers.

                          TITLE I--TRIA REFORM

SEC. 101. REFERENCES.

  Except as otherwise expressly provided, wherever in this title an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Terrorism Risk Insurance 
Act of 2002 (15 U.S.C. 6701 note).

SEC. 102. EXTENSION OF PROGRAM.

  (a) In General.--Subsection (a) of section 108 (15 U.S.C. 6701 note) 
is amended by striking ``December 31, 2014'' and inserting ``December 
31, 2019''.
  (b) Program Years.--Subparagraph (G) of section 102(11) (15 U.S.C. 
6701 note) is amended by striking ``2014'' and inserting ``2019''.

SEC. 103. CERTIFICATION OF ACTS OF TERRORISM.

  (a) In General.--Paragraph (1) of section 102 (15 U.S.C. 6701 note) 
is amended--
          (1) in subparagraph (A), in the matter preceding clause (i), 
        by striking ``concurrence with the Secretary of State'' and 
        inserting ``consultation with the Secretary of Homeland 
        Security'';
          (2) in subparagraph (B)--
                  (A) in clause (i), by striking ``; or'' and inserting 
                a period;
                  (B) by striking clause (ii); and
                  (C) by striking ``terrorism if--'' and all that 
                follows through ``(i) the act'' and inserting 
                ``terrorism if the act'';
          (3) by redesignating subparagraphs (C) and (D) as 
        subparagraphs (E) and (G), respectively;
          (4) by inserting after subparagraph (B) the following new 
        subparagraph:
                  ``(C) Timing of certification.--
                          ``(i) Preliminary certification notice.--The 
                        Secretary shall issue a preliminary 
                        certification notice indicating whether an act 
                        is expected to be a certified act of terrorism 
                        not later than 15 days after--
                                  ``(I) the date of the occurrence of a 
                                potential act of terrorism; or
                                  ``(II) the receipt of a petition 
                                seeking a preliminary certification 
                                decision submitted by an insurer having 
                                an in-force policy or policies that 
                                could be affected by a certification 
                                decision.
                          ``(ii) Final certification notice.--Not later 
                        than 90 days after the date of the occurrence 
                        of a potential act of terrorism or the receipt 
                        of a petition submitted to the Secretary 
                        pursuant to clause (i)(II), the Secretary shall 
                        issue a final certification notice indicating 
                        whether an act is a certified act of terrorism 
                        for purposes of this Act.
                          ``(iii) Rule of construction.--Failure to 
                        issue a preliminary certification notice under 
                        clause (i) shall not prevent the Secretary from 
                        issuing a final certification notice under 
                        clause (ii).''; and
          (5) by inserting before subparagraph (G), as so redesignated 
        by paragraph (3) of this subsection, the following new 
        subparagraph:
                  ``(F) Failure to make determination.--If the 
                Secretary does not certify, or make a determination not 
                to certify, an act as an act of terrorism before the 
                expiration of the 90-day period beginning on the 
                occurrence of such act, such act shall be treated for 
                purposes of this Act as having been determined by the 
                Secretary not to be an act of terrorism and such 
                determination shall be final and shall not be subject 
                to judicial review.''.
  (b) Applicability.--The amendments made by subsection (a) shall apply 
to the Program Year for the Terrorism Insurance Program established by 
title I of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 
note) that begins on January 1, 2015, and Program Years thereafter.

SEC. 104. SEPARATE TREATMENT OF CONVENTIONAL TERRORISM FROM NBCR 
                    TERRORISM.

  (a) Definition.--
          (1) In general.--Section 102 (15 U.S.C. 6701 note) is 
        amended--
                  (A) in paragraph (1), by inserting after subparagraph 
                (C), as added by section 103(a)(4) of this Act, the 
                following new subparagraph:
                  ``(D) Act of nbcr terrorism.--Each certification of 
                an act of terrorism under subparagraph (A) shall 
                include a determination of whether such act involves 
                NBCR terrorism.'';
                  (B) by redesignating paragraphs (9) through (16) as 
                paragraphs (10) through (17), respectively; and
                  (C) by inserting after paragraph (8) the following 
                new paragraph:
          ``(9) NBCR terrorism.--Notwithstanding paragraph (1), the 
        term `NBCR terrorism' means an act of terrorism to the extent 
        that the insured losses involve, regardless of any other cause 
        or event that contributes concurrently or in any sequence to 
        such insurance loss--
                  ``(A) an act of terrorism that is carried out by 
                means of the dispersal or application of radioactive 
                material, or through the use of a nuclear weapon or 
                device that involves or produces a nuclear reaction, 
                nuclear radiation, or radioactive contamination;
                  ``(B) the release of radioactive material, and it 
                appears that one purpose of the act of terrorism was to 
                release such material;
                  ``(C) an act of terrorism that is carried out by 
                means of the dispersal or application of pathogenic or 
                poisonous biological or chemical material; or
                  ``(D) the release of pathogenic or poisonous 
                biological or chemical material, and it appears that 
                one purpose of the act of terrorism was to release such 
                material.''.
          (2) Applicability.--The amendments made by paragraph (1) 
        shall apply to the Program Year for the Terrorism Insurance 
        Program established by title I of the Terrorism Risk Insurance 
        Act of 2002 (15 U.S.C. 6701 note) that begins on January 1, 
        2016, and Program Years thereafter.
  (b) Federal Share of Insured Loss Compensation.--Subparagraph (A) of 
section 103(e)(1) (15 U.S.C. 6701 note) is amended--
          (1) by striking ``The Federal share'' and inserting ``Subject 
        to subparagraphs (B) and (C), the Federal share'';
          (2) by striking ``an insurer during the Transition period'' 
        and inserting the following: ``an insurer--
                          ``(i) during the Transition period,'';
          (3) by inserting ``through the Program Year ending on 
        December 31, 2015,'' after ``each Program Year thereafter'';
          (4) by striking the period at the end and inserting ``; 
        and''; and
          (5) by adding at the end the following new clause:
                          ``(ii) shall be equal to--
                                  ``(I) except as provided in subclause 
                                (II)--
                                          ``(aa) during the Program 
                                        Year beginning on January 1, 
                                        2016, 84 percent of that 
                                        portion of the amount of such 
                                        insured losses that exceeds the 
                                        applicable insurer deductible 
                                        required to be paid during such 
                                        Program Year;
                                          ``(bb) during the Program 
                                        Year beginning on January 1, 
                                        2017, 83 percent of that 
                                        portion of the amount of such 
                                        insured losses that exceeds the 
                                        applicable insurer deductible 
                                        required to be paid during such 
                                        Program Year;
                                          ``(cc) during the Program 
                                        Year beginning on January 1, 
                                        2018, 82 percent of that 
                                        portion of the amount of such 
                                        insured losses that exceeds the 
                                        applicable insurer deductible 
                                        required to be paid during such 
                                        Program Year; and
                                          ``(dd) during the Program 
                                        Year beginning on January 1, 
                                        2019, 80 percent of that 
                                        portion of the amount of such 
                                        insured losses that exceeds the 
                                        applicable insurer deductible 
                                        required to be paid during such 
                                        Program Year; and
                                  ``(II) in the case of insured losses 
                                resulting from acts of NBCR terrorism, 
                                during the Program Year beginning on 
                                January 1, 2016, and each Program Year 
                                thereafter, 85 percent of that portion 
                                of the amount of such insured losses 
                                that exceeds the applicable insurer 
                                deductible required to be paid during 
                                such Program Year.''.
  (c) Program Trigger.--Subparagraph (B) of section 103(e)(1) (15 
U.S.C. 6701 note) is amended--
          (1) in the matter preceding clause (i)--
                  (A) by striking ``a certified act'' and inserting 
                ``certified acts''; and
                  (B) by striking ``such certified act'' and inserting 
                ``such certified acts'';
          (2) in clause (i) by striking ``or'' at the end;
          (3) in clause (ii), by striking the period at the end and 
        inserting the following ``through the Program Year ending on 
        December 31, 2015; or'';
          (4) by adding at the end the following:
                          ``(iii)(I) except as provided in subclause 
                        (II)--
                                  ``(aa) $200,000,000, with respect to 
                                such insured losses occurring in the 
                                Program Year beginning on January 1, 
                                2016;
                                  ``(bb) $300,000,000, with respect to 
                                such insured losses occurring in the 
                                Program Year beginning on January 1, 
                                2017;
                                  ``(cc) $400,000,000, with respect to 
                                such insured losses occurring in the 
                                Program Year beginning on January 1, 
                                2018; and
                                  ``(dd) $500,000,000, with respect to 
                                such insured losses occurring in the 
                                Program Year beginning on January 1, 
                                2019; and
                          ``(II) in the case of an act of NBCR 
                        terrorism, $100,000,000, with respect to such 
                        insured losses occurring in the Program Year 
                        beginning on January 1, 2016, or any Program 
                        Year thereafter.''; and
          (5) by adding after and below clause (iii), as added by 
        paragraph (4) of this subsection, the following:
                  ``In determining the aggregate industry insured 
                losses resulting from certified acts of terrorism for 
                purposes of this subparagraph, the Secretary shall not 
                consider any act of terrorism resulting, in the 
                aggregate, in less than $50,000,000 in insured 
                losses.''.

SEC. 105. AVAILABILITY OF COVERAGE.

  Subsection (c) of section 103 (15 U.S.C. 6701 note) is amended to 
read as follows:
  ``(c) Mandatory Availability.--
          ``(1) In general.--Except as provided in paragraph (2), 
        during each Program Year, each entity that meets the definition 
        of an insurer under section 102 shall make available--
                  ``(A) in all of its property and casualty insurance 
                policies, coverage for insured losses; and
                  ``(B) property and casualty insurance coverage for 
                insured losses that does not differ materially from the 
                terms, amounts, and other coverage limitations 
                applicable to losses arising from events other than 
                acts of terrorism.
          ``(2) No mandatory availability for small insurers.--The 
        Secretary shall provide, by regulation and in consultation with 
        State insurance regulatory authorities, that paragraph (1) 
        shall not apply for a Program Year with respect to any small 
        insurer (as such term is defined in such regulations by the 
        Secretary) that, at the option of the insurer, makes a request 
        for such inapplicability for such Program Year to the 
        appropriate State insurance regulatory authority for the State 
        in which such insurer is domiciled and is determined by such 
        State insurance regulatory authority to meet such requirements 
        for financial hardship or financial infeasibility of providing 
        coverage for insured losses as the Secretary shall establish in 
        such regulations. The insurer shall provide notice, in a manner 
        satisfactory to the State insurance regulatory authority, 
        informing affected prospective and current policyholders 
        whether such coverage is not provided by the insurer. This 
        paragraph may not be construed to require any State insurance 
        regulatory authority to undertake making determinations under 
        this paragraph.''.

SEC. 106. TERRORISM LOSS RISK-SPREADING PREMIUMS AMOUNT.

  (a) In General.--Subparagraph (C) of section 103(e)(7) (15 U.S.C. 
6701 note) is amended--
          (1) by striking ``subparagraphs (A) through (E)'' and 
        inserting ``subparagraphs (A) through (F)''; and
          (2) by striking ``133 percent'' and inserting ``150 
        percent''.
  (b) Applicability.--The amendment made by subsection (a) shall apply 
to the Program Year for the Terrorism Insurance Program established by 
title I of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 
note) that begins on January 1, 2016, and Program Years thereafter.

SEC. 107. INCREASE OF AGGREGATE RETENTION AMOUNT; MANDATORY RECOUPMENT.

  (a) In General.--Paragraph (6) of section 103(e) (15 U.S.C. 6701 
note) is amended--
          (1) in subparagraph (D)(ii), by striking ``and'' at the end;
          (2) in subparagraph (E)--
                  (A) in the matter preceding clause (i), by inserting 
                ``through the Program Year ending on December 31, 
                2015'' before the comma; and
                  (B) in clause (ii), by striking the period at the end 
                and inserting ``; and''; and
          (3) by adding at the end the following new subparagraph:
                  ``(F) for the Program Year beginning January 1, 2016, 
                and each Program Year thereafter, the lesser of--
                          ``(i) the amount that is equal to the sum of 
                        the insurer deductibles for the Program Year 
                        for all insurers participating in the Program; 
                        and
                          ``(ii) the aggregate amount, for all 
                        insurers, of insured losses during such Program 
                        Year.''.
  (b) Mandatory Recoupment.--
          (1) Amount; timing.--Paragraph (7) of section 103(e) (15 
        U.S.C. 6701 note) is amended--
                  (A) by striking subparagraphs (A) and (B) and 
                inserting the following new subparagraph:
                  ``(A) Mandatory recoupment amount.--For purposes of 
                this paragraph, the mandatory recoupment amount for 
                each of the periods referred to in subparagraphs (A) 
                through (F) of paragraph (6) shall be equal to the 
                lesser of--
                          ``(i) the aggregate amount, for all insurers, 
                        of insured losses during such period that are 
                        compensated by the Federal Government pursuant 
                        to paragraph (1); or
                          ``(ii) the insurance marketplace aggregate 
                        retention amount under paragraph (6) for such 
                        period.'';
                  (B) in subparagraph (E)(i)(III), by striking ``after 
                January 1, 2012'' and inserting ``before December 31, 
                2014''; and
                  (C) by redesignating subparagraphs (C), (D), (E) (as 
                so amended), and (F) as subparagraphs (B), (C), (D), 
                and (E), respectively.
          (2) Conforming amendments.--Section 103(e) (15 U.S.C. 6701 
        note) is amended in paragraph (7)(D)(i), as so redesignated by 
        paragraph (1)(C) of this subsection, by striking ``subparagraph 
        (C)'' and inserting ``subparagraph (B)''.

SEC. 108. TERRORISM LOSS RISK-SPREADING PREMIUM.

  (a) In General.--Section 103(e) (15 U.S.C. 6701 note) is amended by 
striking paragraph (8) and inserting the following new paragraph:
          ``(8) Terrorism loss risk-spreading premiums.--
                  ``(A) Establishment.--After an act of terrorism, the 
                Secretary shall, to the extent provided in paragraph 
                (7)(B), and may, to the extent provided in paragraph 
                (7)(C), establish terrorism loss risk-spreading 
                premiums, which shall be imposed as a policyholder 
                premium surcharge on property and casualty insurance 
                policies for all participating insurers in force after 
                the date of such establishment.
                  ``(B) Collection.--The Secretary shall provide for 
                insurers to collect terrorism loss risk-spreading 
                premiums and remit such amounts collected to the 
                Secretary.
                  ``(C) Determination of premiums.--In determining the 
                method and manner of imposing terrorism loss risk-
                spreading premiums, including the amount of such 
                premiums, the Secretary shall--
                          ``(i) impose such terrorism loss risk-
                        spreading premiums beginning with such period 
                        of coverage during the year as the Secretary 
                        determines appropriate, but shall commence 
                        imposition of such premiums not later than 18 
                        months after the occurrence of the act of 
                        terrorism for which such premiums are imposed;
                          ``(ii) base any terrorism loss risk-spreading 
                        premium on a percentage of the premium amount 
                        charged for property and casualty insurance 
                        coverage under the policy; and
                          ``(iii) take into consideration--
                                  ``(I) the economic impact on 
                                commercial centers of urban areas, 
                                including the effect on commercial 
                                rents and commercial insurance 
                                premiums, particularly rents and 
                                premiums charged to small businesses, 
                                and the availability of lease space and 
                                commercial insurance within urban 
                                areas;
                                  ``(II) the risk factors related to 
                                rural areas and smaller commercial 
                                centers, including the potential 
                                exposure to loss and the likely 
                                magnitude of such loss, as well as any 
                                resulting cross-subsidization that 
                                might result; and
                                  ``(III) the various exposures to 
                                terrorism risk for different lines of 
                                insurance.
                  ``(D) Percentage limitation.--A terrorism loss risk-
                spreading premium collected on a discretionary basis 
                pursuant to paragraph (7)(C) shall not be less than, on 
                an annual basis, the amount equal to 3 percent of the 
                premium charged for property and casualty insurance 
                coverage under the policy.
                  ``(E) Timing of premiums.--The Secretary may adjust 
                the timing of terrorism loss risk-spreading premiums to 
                provide for equivalent application of the provisions of 
                this title to policies that are not based on a calendar 
                year, or to apply such provisions on a daily, monthly, 
                or quarterly basis, as appropriate.''.
  (b) Applicability.--The amendment made by subsection (a) shall apply 
to the Program Year for the Terrorism Insurance Program established by 
title I of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 
note) that begins on January 1, 2016, and Program Years thereafter.

SEC. 109. RISK-SHARING MECHANISMS.

  (a) In General.--Section 103(e) (15 U.S.C. 6701 note) is amended by 
adding at the end the following new paragraph:
          ``(9) Risk-sharing mechanisms.--
                  ``(A) Finding; rule of construction.--The Congress 
                finds that it is desirable to encourage the growth of 
                nongovernmental, private market reinsurance capacity 
                for protection against losses arising from acts of 
                terrorism. Therefore, nothing in this title shall 
                prohibit insurers from developing risk-sharing 
                mechanisms (including mutual reinsurance facilities and 
                agreements, use of the capital markets, and insurance-
                linked securities) to voluntarily reinsure terrorism 
                losses between and among themselves that are not 
                subject to reimbursement under this section.
                  ``(B) Establishment of advisory committee.--The 
                Secretary shall appoint an Advisory Committee to--
                          ``(i) encourage the creation and development 
                        of such risk-sharing mechanisms;
                          ``(ii) assist the Secretary and be available 
                        to administer such risk-sharing mechanisms; and
                          ``(iii) develop articles of incorporation, 
                        bylaws, and a plan of operation for any long-
                        term reinsurance facility authorized or created 
                        in the future.
                  ``(C) Membership.--The Advisory Committee shall be 
                composed of nine members who are directors, officers, 
                or other employees of insurers, reinsurers, or capital 
                market participants that are participating or that 
                desire to participate in such mechanisms, and who are 
                representative of the affected sectors of the insurance 
                industry, including commercial property insurance, 
                commercial casualty insurance, reinsurance, and 
                alternative risk transfer industries.''.
  (b) Applicability.--The amendment made by subsection (a) shall apply 
to the Program Year for the Terrorism Insurance Program established by 
title I of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 
note) that begins on January 1, 2015, and Program Years thereafter.

SEC. 110. REPORTING OF TERRORISM INSURANCE DATA.

  Section 104 (15 U.S.C. 6701 note) is amended by adding at the end the 
following new subsection:
  ``(h) Reporting of Terrorism Insurance Data.--
          ``(1) Authority.--During the Program Year beginning on 
        January 1, 2016, and in each Program Year thereafter, the 
        Secretary shall require insurers participating in the Program 
        to submit to the Secretary such information regarding insurance 
        coverage for terrorism losses of such insurers as the Secretary 
        considers appropriate to analyze the effectiveness of the 
        Program, which shall include information regarding--
                  ``(A) lines of insurance with exposure to such 
                losses;
                  ``(B) premiums earned on such coverage;
                  ``(C) geographical location of exposures;
                  ``(D) pricing of such coverage;
                  ``(E) the take-up rate for such coverage;
                  ``(F) the amount of private reinsurance for acts of 
                terrorism purchased; and
                  ``(G) such other matters as the Secretary considers 
                appropriate.
          ``(2) Reports.--Not later than 6 months after the termination 
        of the Program Year beginning on January 1, 2016, and not later 
        than 6 months after the termination of each Program Year 
        thereafter, the Secretary shall submit a report to the 
        Committee on Financial Services of the House of Representatives 
        and the Committee on Banking, Housing, and Urban Affairs of the 
        Senate that includes--
                  ``(A) an analysis of the overall effectiveness of the 
                Program;
                  ``(B) an evaluation of any changes or trends in the 
                data collected under paragraph (1);
                  ``(C) an evaluation of whether any aspects of the 
                Program have the effect of discouraging or impeding 
                insurers from providing commercial property casualty 
                insurance coverage or coverage for acts of terrorism;
                  ``(D) an evaluation of the impact of the Program on 
                workers' compensation insurers;
                  ``(E) an evaluation of the impact on availability and 
                affordability of terrorism insurance coverage and 
                fiscal protection of the taxpayers of separate Federal 
                treatment under the Program for nuclear, biological, 
                chemical, and radiological terrorism; and
                  ``(F) in the case of the data reported in paragraph 
                (1)(B), an updated estimate of the total amount earned 
                since the commencement of Program Year 1.
          ``(3) Protection of data.--To the extent possible, the 
        Secretary shall contract with an insurance statistical 
        aggregator to collect the information described in paragraph 
        (1), which shall keep any nonpublic information confidential 
        and provide it to the Secretary in an aggregate form or in such 
        other form or manner that does not permit identification of the 
        insurer submitting such information.
          ``(4) Advance coordination.--Before collecting any data or 
        information under paragraph (1) from an insurer, or affiliate 
        of an insurer, the Secretary shall coordinate with the 
        appropriate State insurance regulatory authorities or their 
        representatives and any relevant government agency or publicly 
        available sources to determine if the information to be 
        collected is available from, and may be obtained in a timely 
        manner by, individually or collectively, such entities. If the 
        Secretary determines that such data or information is 
        available, and may be obtained in a timely matter, from such 
        entities, the Secretary shall obtain the data or information 
        from such entities. If the Secretary determines that such data 
        or information is not so available, the Secretary may collect 
        such data or information from an insurer and affiliates.
          ``(5) Confidentiality.--
                  ``(A) Retention of privilege.--The submission of any 
                non-publicly available data and information to the 
                Secretary and the sharing of any non-publicly available 
                data with or by the Secretary among other Federal 
                agencies, the State insurance regulatory authorities 
                and their collective agents, or any other entities 
                under this subsection shall not constitute a waiver of, 
                or otherwise affect, any privilege arising under 
                Federal or State law (including the rules of any 
                Federal or State court) to which the data or 
                information is otherwise subject.
                  ``(B) Continued application of prior confidentiality 
                agreements.--Any requirement under Federal or State law 
                to the extent otherwise applicable, or any requirement 
                pursuant to a written agreement in effect between the 
                original source of any non-publicly available data or 
                information and the source of such data or information 
                to the Secretary, regarding the privacy or 
                confidentiality of any data or information in the 
                possession of the source to the Secretary, shall 
                continue to apply to such data or information after the 
                data or information has been provided pursuant to this 
                subsection.
                  ``(C) Information-sharing agreement.--Any data or 
                information obtained by the Secretary under this 
                subsection may be made available to State insurance 
                regulatory authorities, individually or collectively 
                through an information-sharing agreement that--
                          ``(i) shall comply with applicable Federal 
                        law; and
                          ``(ii) shall not constitute a waiver of, or 
                        otherwise affect, any privilege under Federal 
                        or State law (including any privilege referred 
                        to in subparagraph (A) and the rules of any 
                        Federal or State court) to which the data or 
                        information is otherwise subject.
                  ``(D) Agency disclosure requirements.--Section 552 of 
                title 5, United States Code, including any exceptions 
                thereunder, shall apply to any data or information 
                submitted under this subsection to the Secretary by an 
                insurer or affiliate of an insurer.''.

SEC. 111. DELIVERY OF NOTICES TO POLICYHOLDERS.

  Section 103(b)(2) (15 U.S.C. 6701 note) is amended--
          (1) in subparagraph (B), by striking ``, purchase,''; and
          (2) in subparagraph (C), by striking ``, purchase,''.

SEC. 112. DEFINITION OF CONTROL.

  Paragraph (3) of section 102 (15 U.S.C. 6701 note) is amended--
          (1) by redesignating subparagraphs (A), (B), and (C) as 
        clauses (i), (ii), and (iii), respectively and realigning such 
        clauses, as so redesignated, so as to be indented six ems from 
        the left margin;
          (2) in the matter preceding clause (i) (as so redesignated), 
        by striking ``An entity has'' and inserting the following:
                  ``(A) In general.--An entity has''; and
          (3) by adding at the end the following new subparagraph:
                  ``(B) Rule of construction.--An entity, including any 
                affiliate thereof, does not have control over another 
                entity if, as of the date of the enactment of the TRIA 
                Reform Act of 2014, the entity is acting as an 
                attorney-in-fact, as defined by the Secretary, for the 
                other entity and such other entity is a reciprocal 
                insurer, provided that the entity is not, for reasons 
                other than the attorney-in-fact relationship, defined 
                as having control under subparagraph (A).''.

SEC. 113. ANNUAL STUDY OF SMALL INSURER MARKET COMPETITIVENESS.

  Section 108 (15 U.S.C. 6701 note) is amended by adding at the end the 
following new subsection:
  ``(h) Study of Small Insurer Market Competitiveness.--
          ``(1) In general.--The Secretary shall conduct an annual 
        study of small insurers participating in the Program, and 
        identify any competitive challenges small insurers face in the 
        terrorism risk insurance marketplace, including--
                  ``(A) changes to the market share, premium volume, 
                and policyholder surplus of small insurers relative to 
                large insurers;
                  ``(B) how the property and casualty insurance market 
                for terrorism risk differs between small and large 
                insurers, and whether such a difference exists within 
                other perils;
                  ``(C) the impact of the Program's mandatory 
                availability requirement under section 103(c) and the 
                voluntary opt-out for small insurers;
                  ``(D) the effect of increasing the trigger amount for 
                the Program under section 103(e)(1)(B)(iii)(I) on small 
                insurers;
                  ``(E) the availability and cost of private 
                reinsurance for small insurers; and
                  ``(F) the impact that State workers compensation laws 
                have on small insurers, particularly the impact of 
                mandatory, non-excludable participation and unlimited 
                financial liability.
          ``(2) Timing and report.--The Secretary shall complete the 
        first study under paragraph (1) and submit a report to the 
        Congress setting forth the findings and conclusions of the 
        study not later than June 30, 2016, and shall complete an 
        annual study under paragraph (1) and submit a report regarding 
        such study to the Congress by June 1 annually thereafter.''.

SEC. 114. CBO AND OMB STUDIES REGARDING BUDGETING FOR COSTS OF FEDERAL 
                    INSURANCE PROGRAMS.

  Not later than the expiration of the 12-month period beginning on the 
date of the enactment of this Act, the Director of the Congressional 
Budget Office and the Director of the Office of Management and Budget 
shall each--
          (1) conduct a study to determine the feasibility of applying 
        accrual accounting concepts to budgeting for the costs of the 
        Terrorism Risk Insurance Program and for the costs of the other 
        Federal insurance programs; and
          (2) submit a report regarding such study to the Committees on 
        the Budget of the House of Representatives and the Senate, 
        which shall include a recommendation specifically addressing 
        the feasibility of applying fair value concepts to budgeting 
        for the costs of Federal insurance programs, including the 
        Terrorism Risk Insurance Program.

SEC. 115. GAO STUDY ON UPFRONT PREMIUMS AND CAPITAL RESERVE FUND.

  (a) Study.--Not later than 2 years after the date of the enactment of 
this Act, the Comptroller General of the United States shall complete a 
study on the viability of the Federal Government--
          (1) assessing and collecting upfront premiums on insurers 
        that participate in the Terrorism Risk Insurance Program 
        established under the Terrorism Risk Insurance Act of 2002 (15 
        U.S.C. 6701 note) (in this section referred to as the 
        ``Program''), which shall include a comparison of practices in 
        international markets to assess and collect premiums either 
        before or after terrorism losses are incurred; and
          (2) creating a capital reserve fund under the Program and 
        requiring insurers participating in the Program to dedicate 
        capital specifically for terrorism losses before such losses 
        are incurred, which shall include a comparison of practices in 
        international markets to establish reserve funds.
  (b) Required Content.--The study required under subsection (a) shall 
examine, but shall not be limited to, the following issues:
          (1) Upfront premiums.--With respect to upfront premiums 
        described in subsection (a)(1)--
                  (A) how the Federal Government could determine the 
                price of such upfront premiums on insurers that 
                participate in the Program;
                  (B) how the Federal Government could collect such 
                upfront premiums;
                  (C) how the Federal Government could ensure that such 
                upfront premiums are not spent for purposes other than 
                satisfying claims through the Program;
                  (D) how the assessment and collection of such upfront 
                premiums could affect take-up rates for terrorism risk 
                coverage in different regions and industries;
                  (E) the effect of collecting such upfront premiums on 
                the private market for terrorism risk reinsurance; and
                  (F) the size of the Federal Government subsidy 
                insurers currently receive through their participation 
                in the Program.
          (2) Capital reserve fund.--With respect to the capital 
        reserve fund described in subsection (a)(2)--
                  (A) how the creation of a capital reserve fund would 
                affect the Federal Government's fiscal exposure under 
                the Terrorism Risk Insurance Program and the ability of 
                the Program to meet its statutory purposes;
                  (B) how a capital reserve fund would impact insurers 
                and reinsurers, including liquidity, insurance pricing, 
                and capacity to provide terrorism risk coverage;
                  (C) the feasibility of segregating funds attributable 
                to terrorism risk from funds attributable to other 
                insurance lines;
                  (D) how a capital reserve fund would be viewed and 
                treated under current Financial Accounting Standards 
                Board accounting rules and the tax laws; and
                  (E) how a capital reserve fund would affect the 
                States' ability to regulate insurers participating in 
                the Program.
          (3) International practices.--With respect to international 
        markets referred to in paragraphs (1) and (2) of subsection 
        (A), how other countries, if any--
                  (A) have established terrorism insurance structures;
                  (B) charge premiums or otherwise collect funds to pay 
                for the costs of terrorism insurance structures, 
                including risk and administrative costs; and
                  (C) have established capital reserve funds to pay for 
                the costs of terrorism insurance structures.
          (4) Duration.--With respect to the capital reserve fund 
        described in subsection (a)(2), how the duration of the Program 
        would affect the viability of such capital reserve fund.
  (c) Report.--Upon completion of the study required under subsection 
(a), the Comptroller General shall submit a report on the results of 
such study to the Committee on Banking, Housing, and Urban Affairs of 
the Senate and the Committee on Financial Services of the House of 
Representatives.
  (d) Public Availability.--The study and report required under this 
section shall be made available to the public in electronic form and 
shall be published on the website of the Government Accountability 
Office.

 TITLE II--NATIONAL ASSOCIATION OF REGISTERED AGENTS AND BROKERS REFORM

SEC. 201. SHORT TITLE.

  This title may be cited as the ``National Association of Registered 
Agents and Brokers Reform Act of 2014''.

SEC. 202. 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 fingerprints or other 
                        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 fingerprints or other 
                        identification information and criminal history 
                        record information, including the establishment 
                        of reasonable fees to defray the expenses of 
                        the Association in connection with the 
                        performance of a criminal history record check 
                        and appropriate safeguards for maintaining 
                        confidentiality and security of the 
                        information. Any fees charged pursuant to this 
                        clause shall be separate and distinct from 
                        those charged by the Attorney General pursuant 
                        to subparagraph (I).
                  ``(D) Form of request.--A submission under 
                subparagraph (C)(i) shall include such fingerprints or 
                other 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 fingerprints or other 
                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 not 
                more than $50,000 per violation as determined by a 
                court of competent jurisdiction.
                  ``(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, standards, 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 referred to 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 subparagraph (B) or (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 
2014.
  ``(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.''.

                          Purpose and Summary

    H.R. 4871, the TRIA Reform Act of 2014, extends the 
authorization for the Terrorism Risk Insurance Act (TRIA) 
through December 31, 2019. Originally enacted in 2002, TRIA 
established a temporary federal program that helped to maintain 
the availability of commercial property and casualty insurance 
and reinsurance for terrorism-related risks. As stated on 
Section 101 of the original legislation, the program was to be 
``a temporary Federal program that provides for a transparent 
system of shared public and private compensation for insured 
losses resulting from acts of terrorism, in order to--(1) 
protect consumers by addressing market disruptions and ensure 
the continued widespread availability and affordability of 
property and casualty insurance for terrorism risk; and (2) 
allow for a transitional period for the private markets to 
stabilize, resume pricing of such insurance, and build capacity 
to absorb any future losses, while preserving State insurance 
regulation and consumer protections.''
    H.R. 4871 builds upon those purposes and reforms the 
program to better protect taxpayers from the financial risks 
that TRIA poses. H.R. 4871 accomplishes three goals: it (1) 
strengthens taxpayer protections and encourages private market 
participation without curtailing the program's fundamental 
functions, (2) provides greater certainty and stability to the 
terrorism insurance market, and (3) prepares policymakers by 
realistically assessing the benefits and costs of the TRIA's 
current framework.
    To strengthen taxpayer protections and encourage private 
market participation, H.R. 4871 reduces the federal co-share 
for insured losses exceeding an insurer's deductible, from 85 
percent of insured losses today to 80 percent of insured losses 
by 2019. The co-share was last reduced in 2006, from 90 percent 
of insured losses in 2005 to 85 percent of insured losses. H.R 
4871 also reduces taxpayer exposure by increasing over several 
years the program trigger, or threshold of certified losses 
after which federal payments begin, for acts of terrorism that 
do not include nuclear, biological, radiological, and or 
chemical (NBCR) agents. Beginning in 2016, H.R 4871 increases 
the trigger from $100 million to $500 million, in $100 million 
annual increments. The trigger was last increased in 2007, from 
$50 million in 2006 to $100 million.
    To address concerns that the increased trigger could harm 
small insurers, H.R. 4871 authorizes the Secretary of the 
Treasury to develop a process through regulation and in 
consultation with state insurance regulatory authorities that 
permits small insurers to opt out of the federal statutory 
requirement to make available terrorism risk insurance. Small 
insurers may request to opt out if they can demonstrate 
financial hardship or financial infeasibility of providing 
coverage for insured losses.
    H.R. 4871 protects taxpayers by aligning the aggregate 
retention requirement with mandatory deductible amounts. Under 
current law, while individual insurers each are responsible for 
a deductible equal to 20 percent of their prior year's direct 
earned premiums before they can receive federal assistance 
through the co-share mechanism, the losses for the insurance 
industry as a whole are capped at $27.5 billion in any given 
program year. That amount, known as the insurance marketplace 
aggregate retention amount, has remained constant since 2007, 
when it was roughly equal to 20 percent of the industry's total 
amount of direct earned premiums collected for 2006. H.R. 4871 
sets the retention amount equal to the sum of the industry's 
deductibles, or 20 percent of the industry's direct earned 
premiums for the prior year, rather than a fixed number. 
Setting the retention amount in this way indexes it to the 
state of the insurance market, allowing the retention amount to 
increase or decrease in proportion to the total amount of 
premiums collected each program year.
    To provide greater certainty and stability to the market, 
H.R 4871 separates certified acts of terrorism into two 
categories: those that involve NBCR losses, which are 
inherently more difficult to model, and those that do not 
involve NBCR losses, for which the modeling is more developed. 
Because the modeling is less developed for the frequency and 
severity of NBCR events, H.R. 4871 retains the current program 
trigger of $100 million for acts of terrorism involving NBCR 
losses.
    H.R. 4871 also provides more certainty in the certification 
process by giving the Secretary of Treasury up to 90 days after 
an event to provide a final determination whether it met the 
definition of an act of terrorism under the program, and 
whether it involved NBCR losses. To further expedite the 
payment of claims, H.R. 4871 requires the Secretary to issue a 
preliminary certification notice within 15 days of an event 
indicting whether it is expected to meet the definition of an 
act of terrorism under the program. H.R. 4871 also removes the 
current limitation that an event must result in $5 million in 
insured losses to be certified as an act of terrorism, which 
will allow the Secretary to base certification on the 
motivation underpinning the event rather than its scope.
    To prepare policymakers by realistically assessing the 
benefits and costs of TRIA's current framework, H.R. 4871 
eliminates TRIA's payment timing budget gimmick and adopts more 
realistic financing requirements for the recoupment of federal 
payments made under TRIA. In its 2007 reauthorization of TRIA, 
Congress added Section 103(e)(7)(E) to TRIA as a budget gimmick 
to meet Pay-As-You-Go requirements that new spending not 
increase projected deficits. Section 103(e)(7)(E) established 
specific repayment schedules that required recoupment within a 
short period of time, which are generally acknowledged as 
unrealistic and unworkable. H.R. 4871 ends the use of that 
budget gimmick beginning in Program Year 2015. In its place, 
H.R. 4871 provides that when federal payments are subject to 
recoupment, recoupment must begin no later than 18 months after 
the event. H.R. 4871 also increases the assessment rate for 
terrorism loss risk-spreading premiums required for the 
mandatory recoupment of federal payments from 133 percent to 
150 percent of federal outlays. H.R. 4871 also requires that 
when terrorism loss risk-spreading premiums are used for the 
discretionary recoupment of federal payments, that they be not 
less than 3 percent of the annual premiums charged for property 
and casualty insurance coverage.
    H.R. 4871 authorizes the Secretary of Treasury to collect 
data to enable Congress to better understand the terrorism risk 
insurance market and to conduct an annual study of the impact 
of TRIA on small insurers. H.R. 4871 requires the Congressional 
Budget Office and the Office of Management and Budget to study 
the feasibility of applying accrual accounting concepts to 
TRIA. H.R. 4871 requires the General Accountability Office to 
study (1) the feasibility of collecting premiums from insurers 
using the TRIA program before a terrorist act or loss occurs; 
(2) the feasibility of developing a capital reserve fund, as 
originally envisioned by this Committee in 2005; and (3) other 
nations' practices for collecting premiums or creating capital 
reserve funds.
    Title II of H.R. 4871 amends the Gramm-Leach-Bliley Act to 
repeal the contingent conditions preventing the establishment 
of the National Association of Registered Agents and Brokers 
(NARAB). In its place, Title II establishes the NARAB as an 
independent nonprofit corporation to prescribe, on a multi-
state basis, licensing and qualification requirements for 
insurance agents and brokers. Title II is identical to H.R. 
1155, the National Association of Registered Agents and Brokers 
Reform Act of 2013, introduced by Rep. Randy Neugebauer and 
passed by the House on September 10, 2013.

                  Background and Need for Legislation

    Before the terrorist attacks of September 11, 2001, 
insurers considered the risk of significant terrorism-related 
damage to be so remote that they did not separately charge for 
coverage against terrorism risk, nor did they separately 
consider terrorism risk in underwriting property and casualty 
insurance. Instead, insurers generally covered losses resulting 
from terrorist acts under commercial property and casualty 
insurance policies. Complacency about terrorism risk, however, 
changed considerably following these attacks, which resulted in 
insurance companies paying out $31.6 billion (approximately 
$41.4 billion in current dollars, adjusted for inflation) in 
terrorism-related claims.
    After September 11, insurance and reinsurance companies 
began to view potential losses from terrorism as a new and 
significant risk for which they could not accurately model, 
given the uncertainty of the location, frequency, and severity 
of such acts. Without reliable insurance models, the potential 
cost of terrorism insurance skyrocketed, and many insurance and 
reinsurance companies began excluding terrorism coverage from 
their policies. These exclusions made terrorism coverage either 
unavailable or unaffordable for businesses and employers--some 
of whom were contractually or legally obliged to obtain it--
thus jeopardizing economic growth, particularly in large 
commercial centers.
    To fill this void, some industry participants and analysts 
advocated the creation of a temporary federal reinsurance 
program that would allow insurers to offer coverage for 
terrorism-related losses. Proponents of this federal 
reinsurance program argued that a temporary government backstop 
would give the insurance industry time to build accurate 
terrorism-risk models so that appropriately priced, privately-
backed coverage could again be made available.
    In response to these calls, Congress passed the Terrorism 
Risk Insurance Act of 2002 (Pub. L. No. 107-297), popularly 
known as TRIA, which established the Terrorism Risk Insurance 
Program, administered by the Treasury Department and designed 
to make terrorism insurance coverage more widely available. In 
2010, the Dodd-Frank Wall Street Reform and Consumer Protection 
Act (Pub. L. No. 111-203) established a Federal Insurance 
Office within the Treasury Department and instructed its 
Director to assist the Treasury Secretary in administering 
TRIA.
    Under the original temporary program, the federal 
government and the insurance industry share the risk of loss 
from terrorist attacks for three years, after which the program 
would expire. TRIA mandates that insurers participate in the 
program and requires that insurers make terrorism coverage 
available in all commercial property and casualty insurance 
policies; however, it does not require that businesses purchase 
terrorism coverage. To date, the federal government has never 
made a payment under TRIA because no terrorist attacks have 
taken place that meet TRIA's loss-sharing criteria.
    Congress originally designed TRIA as a temporary three-year 
federal backstop, with the expectation that the industry would 
eventually model and price for terrorism risk. In its November 
19, 2001 report for the 107th Congress on H.R. 3210, the 
Terrorism Risk Protection Act, the Financial Services Committee 
wrote:

          [t]he Committee believes that Congress must create 
        the temporary program established by this legislation 
        [H.R. 3210] to provide a bridge between today and the 
        time when the private market has developed the 
        mechanisms to provide terrorism risk coverage and 
        reinsurance at reasonable cost and sufficient levels. 
        The insurance industry in the past has demonstrated a 
        remarkable resiliency in adapting to changing 
        circumstances and, given time, will diversify and 
        spread risks in such a way that they will be able to 
        underwrite affordable terrorist risk insurance at a 
        profit. Until that time comes, however, the Federal 
        government can assist the industry by providing 
        liquidity and creating a short-term industry risk 
        spreading program.
          While there is a clear need to act to create this 
        bridge, it is essential that it is done while providing 
        the utmost protection for taxpayers.

    In late 2005, Congress passed the Terrorism Risk Insurance 
Extension Act (Pub. L. No. 109-144), which extended TRIA for 
two years, through December 31, 2007. Congress extended TRIA 
because it found that the private market for terrorism 
insurance had not recovered as quickly as expected. The 2005 
extension left much of the original TRIA program intact, but 
raised industry retention levels and reduced the insurance 
lines covered. For Program Year 2007, the act increased TRIA's 
program trigger to $100 million in aggregate industry losses 
and an individual insurer's deductible to 20 percent of 
premiums before the federal government shares 85 percent of the 
insured losses.
    Despite the 2005 extension--or as some critics have argued 
because of it--a private market for terrorism insurance failed 
to develop. In 2007, with TRIA scheduled to expire for a second 
time, Congress passed H.R. 2761, the Terrorism Risk Insurance 
Program Reauthorization Act of 2007 (Pub. L. No. 110-160). H.R. 
2761 extended the TRIA program for seven years, through 
December 31, 2014. The legislation failed to include any 
reforms that encouraged private markets to stabilize, resume 
pricing terrorism insurance, or build capacity to absorb future 
losses. Instead, the legislation held the program's trigger, 
deductible, and co-share amounts at their 2007 levels through 
2014. The legislation expanded TRIA, by adding domestic 
terrorism coverage to TRIA, which had previously covered only 
acts committed on behalf of a foreign person or interests. It 
also clarified TRIA's annual liability cap so that insurers 
were not responsible for losses exceeding $100 billion in any 
program year, and instituted the use of new budget gimmicks to 
affect the timing and amount of insurers' mandatory surcharge 
and recoupment amounts.
    TRIA's authorization will expire on December 31, 2014. 
Although the Financial Services Committee has received 
testimony that there remains much capacity within insurance and 
reinsurance industries to cover greater portions of terrorism 
risk, the failure to include any reforms in the 2007 
reauthorization have led many to believe that the industry has 
not yet developed the systems and products necessary for the 
terrorism-risk insurance market to function without a TRIA 
backstop.
    While there may currently be a need for a federal backstop 
against acts of terrorism that cannot be modeled and whose size 
significantly affects the economy, continuing the program in 
its current form raises several concerns. Some critics of the 
program have pointed out that the TRIA extensions have 
dramatically expanded a federal program that was supposed to be 
temporary. Others note that government-provided terrorism 
reinsurance under TRIA has inhibited the return of private-
sector terrorism insurance. And although the program has never 
been used, TRIA's potential post-event cost to taxpayers, which 
could total tens of billions of dollars or more, has also 
raised concerns.
    In September 19, 2013, testimony before the Financial 
Services Committee on TRIA, Dr. Gordon Woo, Catastrophist for 
Risk Management Solutions, stated that insurance companies have 
had time to adjust to the post-September 11 view of terrorism 
risk. Dr. Woo testified that:

          In 2002, when the Terrorism Risk Insurance Act (TRIA) 
        was introduced, and subsequently, when TRIA was 
        reauthorized in 2005 and 2007, some attention was given 
        to terrorism insurance risk models, but experience was 
        still too limited for them to be accorded much weight. 
        Now, in September 2013, with a doubling of experience 
        since 2001, terrorism insurance risk modeling has 
        attained a level of capability, validation and maturity 
        to make a more notable contribution to the discussion 
        over the future of TRIA.

    In its FY 2015 budget proposal, the Obama Administration 
called for ``programmatic reforms [to TRIA] to limit taxpayer 
exposure and achieve cost neutrality.'' The Administration's 
budget proposal endorsed several of the reforms in the TRIA 
Reform Act, including changes to ``the threshold for a 
certified terrorist event,'' and to ``the loss-sharing 
percentages for the Government and covered firms after the 
deductible is exceeded.'' Emphasizing the need for a market 
solution, the Administration's budget proposal stated that its 
objective over the longer term is a ``full transition of the 
program to the private sector.''
    The Obama Administration's calls for reforming TRIA are not 
new. The previous administration also called upon Congress to 
reform TRIA to strengthen taxpayer protections and encourage 
more private market participation. In a June 30, 2005 letter to 
the Financial Services Committee, then-Treasury Secretary John 
Snow wrote:

          [the] continuation of the program in its current form 
        is likely to hinder the further development of the 
        insurance market by crowding out innovation and 
        capacity building.
          Any extension of the program should recognize several 
        key principles, including the temporary nature of the 
        program, the rapid expansion of private market 
        development (particularly for insurers and reinsurers 
        to grow capacity), and the need to significantly reduce 
        taxpayer exposure. The administration would accept an 
        extension only if it includes a significant increase to 
        $500 million of the event size that triggers coverage, 
        increases the dollar deductibles and percentage co-
        payments.

    After fourteen years and two extensions, any further 
extension of the TRIA must include significant reforms that 
encourage the insurance industry to improve its modeling for 
acts of terrorism, to build its capacity to meet its financial 
obligations after an act of terrorism without government 
assistance, and to develop systems and products for a private 
terrorism insurance market that is not dependent on TRIA. H.R. 
4871, the TRIA Reform Act of 2014, furthers those goals and 
better protects taxpayers against the tens of billions of 
dollars of risk they now bear through the program.

                                Hearings

    The Committee on Financial Services did not hold hearings 
on H.R. 4871. The Committee did, however, hold two hearings on 
the subject of terrorism insurance--a full committee hearing 
entitled ``The Terrorism Risk Insurance Act of 2002'' on 
September 19, 2013; and a subcommittee hearing entitled ``The 
Future of Terrorism Insurance: Fostering Private Market 
Innovation to Limit Taxpayer Exposure'' on November 13, 2013.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
June 19-20, 2014 to consider H.R. 4871, ordering the same to be 
reported favorably to the House with an amendment on June 20 by 
a vote of 32 ayes to 27 nays.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
Those votes were as follows:
    1. An amendment in the nature of a substitute offered by 
Ranking Member Waters and Rep. Capuano to replace the bill's 
text with a 10-year clean reauthorization, and for other 
purposes, was not agreed to by a vote of 27 ayes to 31 nays 
(Recorded Vote No. 83).

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    2. The motion by Chairman Hensarling to report the bill 
favorably to the House with an amendment was agreed to by a 
vote of 32 ayes to 27 nays (Recorded Vote No. 84).

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                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has held hearings and 
made findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R 4871 
reforms and reauthorizes the Terrorism Risk Insurance Program 
and amends the Gramm-Leach-Bliley Act to repeal the contingent 
conditions preventing the establishment of the National 
Association of Registered Agents and Brokers (NARAB).

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                 Congressional Budget Office Estimates

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 15, 2014.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4871, the TRIA 
Reform Act of 2014.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie, 
who can be reached at 226-2860.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 4871--TRIA Reform Act of 2014

    Summary: H.R. 4871 would extend the Terrorism Risk 
Insurance Act (TRIA) for five years--through calendar year 
2019--and, in certain instances, increase the share of insured 
losses paid by private insurers under the program.\1\ The bill 
also would establish the National Association of Registered 
Agents and Brokers (NARAB) and authorize it to license 
producers of insurance (mostly agents and brokers) to operate 
in multiple states. Finally, the bill would require several new 
studies of various aspects of the terrorism insurance program.
---------------------------------------------------------------------------
    \1\The Terrorism Risk Insurance Act, Public Law 107-297, was 
enacted on November 2, 2002. It was extended on December 22, 2005, upon 
enactment of the Terrorism Risk Insurance Extension Act of 2005 (P.L. 
109-144). On December 26, 2007, the Terrorism Risk Insurance Program 
Reauthorization Act of 2007 (P.L. 110-160) extended the program again. 
In this estimate, CBO refers to the original Act as subsequently 
amended, as TRIA.
---------------------------------------------------------------------------
    Considering both the direct spending and revenue effects of 
the bill, CBO estimates that enacting H.R. 4871 would increase 
budget deficits by about $500 million over the 2015-2024 
period. Changes in federal revenues and spending, however, 
would continue beyond 2024; CBO estimates that after taking 
into account all revenues and direct spending, enacting H.R. 
4871 would lead to a small reduction in deficits over time.
    Title I would reauthorize the TRIA program, which requires 
insurance firms that sell commercial property and casualty 
insurance to offer clients insurance coverage for damages 
caused by terrorist attacks by foreign or domestic interests.
    Under TRIA, the federal government would help insurers 
cover losses in the event of a terrorist attack under certain 
conditions, and would impose assessments on the insurance 
industry to recover all or a portion of any federal payments. 
The program is currently set to expire at the end of calendar 
year 2014; no federal payments have been made under the program 
since its inception in 2002.
    There is no reliable way to predict how much insured damage 
terrorists might cause, if any, in any year. Rather, CBO's 
estimate of the cost of financial assistance provided under the 
bill represents an expected value of payments from the 
program--a weighted average that reflects industry experts' 
opinions of the probability of various outcomes ranging from 
zero damages up to very large damages resulting from possible 
future terrorist attacks. The expected value can be thought of 
as the amount of an insurance premium that would be necessary 
to just offset the government's expected losses from providing 
this insurance, although firms do not pay any upfront premium 
for the federal assistance available under TRIA.
    Title II of H.R. 4871 would establish the NARAB; it would 
allow insurance producers who join the organization to obtain a 
license to act as a producer in any state other than their home 
state by meeting the NARAB's eligibility requirements and 
paying certain fees.
    CBO estimates that enacting the bill would increase direct 
spending for federal assistance under TRIA and spending by the 
NARAB by $3.0 billion over the 2015-2024 period.
    CBO estimates that enacting H.R. 4871 also would increase 
revenues. The bill would direct the Department of the Treasury 
to recoup some or all of the costs of providing financial 
assistance under TRIA through taxes imposed on certain 
insurance policyholders. CBO expects that spending for 
financial assistance to insurers would be offset (on a cash 
basis) by an increase in revenues. In addition, the bill would 
authorize the NARAB to charge fees to cover the cost of 
operating the organization. Taken together, CBO estimates that 
enacting H.R. 4871 would increase revenues by $2.5 billion over 
the 2015-2024 period, net of income and payroll tax offsets.\2\
---------------------------------------------------------------------------
    \2\When excise taxes and other types of ``indirect'' taxes are 
imposed on goods and services, they tend to reduce income for workers 
or business owners in the taxed industry and others throughout the 
economy. Consequently, revenue derived from existing ``direct'' tax 
sources--such as individual and corporate income taxes and payroll 
taxes--will also be reduced. To approximate that effect, CBO and the 
staff of the Joint Committee on Taxation apply an offset when 
estimating the net revenue that legislation imposing some form of 
indirect tax is expected to generate. The amount of the offset ranges 
from 25.2 percent in 2015 to 26.2 percent in 2024.
---------------------------------------------------------------------------
    Enacting the legislation would lead to additional spending 
of $250 million and additional revenues of $1 billion after 
2024, CBO estimates. Thus the estimated net budgetary savings 
after 2024 would be slightly larger than the estimated net 
budgetary cost between 2015 and 2024.
    The bill would impose intergovernmental and private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
by extending and expanding some requirements on insurers and 
policyholders, including the payment of surcharges. State, 
local, or tribal governments could be required to pay a 
surcharge as purchasers of property and casualty insurance, but 
CBO estimates that the aggregate cost to public entities of 
complying with those mandates would probably fall below the 
annual threshold established in UMRA ($76 million for 
intergovernmental mandates in 2014, adjusted annually for 
inflation). CBO estimates that the aggregate cost to private 
insurers and policyholders to comply with those mandates would 
exceed UMRA's annual threshold for private-sector mandates 
($152 million in 2014, adjusted annually for inflation) in each 
year policyholders pay a surcharge.
    Estimated cost to the Federal Government: The estimated 
budgetary effect of H.R. 4871 is shown in the following table. 
We estimate that enacting the bill would increase direct 
spending by $3.0 billion and increase revenues by $2.5 billion 
over the 2015-2024 period. The costs of this legislation fall 
within budget function 370 (commerce and housing credit).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             By fiscal year, in millions of dollars--
                                         ---------------------------------------------------------------------------------------------------------------
                                            2015     2016     2017     2018     2019     2020     2021     2022     2023     2024   2015-2019  2015-2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              CHANGES IN DIRECT SPENDING\a\
Title I--TRIA Reform:
    Estimated Budget Authority..........      120      280      380      440      480      360      210      120       80       60     1,700      2,530
    Estimated Outlays...................      120      280      380      440      480      360      210      120       80       60     1,700      2,530
Title II--NARAB Reform:
    Estimated Budget Authority..........        1        2       55       56       58       60       63       66       68       68       172        497
    Estimated Outlays...................        1        1       49       56       58       60       63       65       69       69       165        491
Total Changes in Direct Spending:
    Estimated Budget Authority..........      121      282      435      496      538      420      273      186      148      128     1,873      3,027
    Estimated Outlays...................      121      281      429      496      538      420      273      186      148      128     1,865      3,020

                                                                   CHANGES IN REVENUES

Title I--TRIA Reform....................        0       40      100      160      220      290      310      300      300      300       520      2,020
Title II--NARAB Reform..................        1        2       55       56       58       60       63       65       69       69       172        497
                                         ---------------------------------------------------------------------------------------------------------------
    Total Changes in Revenues...........        1       42      155      216      278      350      373      366      368      368       693      2,518

                                NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUES

Effect on the Deficit...................      120      239      274      280      260       70     -100     -180     -220     -240     1,173       503
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: TRIA = Terrorism Risk Insurance Act; NARAB = National Association of Registered Agents and Brokers.
        Components may not sum to totals because of rounding.
\a\CBO also estimates that implementing H.R. 4871 would increase discretionary costs by $2 million over the 2015-2019 period.

    Basis of estimate for Title I (TRIA): Title I would extend 
the TRIA program for five years, through December 31, 2019. CBO 
estimates that enacting the extension would increase direct 
spending by $2.5 billion and revenues by $2.0 billion over the 
2015-2024 period. While this estimate reflects CBO's best 
judgment on the basis of available information, the cost of the 
TRIA program is a function of inherently unpredictable future 
terrorist attacks. As such, actual costs are likely to vary 
significantly from the estimated amounts. Such costs could be 
either higher or lower than the expected-value estimates 
provided for each year.

Terrorism Risk Insurance Act under current law

    The Terrorism Risk Insurance Act provides financial 
assistance to commercial property and casualty insurers for 
losses above certain thresholds (illustrated in Figure 1 on the 
next page) caused by terrorist attacks by individuals acting on 
behalf of foreign or domestic interests. For such assistance to 
be provided, the Secretary of the Treasury must certify that a 
terrorist attack has occurred in the United States or other 
specified locations. TRIA is set to expire on December 31, 
2014.
    TRIA does not require commercial property and casualty 
insurance policies to cover losses from terrorist attacks 
involving nuclear, biological, chemical, or radioactive (NBCR) 
materials. If, however, an insurer and a policyholder choose to 
include losses from terrorist attacks involving NBCR materials 
in such a policy, TRIA would cover a portion of the losses 
resulting from such attacks.
    For the Secretary of the Treasury to certify a terrorist 
attack, insured damages resulting from the attack must exceed 
$5 million. Financial assistance becomes available to insurers 
suffering losses from a certified attack once the insurers 
suffering losses have aggregate insured losses from an attack 
that exceed $100 million. Once that threshold is met, insurance 
companies that suffer losses are responsible for paying claims 
up to a deductible amount that equals 20 percent of the 
premiums they collected for certain lines of insurance in the 
calendar year preceding a certified attack. The total amount of 
deductibles paid by insurers would depend on the amount of 
losses from an attack and the particular insurers involved.
    After meeting their individual deductibles for damage 
claims, insurers that suffered losses and the federal 
government would each pay a portion of the losses above the 
deductible (in 2014, the federal government would pay 85 
percent of insured losses and individual insurers would pay 15 
percent) up to total losses of as much as $100 billion. The law 
does not specify how any claims above the $100 billion cap 
would be paid.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The Secretary of the Treasury is authorized to recover 
payments made by the federal government through taxes in the 
form of surcharges paid by all purchasers of commercial 
property and casualty insurance. The Secretary is required to 
recoup any federal payments made to cover losses, but only if 
those recoveries plus other amounts paid by directly affected 
insurers do not exceed $27.5 billion--known as the retention 
amount. If insured losses from a terrorist attack are large 
enough that insurers pay more than the industry retention 
amount, the Secretary would not be required to recoup any 
federal payments. The program provides the Secretary with 
authority, however, to recover federal payments in that 
instance after considering the ultimate cost to taxpayers, 
economic conditions, and the affordability of commercial 
insurance.

Modifications to TRIA under H.R. 4871

    H.R. 4871 would extend TRIA for five years, through 
December 31, 2019. The bill also would make changes in program 
parameters that would increase the share of insured losses 
paid, in certain instances, by private insurers in the event of 
an attack.
    The bill would make changes to the program trigger, that 
is, the level of aggregate insured losses from a certified 
attack that must be incurred before insurers would become 
eligible for federal assistance. For losses resulting from an 
attack using nuclear, biological, chemical or radiological 
(NBCR) materials, the current-law level, $100 million, would be 
retained for the term of the program. For losses incurred from 
an attack using conventional (or non-NBCR) materials, however, 
the trigger would increase incrementally from $100 million in 
calendar year 2015 to $500 million in calendar year 2019, the 
last year the program would be in effect under H.R. 4871.
    As under current law, an insurer suffering losses as a 
result of a certified attack would pay claims up to a specified 
deductible. The bill would retain the same deductible limits as 
in current law: 20-percent of certain premiums collected in the 
year preceding an attack.
    H.R. 4871 also would continue the payment-sharing process 
that exists under current law. Affected insurers and the 
federal government would each pay a portion of the losses over 
the deductibles up to the $100 billion limit for the program. 
However, the bill would establish different sharing rates for 
losses depending on the materials used in the attack. 
Currently, the federal government would cover 85 percent of 
covered losses above the deductible. Under the bill, in the 
case of an NBCR attack, the federal government's share would 
remain at 85 percent of covered losses through the expiration 
of the program. In the case of an attack using conventional 
materials, however, that rate would decrease incrementally from 
85 percent of covered losses in calendar year 2015 to 80 
percent of covered losses in calendar year 2019.
    Finally, H.R. 4871 would change the industry retention 
amount the limit used to calculate the amount of federal 
spending that would be recovered from policyholders--from a 
flat amount, $27 billion in 2015, to an amount equal to the sum 
of the deductibles for all insurers participating in the 
program during the year of the loss. (CBO estimates that amount 
would be about $44 billion in 2016.)

Direct spending for TRIA

    By extending financial assistance to certain commercial 
insurers for losses from future acts of terrorism against 
insured private property, enacting H.R. 4871 would expose the 
federal government to potentially large liabilities for five 
more years (2015 through 2019). For any particular year, the 
amount of insured damage caused by terrorists could range from 
zero to many billions of dollars. CBO's estimate of the cost of 
this program reflects how much, on average, the government 
could be expected to pay to insurers and recover from the 
industry over the 2015-2024 period.
    The following sections describe our method for estimating 
the expected value of financial assistance under the bill and 
explain how we convert that cost to estimates of annual federal 
expenditures.
    Estimating the Expected Cost of Federal Assistance. For 
this estimate, CBO discussed the process of estimating insured 
losses with industry actuaries and reviewed models used by 
firms to set premiums for the terrorism component of property 
and casualty insurance that they offer. State insurance 
regulators generally require such premiums to be grounded in a 
widely accepted model of expected losses from covered events. 
After the terrorist attacks on September 11, 2001, the 
insurance industry began efforts to set premiums for insurance 
coverage for terrorist events using such models.
    Although estimating losses associated with terrorist events 
is difficult because of the lack of meaningful historical data, 
the insurance industry has experience setting premiums for 
other catastrophic events namely, natural disasters. Setting 
premiums for hurricanes and earthquakes, for example, involves 
determining areas that could sustain damage, the value of the 
losses that could result from various types of events with 
different levels of severity, and the frequency of such events.
    Similarly, estimating premiums for losses resulting from 
terrorist attacks involves judgments regarding potential 
targets and the frequency of potential attacks. Because there 
is a very limited history of terrorist attacks in the United 
States, many of the parameters needed by the insurance industry 
to set premiums are based on expert opinion regarding terrorist 
activities and capabilities as well as information about 
attempted attacks that were not successful.
    Estimating Potential Insured Losses. Based on discussions 
with insurers and information provided by the insurance 
industry, CBO estimates that the expected or average annual 
loss subject to TRIA coverage under the bill would be about 
$2.1 billion (in 2014 dollars); of that amount, $1.5 billion 
would account for losses caused by attacks using conventional 
materials and $650 million would be for losses caused by 
attacks using NBCR materials. This estimate incorporates 
industry expectations of the probabilities of terrorist 
attacks, encompassing the possibility of attacks that result in 
enormous loss of life and property damage, as well as a 
significant likelihood that no such attacks would occur in any 
given year. This estimate also reflects our expectation that 
some portion of losses from terrorism would not be covered by 
TRIA because some policyholders choose not to purchase 
insurance coverage for terrorism risks.
    CBO's estimate incorporates an expectation that, in most 
years, losses from terrorist attacks covered by TRIA would cost 
significantly less than $2.1 billion. We expect that there is a 
significant chance that no terrorist attacks covered by TRIA 
would occur in a given year. Since enactment of TRIA, no 
covered events have occurred, though several attempts were 
prevented by law enforcement and other security measures. 
Although the risk of a terrorist attack with many lives lost 
and substantial property damage still remains, based on 
industry models, CBO assumes for this estimate that attacks 
causing losses similar in scale to those sustained on September 
11, 2011, in New York City are likely to occur very rarely, if 
at all.\3\
---------------------------------------------------------------------------
    \3\Based on information from the Insurance Information Institute, 
we estimate that industry losses on September 11, 2001, totaled about 
$44 billion (in 2014 dollars), including about $35 billion in losses 
that would have qualified for coverage under TRIA had the law been in 
effect on that date.
---------------------------------------------------------------------------
    Under current law, insurers are not required to offer 
coverage for attacks using NBCR materials, although if an 
insurer and a policyholder voluntarily agree to include this 
coverage in a property and casualty policy, TRIA would cover 
some of those losses. While the bill would not require property 
and casualty policies to include coverage for losses resulting 
from attacks using NBCR materials, information provided by the 
industry indicates that a small amount of coverage is currently 
in place for such losses. Thus, under the bill, the 
government's exposure to losses resulting from terrorist 
attacks involving NBCR materials would likewise be small 
compared with losses resulting from attacks using conventional 
materials. The only exception is in the workers' compensation 
insurance line, where no exclusions for specific causes are 
allowed.
    Determining the Federal Share of Insured Losses. Federal 
payments under TRIA would be lower than the total expected 
losses from terrorist attacks because TRIA places limits on 
eligibility for federal assistance and requires that insurers 
that suffer losses as the result of a certified attack pay a 
share of covered losses. CBO took account of those requirements 
to estimate federal spending for any given amount of insured 
losses from future terrorist attacks.
         Upper and lower limits for federal assistance. 
        Because federal payments under TRIA would be capped at 
        $100 billion per event, we excluded costs for potential 
        losses above that level.
         Similarly, H.R. 4871 would set a minimum level 
        of aggregate insured losses that must be incurred 
        before insurers become eligible for financial 
        assistance. Those minimum levels would depend on the 
        materials used in a certified attack. If conventional 
        materials were used, the minimum level of losses would 
        increase each year of the authorization from $100 
        million in 2015 to $500 million in 2019. For attacks 
        using NBCR materials, that minimum level would remain 
        at $100 million each year. For this estimate, we 
        excluded losses below the appropriate minimum level as 
        well.
         Insurers' deductibles. Before the federal 
        government would make any payments under TRIA, an 
        insurer incurring losses would first pay claims up to a 
        deductible amount. H.R. 4871 would maintain the 
        current-law deductible of 20 percent of premiums on 
        certain property and casualty lines collected by 
        affected insurers in the calendar year preceding an 
        attack.
         The total amount of the deductibles could range from a 
        few million dollars to several billion dollars, 
        depending on how many insurers provide coverage for 
        losses resulting from a particular terrorist attack. In 
        addition, the value of each individual insurer's 
        deductible would vary greatly across the industry. For 
        this estimate, CBO considered a range of possibilities 
        regarding the share of federal assistance, using 
        industry data to estimate insurers' deductibles under 
        the bill. The range encompasses the possibility that an 
        attack would affect only a few insurers with relatively 
        small deductibles or several insurers with relatively 
        large deductibles. CBO expects that insured losses 
        below a few hundred million dollars for attacks using 
        either conventional or NBCR materials would most likely 
        be covered by insurers' deductibles, and therefore, 
        would not result in a significant increase in federal 
        spending.
          Shared payments if losses exceed insurers' 
        deductibles. Once affected insurers have paid claims up 
        to their deductibles, the federal government would 
        share a portion of the losses above the deductibles. 
        Under H.R. 4871, the federal government's share of 
        claims above the deductible for losses from 
        conventional attacks would fall from the current level 
        of 85 percent of total losses to 80 percent, up to the 
        $100 billion limit covered by the program, by 2019. For 
        losses incurred in attacks using NBCR materials, the 
        federal government's share of amounts above the 
        deductible would remain at 85 percent, up to the $100 
        billion limit, for the full term of the program.
    After taking into account minimum and maximum limits, 
deductibles, and the insurers' share of payments above the 
deductibles, CBO estimates that enacting title I would increase 
direct spending in total by $2.8 billion (but a portion of that 
estimated spending would occur after 2024, as noted below). 
That amount translates into an average of roughly $560 million 
for each of the five years for which the program would be 
extended. Actual spending would be spread out over many years, 
and those costs would be recovered through surcharges imposed 
on policyholders (which are discussed in the section on 
revenues below).
    Taken another way, if the Secretary of the Treasury were 
authorized to collect premiums for the program, CBO estimates 
that the Secretary would need to charge, on average, about $560 
million per year (for five years) to offset the government's 
projected losses under the bill. The bill, however, would not 
authorize any charges prior to a certified attack. The bill 
also does not contain an explicit requirement for the Secretary 
to recoup interest that would accrue on amounts outstanding.
    Timing of Federal Spending. To estimate federal spending 
for this program on a cash basis, CBO used information from 
insurance experts on historical rates of payment for property 
and casualty claims following catastrophic events. Based on 
such information, CBO estimates that outlays under title I 
would total about $2.5 billion over the 2015-2024 period and 
about $250 million after 2024. In general, following a 
catastrophic loss, it takes many years to complete insurance 
payments because of disputes over the value of covered losses 
by property and business owners. Under this bill, we expect 
that financial assistance to insurers would be paid over 
several years, with most of the spending occurring within the 
first five years following a certified event.

Revenues for TRIA

    Enacting title I would affect federal revenues by 
authorizing the Secretary of the Treasury to impose taxes in 
the form of surcharges on all holders of property and casualty 
insurance policies to recover the amount of federal payments 
made under the program, with certain limitations. CBO estimates 
that this provision would increase revenues by $2.0 billion 
over the 2015-2024 period and an additional $1 billion after 
2024.
    Surcharges. If a terrorist attack were to trigger 
government payment of financial assistance, the bill would 
require the Secretary of the Treasury to recoup some or all of 
that cost through taxes paid by purchasers of commercial 
property and casualty insurance. The calculation of the amount 
to be recouped would continue as under current law for the 
first year of the reauthorization (2015). Starting in calendar 
year 2016, the bill would direct the Secretary to recoup all 
federal assistance paid to affected insurers up the industry 
retention amount, which would be set at the deductible amount 
for all insurers participating in the program (about $44 
billion in 2016, CBO estimates.)
    If insured losses from a terrorist attack are large enough 
that federal assistance exceeds the industry retention amount, 
the Secretary would not be required to recoup that excess 
federal assistance--although the Secretary could choose to do 
so. In that case, the amount the Secretary would collect would 
be based on economic conditions, the affordability of 
commercial insurance, and the cost to taxpayers of no 
additional recoupment. CBO expects that the Secretary would not 
seek to recover financial assistance provided above the 
industry retention amount and would not collect interest on 
outstanding amounts.
    The recoupment of financial assistance would be 
accomplished by assessing a surcharge on premiums for property 
and casualty insurance policies and would apply to policies in 
force following a terrorist attack that necessitated federal 
assistance. The amount to be recovered would be 150 percent of 
the difference between the industry retention amount and the 
Secretary's estimate of the total amount paid by insurers for 
deductibles and their share of payments over the deductibles. 
CBO estimates that surcharges resulting from a five-year 
extension of TRIA would total, on an expected-value basis, $2.8 
billion over the 2015-2024 period.
    Timing and Tax Offset. The bill would direct the Secretary 
to begin collection of the surcharge in cases where a surcharge 
would be imposed--no later than 18 months after an attack. CBO 
assumes that such surcharges would be fully collected over 10 
years, with collections starting in the first year after a 
certified attack.
    The gross revenue collections would be partially offset by 
a loss of revenues from income and payroll taxes. Consistent 
with standard procedures for estimating the revenue impact of 
indirect business taxes, CBO reduced the gross revenue impact 
of the insurance surcharges to reflect offsetting effects on 
income and payroll tax receipts. On balance, CBO estimates that 
enacting title I would increase revenues by a total of $2.0 
billion over the 2015-2024 period, net of income and payroll 
tax offsets.

Spending subject to appropriation for TRIA

    Title I also would direct several agencies to prepare 
reports on various issues related to the TRIA program. Spending 
to complete those reports would be subject to the availability 
of appropriated funds. Specifically:
           The Congressional Budget Office and the 
        Office of Management and Budget each would be required 
        to determine the feasibility of applying accrual 
        accounting concepts to budgeting for the costs of TRIA 
        and other insurance programs administered by the 
        federal government; and
           The Government Accountability Office would 
        be required to assess the viability of collecting 
        upfront premiums from insurers that participate in the 
        TRIA program and creating a reserve fund under the 
        program where participating insurers would be able to 
        dedicate capital for terrorism losses.
    CBO estimates that implementing the new reporting 
requirements would cost about $2 million over the 2015-2019 
period to complete the required studies and reports.
    Basis of estimate for Title II (NARAB): CBO believes that 
cash flows related to the National Association of Registered 
Agents and Brokers that would be created under the bill should 
be recorded in the budget as revenues and direct spending 
because the association's authority would exist only through a 
preemption of states' power to regulate the licensing of 
insurance producers. This preemption would stem from an 
exercise of the sovereign power of the federal government.

Direct spending for NARAB

    Under H.R. 4871, the NARAB would be responsible for 
establishing eligibility requirements for membership in the 
association, evaluating applicants' eligibility for membership, 
and managing license requirements for members. Title II would 
direct the NARAB to establish separate classes of membership 
for businesses and individuals and require members to meet 
certain continuing education requirements.
    H.R. 4871 would authorize the NARAB to create a database to 
centralize information about regulatory actions taken by states 
regarding insurance producers. The bill would allow two years 
from the date of enactment for the association to set up 
operations. During that time, the NARAB would be authorized to 
borrow funds from the public to cover start-up costs, which 
would be repaid from membership fees.
    Based on information about the cost to operate similar 
professional organizations, CBO estimates that enacting title 
II would increase direct spending by $491 million over the 
2015-2024 period to cover start-up, staffing, and operating 
costs of the organization.

Revenues for NARAB

    H.R. 4871 would authorize the NARAB to charge fees to 
members to cover the cost of operating the organization. CBO 
assumes that the NARAB would use its authority to borrow funds 
to organize and begin its operations before membership fees 
could be collected, but revenues would keep pace with outlays 
beginning in 2015. CBO estimates that collecting those fees 
would increase revenues by $497 million over the 2015-2024 
period.

Spending subject to appropriation for NARAB

    Title II would require the Department of Justice to 
establish regulations to implement a requirement that members 
of NARAB undergo a background check conducted by the Attorney 
General. The NARAB would be authorized to collect fees, which 
would be remitted to the Department of Justice, for those 
background checks. We expect that those fees would be 
classified as offsetting collections and would be credited to 
the salaries and expenses appropriation of the Federal Bureau 
of Investigation (FBI). This is the same budgetary treatment 
accorded fees currently collected by the FBI for similar 
purposes.
    We estimate that collecting and spending the fees for 
background checks authorized under title II would have no 
significant net effect on discretionary spending in any year.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays and revenues that are 
subject to those pay-as-you-go procedures are shown in the 
following table.

         CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 4871, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON FINANCIAL SERVICES ON JUNE 20, 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         By fiscal year, in millions of dollars--
                                ------------------------------------------------------------------------------------------------------------------------
                                   2014     2015     2016     2017     2018     2019     2020     2021     2022     2023     2024   2014-2019  2014-2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       NET INCREASE OR DECREASE (-) IN THE DEFICIT

Statutory Pay-As-You-Go Effect.        0      120      239      274      280      260       70     -100     -180     -220     -240     1,173        503
Memorandum:
    Changes in Outlays.........        0      121      281      429      496      538      420      273      186      148      128     1,865      3,020
    Changes in Revenues........        0        1       42      155      216      278      350      373      366      368      368       693      2,518
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: H.R. 4871 
would impose intergovernmental and private-sector mandates, as 
defined in the Unfunded Mandates Reform Act, by extending and 
expanding requirements contained in the Terrorism Risk 
Insurance Act. Those mandates would:
           Require property and casualty insurers to 
        offer terrorism insurance;
           Require property and casualty insurers to 
        collect and report information about terrorism 
        insurance policies; and
           Require, under certain circumstances, 
        property and casualty insurers to collect surcharges 
        from policyholders in amounts large enough to pay 
        assessments to the federal government.
    The bill also would impose intergovernmental mandates by 
preempting state laws and by requiring state insurance 
regulators to report on the results of insurance 
investigations.
    State, local, or tribal governments could be required to 
pay a surcharge as purchasers of property and casualty 
insurance, but CBO estimates that the aggregate costs to public 
entities of complying with all of the mandates contained in the 
bill would fall below the annual threshold established in UMRA 
($76 million in 2014 for intergovernmental mandates, adjusted 
annually for inflation). CBO estimates that the aggregate cost 
to private insurers and policyholders to comply with the 
mandates would exceed the annual threshold established in UMRA 
($152 million in 2014 for private-sector mandates, adjusted 
annually for inflation) beginning in 2018.

Mandates that apply to public and private entities

    Requirement to Offer Insurance. Current law (through 2014) 
requires that insurance companies offer terrorism insurance as 
a part of their property and casualty policies. Insurers may 
set their own premium rates, and policyholders can choose 
whether to purchase such insurance. The bill would extend the 
requirement to offer terrorism insurance through 2019. 
According to industry representatives, the cost to public and 
private insurers of continuing to offer such insurance would be 
minimal.
    Requirement to Collect and Report Information. The bill 
would require property and casualty insurers to collect and 
report information to the federal government regarding their 
insurance coverage for terrorism losses (including information 
about lines of insurance with exposure to such losses; premiums 
earned on such coverage; geographical location of exposures; 
and pricing of such coverage). Based on information from 
insurers, CBO estimates that the cost to public and private 
entities of complying with the mandate would amount to tens of 
millions of dollars annually.
    Repayment of Assistance. Insurers that offer terrorism 
insurance would receive financial assistance to cover losses 
under some conditions in the event of a certified terrorist 
attack. The bill would extend and expand the requirement that 
the federal government recoup the costs of such financial 
assistance through assessments on the insurers and surcharges 
on purchasers of property and casualty insurance. On average, 
policyholders would be required to pay a higher amount in 
surcharges under the bill in the event of a certified terrorist 
attack as compared to the amount they would have to pay under 
current requirements. The requirement to repay the federal 
government would be both an intergovernmental and a private-
sector mandate under UMRA since state and local governments and 
private entities are both providers and purchasers of 
insurance.
    The cost to insurers to comply with the mandate to 
administer the surcharges on policyholders and remit the 
amounts collected to the federal government would be small.
    CBO estimates that insurer surcharges would total about 
$715 million over the 2015-2019 period. That amount is equal to 
federal benefits paid over those years plus 50 percent of those 
benefits (see the section on Revenues for TRIA, above, for 
further discussion). Based on information about the purchase of 
various types of insurance by public entities, CBO judges that 
state, local, and tribal governments comprise a small portion 
of the total market for property and casualty insurance. To the 
extent that state, local, or tribal governments would be 
required to pay a surcharge as policyholders, CBO estimates 
that the aggregate cost to public entities of complying with 
the mandate would total about $60 million over the 2015-2019 
period. CBO estimates that the aggregate amount of surcharges 
paid by private entities would total about $655 million over 
the 2015-2019 period.

Mandates that apply to public entities only

    H.R. 4871 would prohibit states from requiring producers 
that are members of the National Association of Registered 
Agents and Brokers to register with secretaries of state, meet 
state licensing requirements, complete education requirements, 
or be bonded. The bill also would require state insurance 
regulators to notify the NARAB of the results of complaint 
investigations.
    Under current law, about 10 states require nonresident 
producers to register with their respective secretaries of 
state, and to pay fees. The bill would prohibit states from 
imposing this requirement and from collecting such fees. Based 
on the number of producers that are currently registered in 
states that impose that requirement, CBO estimates that the 
states would lose less than $1 million in fee revenue in 2017 
and each year thereafter. We also estimates that the cost to 
states for the licensing, education, bonding, and notification 
requirements would be minimal. The bill also would preempt some 
state laws that regulate insurance. Based on information from 
state insurance regulators, CBO estimates that the cost to 
states of extending those preemptions would be minimal.
    Previous CBO estimates: On June 24, 2014, CBO transmitted a 
cost estimate for S. 2244, the Terrorism Risk Insurance Program 
Reauthorization Act of 2014, as ordered reported by the Senate 
Committee on Banking, Housing, and Urban Affairs on June 23, 
2014. Title I of H.R. 4817 and S. 2244 would extend 
authorization for TRIA for a different length of time and 
change the program's parameters in different ways; the CBO cost 
estimates reflect the differences between the two bills.
    On June 13, 2013, CBO transmitted a cost estimate for S. 
534, the National Association of Registered Agents and Brokers 
Reform Act of 2013, as ordered reported by the Senate Committee 
on Banking, Housing, and Urban Affairs on June 6, 2013. The 
provisions of title II of H.R. 4817 and S. 534 are similar, as 
are the CBO cost estimates.
    Estimate prepared by: Federal costs: Susan Willie, David 
Torregrosa, Perry Beider, and Kevin Perese; Impact on state, 
local, and tribal governments: Melissa Merrell; Impact on the 
private sector: Amy Petz and Tristan Hanon.
    Estimate approved by: Peter H. Fontaine, Assistant Director 
for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of the section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 4871 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                    Duplication of Federal Programs

    Pursuant to section 3(j) of H. Res. 5, 113th Cong. (2013), 
the Committee states that no provision of H.R. 4871 establishes 
or reauthorizes a program of the Federal Government known to be 
duplicative of another Federal program, a program that was 
included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance.

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(k) of H. Res. 5, 113th Cong. (2013), 
the Committee states that H.R. 4871 contains no directed 
rulemaking.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This bill may be cited as the ``TRIA Reform Act of 2014.''

                          TITLE I--TRIA REFORM


Section 101. References

    Clarifies that all amendments contained in this bill refer 
to the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 
note).

Section 102. Extension of program

    Extends the Terrorism Risk Insurance Program for five years 
through December 31, 2019.

Section 103. Certification of acts of terrorism

    Beginning on January 1, 2015, requires the Treasury 
Secretary, when deciding whether to certify an ``act of 
terrorism,'' to consult with the Secretary of Homeland Security 
and the Attorney General of the United States. Requires the 
Secretary to issue a preliminary certification within 15 days 
after an event followed by a final determination within 90 days 
to certify an event as an act of terrorism. This section also 
removes the $5 million threshold for certifying acts of terror.

Section 104. Separate treatment of conventional terrorism from NBCR 
        Terrorism

     Bifurcation of the definition of ``act of 
terrorism''
    Beginning on January 1, 2016, for each event certified as 
an act of terrorism, the Treasury Secretary shall include a 
determination whether the event does or does not involve 
Nuclear, Biological, Chemical, or Radiological (NBCR) 
terrorism.
     Federal Share of Insured Losses (Co-Pay)
    Beginning on January 1, 2016, annually reduces the federal 
share of payments for non-NBCR acts of terrorism to 80 percent 
of insured losses by 2019. For acts involving NBCR terrorism, 
the federal share of payments would remain at 85 percent of 
insured losses.
     Program Trigger
    Beginning January 1, 2016, increases the program trigger 
for non-NBCR acts of terrorism by $100 million per year up to 
$500 million by January 1, 2019. For acts involving NBCR 
terrorism, the program trigger would remain at $100 million. 
For purposes of determining if industry losses have exceeded 
the trigger, the Treasury Secretary shall not include acts 
resulting in $50 million or less in insured losses.

Section 105. Availability of coverage

    Requires the Treasury Secretary to promulgate regulations 
to allow small insurers to voluntarily opt-out of TRIA's 
mandatory availability requirement if their state regulator 
determines continued participation by such insurer would create 
a financial hardship or that it would be financially infeasible 
for the insurer to provide coverage for insured losses.

Section 106. Terrorism loss risk-spreading premiums amount

    Beginning on January 1, 2016, increases the amount that the 
Treasury Secretary is required to collect through terrorism 
loss risk-spreading premiums from 133 to 150 percent of the 
federal payments made subject to mandatory recoupment.

Section 107. Increase of aggregate retention amount

    Beginning on January 1, 2016, increases the insurance 
marketplace aggregate retention amount to equal the sum of 
insurer deductibles for the preceding program year for all 
participating insurers. Clarifies that the amount of federal 
payments subject to mandatory recoupment shall be equal to the 
lesser of the total of federal payments made or the insurance 
marketplace aggregate retention amount.

Section 108. Terrorism loss risk-spreading premium

    Beginning on January 1, 2016, requires the Treasury 
Secretary when establishing terrorism loss risk-spreading 
premiums, to begin collecting such premiums within 18 months 
after the occurrence of the certified act for which they are 
imposed and, in the case of premiums imposed on a discretionary 
basis, limits the premium to not less than 3 percent of the 
annual premiums charged for property and casualty insurance 
coverage.

Section 109. Risk-sharing mechanism

    Asserts that Congress finds it is desirable to encourage 
the growth of nongovernmental, private market reinsurance 
capacity for terrorism risks, and requires the Treasury 
Secretary to establish an Advisory Committee to encourage the 
creation and development of private market risk-sharing 
mechanisms.

Section 110. Reporting of terrorism insurance data

    Beginning on January 1, 2016, the Treasury Secretary shall 
collect the following information: (1) lines of insurance with 
exposure to terrorism; (2) premiums earned on terrorism risk 
coverage; (3) the geographical location of risk exposure; (4) 
the pricing of terrorism risk insurance; (5) the take-up rate 
of terrorism risk insurance; (6) the amount of private 
reinsurance for acts of terrorism purchased; and (7) such other 
data as the Secretary deems appropriate. Requires the Secretary 
to collect the data in a manner that does not reveal 
proprietary information of the participating insurers, and to 
provide the House and Senate Committees of jurisdiction an 
analysis of such data on an annual basis.

Section 111. Delivery of notice to policyholders

    Requires insurers to issue disclosure notices to 
policyholders only at the time of offer and renewal of the 
policy rather than at the time of offer, purchase, and renewal, 
as required under current law.

Section 112. Definition of control

    Clarifies definition of ``control'' for certain reciprocal 
insurers where the establishment of an attorney-in-fact 
relationship could currently be misinterpreted by Treasury and 
result in misallocated deductible, liability cap, recoupment, 
and liability.

Section 113. Annual study of small insurer market competitiveness

    Requires the Treasury Secretary to conduct an annual study 
of small insurers participating in the TRIA program to identify 
any competitive challenges they may face in the terrorism risk 
insurance marketplace.

Section 114. CBO and OMB studies regarding budgeting for costs of 
        federal insurance programs

    Requires the Congressional Budget Office (CBO) and the 
Office of Management and Budget (OMB) to each conduct a study 
on the application of accrual accounting concepts to budgeting 
for the costs of TRIA and other federal insurance programs, and 
report their findings to the House and Senate Committees of 
jurisdiction.

Section 115. GAO study on upfront premiums and capital reserve fund

    Requires the Government Accountability Office (GAO) to 
study the viability of the Federal government assessing and 
collecting upfront premiums from insurers for terrorism 
reinsurance coverage or requiring insurers to create capital 
reserve funds for terrorism-related risks. This study would 
also provide a comparative analysis of the types of systems 
implemented in other countries that collect or assess premiums 
or create capital reserve funds.

 TITLE II--NATIONAL ASSOCIATION OF REGISTERED AGENTS AND BROKERS REFORM


Section 201. Short title

    Provides that this title may be referred to as the 
``National Association of Registered Agents and Brokers Reform 
Act of 2014.

Section 202. Reestablishment of the National Association of Registered 
        Agents and Brokers

    Amends the Gramm-Leach-Bliley Act to repeal the contingent 
conditions preventing the establishment of the National 
Association of Registered Agents and Brokers (NARAB) and 
establishes the NARAB.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

TERRORISM RISK INSURANCE ACT OF 2002

           *       *       *       *       *       *       *



TITLE I--TERRORISM INSURANCE PROGRAM

           *       *       *       *       *       *       *


SEC. 102. DEFINITIONS.

   In this title, the following definitions shall apply:
          (1) Act of terrorism.--
                  (A) Certification.--The term ``act of 
                terrorism'' means any act that is certified by 
                the Secretary, in [concurrence with the 
                Secretary of State] consultation with the 
                Secretary of Homeland Security, and the 
                Attorney General of the United States--
                          (i) * * *

           *       *       *       *       *       *       *

                  (B) Limitation.--No act shall be certified by 
                the Secretary as an act of [terrorism if--]
                          [(i) the act] terrorism if the act is 
                        committed as part of the course of a 
                        war declared by the Congress, except 
                        that this clause shall not apply with 
                        respect to any coverage for workers' 
                        compensation[; or].
                          [(ii) property and casualty insurance 
                        losses resulting from the act, in the 
                        aggregate, do not exceed $5,000,000.]
                  (C) Timing of certification.--
                          (i) Preliminary certification 
                        notice.--The Secretary shall issue a 
                        preliminary certification notice 
                        indicating whether an act is expected 
                        to be a certified act of terrorism not 
                        later than 15 days after--
                                  (I) the date of the 
                                occurrence of a potential act 
                                of terrorism; or
                                  (II) the receipt of a 
                                petition seeking a preliminary 
                                certification decision 
                                submitted by an insurer having 
                                an in-force policy or policies 
                                that could be affected by a 
                                certification decision.
                          (ii) Final certification notice.--Not 
                        later than 90 days after the date of 
                        the occurrence of a potential act of 
                        terrorism or the receipt of a petition 
                        submitted to the Secretary pursuant to 
                        clause (i)(II), the Secretary shall 
                        issue a final certification notice 
                        indicating whether an act is a 
                        certified act of terrorism for purposes 
                        of this Act.
                          (iii) Rule of construction.--Failure 
                        to issue a preliminary certification 
                        notice under clause (i) shall not 
                        prevent the Secretary from issuing a 
                        final certification notice under clause 
                        (ii).
                  (D) Act of NBCR terrorism.--Each 
                certification of an act of terrorism under 
                subparagraph (A) shall include a determination 
                of whether such act involves NBCR terrorism.
                  [(C)] (E) Determinations final.--Any 
                certification of, or determination not to 
                certify, an act as an act of terrorism under 
                this paragraph shall be final, and shall not be 
                subject to judicial review.
                  (F) Failure to make determination.--If the 
                Secretary does not certify, or make a 
                determination not to certify, an act as an act 
                of terrorism before the expiration of the 90-
                day period beginning on the occurrence of such 
                act, such act shall be treated for purposes of 
                this Act as having been determined by the 
                Secretary not to be an act of terrorism and 
                such determination shall be final and shall not 
                be subject to judicial review.
                  [(D)] (G) Nondelegation.--The Secretary may 
                not delegate or designate to any other officer, 
                employee, or person, any determination under 
                this paragraph of whether, during the effective 
                period of the Program, an act of terrorism has 
                occurred.
          (3) Control.--[An entity has]
                  (A) In general.-- An entity has ``control'' 
                over another entity, if--
                          [(A)] (i) the entity directly or 
                        indirectly or acting through 1 or more 
                        other persons owns, controls, or has 
                        power to vote 25 percent or more of any 
                        class of voting securities of the other 
                        entity;
                          [(B)] (ii) the entity controls in any 
                        manner the election of a majority of 
                        the directors or trustees of the other 
                        entity; or
                          [(C)] (iii) the Secretary determines, 
                        after notice and opportunity for 
                        hearing, that the entity directly or 
                        indirectly exercises a controlling 
                        influence over the management or 
                        policies of the other entity.
                  (B) Rule of construction.--An entity, 
                including any affiliate thereof, does not have 
                control over another entity if, as of the date 
                of the enactment of the TRIA Reform Act of 
                2014, the entity is acting as an attorney-in-
                fact, as defined by the Secretary, for the 
                other entity and such other entity is a 
                reciprocal insurer, provided that the entity is 
                not, for reasons other than the attorney-in-
                fact relationship, defined as having control 
                under subparagraph (A).

           *       *       *       *       *       *       *

          (9) NBCR terrorism.--Notwithstanding paragraph (1), 
        the term ``NBCR terrorism'' means an act of terrorism 
        to the extent that the insured losses involve, 
        regardless of any other cause or event that contributes 
        concurrently or in any sequence to such insurance 
        loss--
                  (A) an act of terrorism that is carried out 
                by means of the dispersal or application of 
                radioactive material, or through the use of a 
                nuclear weapon or device that involves or 
                produces a nuclear reaction, nuclear radiation, 
                or radioactive contamination;
                  (B) the release of radioactive material, and 
                it appears that one purpose of the act of 
                terrorism was to release such material;
                  (C) an act of terrorism that is carried out 
                by means of the dispersal or application of 
                pathogenic or poisonous biological or chemical 
                material; or
                  (D) the release of pathogenic or poisonous 
                biological or chemical material, and it appears 
                that one purpose of the act of terrorism was to 
                release such material.
          [(9)] (10) Person.--The term ``person'' means any 
        individual, business or nonprofit entity (including 
        those organized in the form of a partnership, limited 
        liability company, corporation, or association), trust 
        or estate, or a State or political subdivision of a 
        State or other governmental unit.
          [(10)] (11) Program.--The term ``Program'' means the 
        Terrorism Insurance Program established by this title.
          [(11)] (12) Program years.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (G) Additional program years.--Except when 
                used as provided in subparagraphs (B) through 
                (F), the term ``Program Year'' means, as the 
                context requires, any of Program Year 1, 
                Program Year 2, Program Year 3, Program Year 4, 
                Program Year 5, or any of calendar years 2008 
                through [2014] 2019.
          [(12)] (13) Property and casualty insurance.--The 
        term ``property and casualty insurance''--
                  (A) * * *

           *       *       *       *       *       *       *

          [(13)] (14) Secretary.--The term ``Secretary'' means 
        the Secretary of the Treasury.
          [(14)] (15) State.--The term ``State'' means any 
        State of the United States, the District of Columbia, 
        the Commonwealth of Puerto Rico, the Commonwealth of 
        the Northern Mariana Islands, American Samoa, Guam, 
        each of the United States Virgin Islands, and any 
        territory or possession of the United States.
          [(15)] (16) United states.--The term ``United 
        States'' means the several States, and includes the 
        territorial sea and the continental shelf of the United 
        States, as those terms are defined in the Violent Crime 
        Control and Law Enforcement Act of 1994 (18 U.S.C. 
        2280, 2281).
          [(16)] (17) Rule of construction for dates.--With 
        respect to any reference to a date in this title, such 
        day shall be construed--
                  (A) * * *

           *       *       *       *       *       *       *


SEC. 103. TERRORISM INSURANCE PROGRAM.

  (a) * * *
  (b) Conditions for Federal Payments.--No payment may be made 
by the Secretary under this section with respect to an insured 
loss that is covered by an insurer, unless--
          (1) * * *
          (2) the insurer provides clear and conspicuous 
        disclosure to the policyholder of the premium charged 
        for insured losses covered by the Program and the 
        Federal share of compensation for insured losses under 
        the Program--
                  (A) * * *
                  (B) in the case of any policy that is issued 
                within 90 days of the date of enactment of this 
                Act, at the time of offer[, purchase,] and 
                renewal of the policy; and
                  (C) in the case of any policy that is issued 
                more than 90 days after the date of enactment 
                of this Act, on a separate line item in the 
                policy, at the time of offer[, purchase,] and 
                renewal of the policy;

           *       *       *       *       *       *       *

  [(c) Mandatory Availability.--During each Program Year, each 
entity that meets the definition of an insurer under section 
102--
          [(1) shall make available, in all of its property and 
        casualty insurance policies, coverage for insured 
        losses; and
          [(2) shall make available property and casualty 
        insurance coverage for insured losses that does not 
        differ materially from the terms, amounts, and other 
        coverage limitations applicable to losses arising from 
        events other than acts of terrorism.]
  (c) Mandatory Availability.--
          (1) In general.--Except as provided in paragraph (2), 
        during each Program Year, each entity that meets the 
        definition of an insurer under section 102 shall make 
        available--
                  (A) in all of its property and casualty 
                insurance policies, coverage for insured 
                losses; and
                  (B) property and casualty insurance coverage 
                for insured losses that does not differ 
                materially from the terms, amounts, and other 
                coverage limitations applicable to losses 
                arising from events other than acts of 
                terrorism.
          (2) No mandatory availability for small insurers.--
        The Secretary shall provide, by regulation and in 
        consultation with State insurance regulatory 
        authorities, that paragraph (1) shall not apply for a 
        Program Year with respect to any small insurer (as such 
        term is defined in such regulations by the Secretary) 
        that, at the option of the insurer, makes a request for 
        such inapplicability for such Program Year to the 
        appropriate State insurance regulatory authority for 
        the State in which such insurer is domiciled and is 
        determined by such State insurance regulatory authority 
        to meet such requirements for financial hardship or 
        financial infeasibility of providing coverage for 
        insured losses as the Secretary shall establish in such 
        regulations. The insurer shall provide notice, in a 
        manner satisfactory to the State insurance regulatory 
        authority, informing affected prospective and current 
        policyholders whether such coverage is not provided by 
        the insurer. This paragraph may not be construed to 
        require any State insurance regulatory authority to 
        undertake making determinations under this paragraph.

           *       *       *       *       *       *       *

  (e) Insured Loss Shared Compensation.--
          (1) Federal share.--
                  (A) In general.-- [The Federal share] Subject 
                to subparagraphs (B) and (C), the Federal share 
                of compensation under the Program to be paid by 
                the Secretary for insured losses of [an insurer 
                during the Transition Period] an insurer--
                          (i) during the Transition period, and 
                        each Program Year through Program Year 
                        4 shall be equal to 90 percent, and 
                        during Program Year 5 and each Program 
                        Year thereafter through the Program 
                        Year ending on December 31, 2015, shall 
                        be equal to 85 percent, of that portion 
                        of the amount of such insured losses 
                        that exceeds the applicable insurer 
                        deductible required to be paid during 
                        such Transition Period or such Program 
                        Year[.]; and
                          (ii) shall be equal to--
                                  (I) except as provided in 
                                subclause (II)--
                                          (aa) during the 
                                        Program Year beginning 
                                        on January 1, 2016, 84 
                                        percent of that portion 
                                        of the amount of such 
                                        insured losses that 
                                        exceeds the applicable 
                                        insurer deductible 
                                        required to be paid 
                                        during such Program 
                                        Year;
                                          (bb) during the 
                                        Program Year beginning 
                                        on January 1, 2017, 83 
                                        percent of that portion 
                                        of the amount of such 
                                        insured losses that 
                                        exceeds the applicable 
                                        insurer deductible 
                                        required to be paid 
                                        during such Program 
                                        Year;
                                          (cc) during the 
                                        Program Year beginning 
                                        on January 1, 2018, 82 
                                        percent of that portion 
                                        of the amount of such 
                                        insured losses that 
                                        exceeds the applicable 
                                        insurer deductible 
                                        required to be paid 
                                        during such Program 
                                        Year; and
                                          (dd) during the 
                                        Program Year beginning 
                                        on January 1, 2019, 80 
                                        percent of that portion 
                                        of the amount of such 
                                        insured losses that 
                                        exceeds the applicable 
                                        insurer deductible 
                                        required to be paid 
                                        during such Program 
                                        Year; and
                                  (II) in the case of insured 
                                losses resulting from acts of 
                                NBCR terrorism, during the 
                                Program Year beginning on 
                                January 1, 2016, and each 
                                Program Year thereafter, 85 
                                percent of that portion of the 
                                amount of such insured losses 
                                that exceeds the applicable 
                                insurer deductible required to 
                                be paid during such Program 
                                Year.
                  (B) Program trigger.--In the case of [a 
                certified act] certified acts of terrorism 
                occurring after March 31, 2006, no compensation 
                shall be paid by the Secretary under subsection 
                (a), unless the aggregate industry insured 
                losses resulting from [such certified act] such 
                certified acts of terrorism exceed--
                          (i) $50,000,000, with respect to such 
                        insured losses occurring in Program 
                        Year 4; [or]
                          (ii) $100,000,000, with respect to 
                        such insured losses occurring in 
                        Program Year 5 and any Program Year 
                        thereafter[.] through the Program Year 
                        ending on December 31, 2015; or
                          (iii)(I) except as provided in 
                        subclause (II)--
                                  (aa) $200,000,000, with 
                                respect to such insured losses 
                                occurring in the Program Year 
                                beginning on January 1, 2016;
                                  (bb) $300,000,000, with 
                                respect to such insured losses 
                                occurring in the Program Year 
                                beginning on January 1, 2017;
                                  (cc) $400,000,000, with 
                                respect to such insured losses 
                                occurring in the Program Year 
                                beginning on January 1, 2018; 
                                and
                                  (dd) $500,000,000, with 
                                respect to such insured losses 
                                occurring in the Program Year 
                                beginning on January 1, 2019; 
                                and
                          (II) in the case of an act of NBCR 
                        terrorism, $100,000,000, with respect 
                        to such insured losses occurring in the 
                        Program Year beginning on January 1, 
                        2016, or any Program Year thereafter.
                In determining the aggregate industry insured 
                losses resulting from certified acts of 
                terrorism for purposes of this subparagraph, 
                the Secretary shall not consider any act of 
                terrorism resulting, in the aggregate, in less 
                than $50,000,000 in insured losses.

           *       *       *       *       *       *       *

          (6) Insurance marketplace aggregate retention 
        amount.--For purposes of paragraph (7), the insurance 
        marketplace aggregate retention amount shall be--
                  (A) * * *

           *       *       *       *       *       *       *

                  (D) for Program Year 4, the lesser of--
                          (i) * * *
                          (ii) the aggregate amount, for all 
                        insurers, of insured losses during such 
                        Program Year; [and]
                  (E) for Program Year 5 and any Program Year 
                thereafter through the Program Year ending on 
                December 31, 2015, the lesser of--
                          (i) * * *
                          (ii) the aggregate amount, for all 
                        insurers, of insured losses during such 
                        Program Year[.]; and
                  (F) for the Program Year beginning January 1, 
                2016, and each Program Year thereafter, the 
                lesser of--
                          (i) the amount that is equal to the 
                        sum of the insurer deductibles for the 
                        Program Year for all insurers 
                        participating in the Program; and
                          (ii) the aggregate amount, for all 
                        insurers, of insured losses during such 
                        Program Year.
          (7) Recoupment of federal share.--
                  [(A) Mandatory recoupment amount.--For 
                purposes of this paragraph, the mandatory 
                recoupment amount for each of the periods 
                referred to in subparagraphs (A) through (E) of 
                paragraph (6) shall be the difference between--
                          [(i) the insurance marketplace 
                        aggregate retention amount under 
                        paragraph (6) for such period; and
                          [(ii) the aggregate amount, for all 
                        insurers, of insured losses during such 
                        period that are not compensated by the 
                        Federal Government because such 
                        losses--
                                  [(I) are within the insurer 
                                deductible for the insurer 
                                subject to the losses; or
                                  [(II) are within the portion 
                                of losses of the insurer that 
                                exceed the insurer deductible, 
                                but are not compensated 
                                pursuant to paragraph (1).
                  [(B) No mandatory recoupment if uncompensated 
                losses exceed insurance marketplace 
                retention.--Notwithstanding subparagraph (A), 
                if the aggregate amount of uncompensated 
                insured losses referred to in clause (ii) of 
                such subparagraph for any period referred to in 
                any of subparagraphs (A) through (E) of 
                paragraph (6) is greater than the insurance 
                marketplace aggregate retention amount under 
                paragraph (6) for such period, the mandatory 
                recoupment amount shall be $0.]
                  (A) Mandatory recoupment amount.--For 
                purposes of this paragraph, the mandatory 
                recoupment amount for each of the periods 
                referred to in subparagraphs (A) through (F) of 
                paragraph (6) shall be equal to the lesser of--
                          (i) the aggregate amount, for all 
                        insurers, of insured losses during such 
                        period that are compensated by the 
                        Federal Government pursuant to 
                        paragraph (1); or
                          (ii) the insurance marketplace 
                        aggregate retention amount under 
                        paragraph (6) for such period.
                  [(C)] (B) Mandatory establishment of 
                surcharges to recoup mandatory recoupment 
                amount.--The Secretary shall collect, for 
                repayment of the Federal financial assistance 
                provided in connection with all acts of 
                terrorism (or acts of war, in the case of 
                workers compensation) occurring during any of 
                the periods referred to in any of 
                [subparagraphs (A) through (E)] subparagraphs 
                (A) through (F) of paragraph (6), terrorism 
                loss risk-spreading premiums in an amount equal 
                to [133 percent] 150 percent of any mandatory 
                recoupment amount for such period.
                  [(D)] (C) Discretionary recoupment of 
                remainder of financial assistance.--To the 
                extent that the amount of Federal financial 
                assistance provided exceeds any mandatory 
                recoupment amount, the Secretary may recoup, 
                through terrorism loss risk-spreading premiums, 
                such additional amounts that the Secretary 
                believes can be recouped, based on--
                          (i) the ultimate costs to taxpayers 
                        of no additional recoupment;

           *       *       *       *       *       *       *

                  [(E)] (D) Timing of mandatory recoupment.--
                          (i) In general.--If the Secretary is 
                        required to collect terrorism loss 
                        risk-spreading premiums under 
                        [subparagraph (C)] subparagraph (B)--
                                  (I) * * *

           *       *       *       *       *       *       *

                                  (III) for any act of 
                                terrorism that occurs on or 
                                [after January 1, 2012] before 
                                December 31, 2014, the 
                                Secretary shall collect all 
                                required premiums by September 
                                30, 2017.
                  [(F)] (E) Notice of estimated losses.--Not 
                later than 90 days after the date of an act of 
                terrorism, the Secretary shall publish an 
                estimate of aggregate insured losses, which 
                shall be used as the basis for determining 
                whether mandatory recoupment will be required 
                under this paragraph. Such estimate shall be 
                updated as appropriate, and at least annually.
          [(8) Policy surcharge for terrorism loss risk-
        spreading premiums.--
                  [(A) Policyholder premium.--Any amount 
                established by the Secretary as a terrorism 
                loss risk-spreading premium shall--
                          [(i) be imposed as a policyholder 
                        premium surcharge on property and 
                        casualty insurance policies in force 
                        after the date of such establishment;
                          [(ii) begin with such period of 
                        coverage during the year as the 
                        Secretary determines appropriate; and
                          [(iii) be based on a percentage of 
                        the premium amount charged for property 
                        and casualty insurance coverage under 
                        the policy.
                  [(B) Collection.--The Secretary shall provide 
                for insurers to collect terrorism loss risk-
                spreading premiums and remit such amounts 
                collected to the Secretary.
                  [(C) Percentage limitation.--A terrorism loss 
                risk-spreading premium collected on a 
                discretionary basis pursuant to paragraph 
                (7)(D) may not exceed, on an annual basis, the 
                amount equal to 3 percent of the premium 
                charged for property and casualty insurance 
                coverage under the policy.
                  [(D) Adjustment for urban and smaller 
                commercial and rural areas and different lines 
                of insurance.--
                          [(i) Adjustments.--In determining the 
                        method and manner of imposing terrorism 
                        loss risk-spreading premiums, including 
                        the amount of such premiums, the 
                        Secretary shall take into 
                        consideration--
                                  [(I) the economic impact on 
                                commercial centers of urban 
                                areas, including the effect on 
                                commercial rents and commercial 
                                insurance premiums, 
                                particularly rents and premiums 
                                charged to small businesses, 
                                and the availability of lease 
                                space and commercial insurance 
                                within urban areas;
                                  [(II) the risk factors 
                                related to rural areas and 
                                smaller commercial centers, 
                                including the potential 
                                exposure to loss and the likely 
                                magnitude of such loss, as well 
                                as any resulting cross-
                                subsidization that might 
                                result; and
                                  [(III) the various exposures 
                                to terrorism risk for different 
                                lines of insurance.
                          [(ii) Recoupment of adjustments.--Any 
                        mandatory recoupment amounts not 
                        collected by the Secretary because of 
                        adjustments under this subparagraph 
                        shall be recouped through additional 
                        terrorism loss risk-spreading premiums, 
                        in accordance with the timing 
                        requirements of paragraph (7)(E).
                  [(E) Timing of premiums.--The Secretary may 
                adjust the timing of terrorism loss risk-
                spreading premiums to provide for equivalent 
                application of the provisions of this title to 
                policies that are not based on a calendar year, 
                or to apply such provisions on a daily, 
                monthly, or quarterly basis, as appropriate.]
          (8) Terrorism loss risk-spreading premiums.--
                  (A) Establishment.--After an act of 
                terrorism, the Secretary shall, to the extent 
                provided in paragraph (7)(B), and may, to the 
                extent provided in paragraph (7)(C), establish 
                terrorism loss risk-spreading premiums, which 
                shall be imposed as a policyholder premium 
                surcharge on property and casualty insurance 
                policies for all participating insurers in 
                force after the date of such establishment.
                  (B) Collection.--The Secretary shall provide 
                for insurers to collect terrorism loss risk-
                spreading premiums and remit such amounts 
                collected to the Secretary.
                  (C) Determination of premiums.--In 
                determining the method and manner of imposing 
                terrorism loss risk-spreading premiums, 
                including the amount of such premiums, the 
                Secretary shall--
                          (i) impose such terrorism loss risk-
                        spreading premiums beginning with such 
                        period of coverage during the year as 
                        the Secretary determines appropriate, 
                        but shall commence imposition of such 
                        premiums not later than 18 months after 
                        the occurrence of the act of terrorism 
                        for which such premiums are imposed;
                          (ii) base any terrorism loss risk-
                        spreading premium on a percentage of 
                        the premium amount charged for property 
                        and casualty insurance coverage under 
                        the policy; and
                          (iii) take into consideration--
                                  (I) the economic impact on 
                                commercial centers of urban 
                                areas, including the effect on 
                                commercial rents and commercial 
                                insurance premiums, 
                                particularly rents and premiums 
                                charged to small businesses, 
                                and the availability of lease 
                                space and commercial insurance 
                                within urban areas;
                                  (II) the risk factors related 
                                to rural areas and smaller 
                                commercial centers, including 
                                the potential exposure to loss 
                                and the likely magnitude of 
                                such loss, as well as any 
                                resulting cross-subsidization 
                                that might result; and
                                  (III) the various exposures 
                                to terrorism risk for different 
                                lines of insurance.
                  (D) Percentage limitation.--A terrorism loss 
                risk-spreading premium collected on a 
                discretionary basis pursuant to paragraph 
                (7)(C) shall not be less than, on an annual 
                basis, the amount equal to 3 percent of the 
                premium charged for property and casualty 
                insurance coverage under the policy.
                  (E) Timing of premiums.--The Secretary may 
                adjust the timing of terrorism loss risk-
                spreading premiums to provide for equivalent 
                application of the provisions of this title to 
                policies that are not based on a calendar year, 
                or to apply such provisions on a daily, 
                monthly, or quarterly basis, as appropriate.
          (9) Risk-sharing mechanisms.--
                  (A) Finding; rule of construction.--The 
                Congress finds that it is desirable to 
                encourage the growth of nongovernmental, 
                private market reinsurance capacity for 
                protection against losses arising from acts of 
                terrorism. Therefore, nothing in this title 
                shall prohibit insurers from developing risk-
                sharing mechanisms (including mutual 
                reinsurance facilities and agreements, use of 
                the capital markets, and insurance-linked 
                securities) to voluntarily reinsure terrorism 
                losses between and among themselves that are 
                not subject to reimbursement under this 
                section.
                  (B) Establishment of advisory committee.--The 
                Secretary shall appoint an Advisory Committee 
                to--
                          (i) encourage the creation and 
                        development of such risk-sharing 
                        mechanisms;
                          (ii) assist the Secretary and be 
                        available to administer such risk-
                        sharing mechanisms; and
                          (iii) develop articles of 
                        incorporation, bylaws, and a plan of 
                        operation for any long-term reinsurance 
                        facility authorized or created in the 
                        future.
                  (C) Membership.--The Advisory Committee shall 
                be composed of nine members who are directors, 
                officers, or other employees of insurers, 
                reinsurers, or capital market participants that 
                are participating or that desire to participate 
                in such mechanisms, and who are representative 
                of the affected sectors of the insurance 
                industry, including commercial property 
                insurance, commercial casualty insurance, 
                reinsurance, and alternative risk transfer 
                industries.

           *       *       *       *       *       *       *


SEC. 104. GENERAL AUTHORITY AND ADMINISTRATION OF CLAIMS.

  (a) * * *

           *       *       *       *       *       *       *

  (h) Reporting of Terrorism Insurance Data.--
          (1) Authority.--During the Program Year beginning on 
        January 1, 2016, and in each Program Year thereafter, 
        the Secretary shall require insurers participating in 
        the Program to submit to the Secretary such information 
        regarding insurance coverage for terrorism losses of 
        such insurers as the Secretary considers appropriate to 
        analyze the effectiveness of the Program, which shall 
        include information regarding--
                  (A) lines of insurance with exposure to such 
                losses;
                  (B) premiums earned on such coverage;
                  (C) geographical location of exposures;
                  (D) pricing of such coverage;
                  (E) the take-up rate for such coverage;
                  (F) the amount of private reinsurance for 
                acts of terrorism purchased; and
                  (G) such other matters as the Secretary 
                considers appropriate.
          (2) Reports.--Not later than 6 months after the 
        termination of the Program Year beginning on January 1, 
        2016, and not later than 6 months after the termination 
        of each Program Year thereafter, the Secretary shall 
        submit a report to the Committee on Financial Services 
        of the House of Representatives and the Committee on 
        Banking, Housing, and Urban Affairs of the Senate that 
        includes--
                  (A) an analysis of the overall effectiveness 
                of the Program;
                  (B) an evaluation of any changes or trends in 
                the data collected under paragraph (1);
                  (C) an evaluation of whether any aspects of 
                the Program have the effect of discouraging or 
                impeding insurers from providing commercial 
                property casualty insurance coverage or 
                coverage for acts of terrorism;
                  (D) an evaluation of the impact of the 
                Program on workers' compensation insurers;
                  (E) an evaluation of the impact on 
                availability and affordability of terrorism 
                insurance coverage and fiscal protection of the 
                taxpayers of separate Federal treatment under 
                the Program for nuclear, biological, chemical, 
                and radiological terrorism; and
                  (F) in the case of the data reported in 
                paragraph (1)(B), an updated estimate of the 
                total amount earned since the commencement of 
                Program Year 1.
          (3) Protection of data.--To the extent possible, the 
        Secretary shall contract with an insurance statistical 
        aggregator to collect the information described in 
        paragraph (1), which shall keep any nonpublic 
        information confidential and provide it to the 
        Secretary in an aggregate form or in such other form or 
        manner that does not permit identification of the 
        insurer submitting such information.
          (4) Advance coordination.--Before collecting any data 
        or information under paragraph (1) from an insurer, or 
        affiliate of an insurer, the Secretary shall coordinate 
        with the appropriate State insurance regulatory 
        authorities or their representatives and any relevant 
        government agency or publicly available sources to 
        determine if the information to be collected is 
        available from, and may be obtained in a timely manner 
        by, individually or collectively, such entities. If the 
        Secretary determines that such data or information is 
        available, and may be obtained in a timely matter, from 
        such entities, the Secretary shall obtain the data or 
        information from such entities. If the Secretary 
        determines that such data or information is not so 
        available, the Secretary may collect such data or 
        information from an insurer and affiliates.
          (5) Confidentiality.--
                  (A) Retention of privilege.--The submission 
                of any non-publicly available data and 
                information to the Secretary and the sharing of 
                any non-publicly available data with or by the 
                Secretary among other Federal agencies, the 
                State insurance regulatory authorities and 
                their collective agents, or any other entities 
                under this subsection shall not constitute a 
                waiver of, or otherwise affect, any privilege 
                arising under Federal or State law (including 
                the rules of any Federal or State court) to 
                which the data or information is otherwise 
                subject.
                  (B) Continued application of prior 
                confidentiality agreements.--Any requirement 
                under Federal or State law to the extent 
                otherwise applicable, or any requirement 
                pursuant to a written agreement in effect 
                between the original source of any non-publicly 
                available data or information and the source of 
                such data or information to the Secretary, 
                regarding the privacy or confidentiality of any 
                data or information in the possession of the 
                source to the Secretary, shall continue to 
                apply to such data or information after the 
                data or information has been provided pursuant 
                to this subsection.
                  (C) Information-sharing agreement.--Any data 
                or information obtained by the Secretary under 
                this subsection may be made available to State 
                insurance regulatory authorities, individually 
                or collectively through an information-sharing 
                agreement that--
                          (i) shall comply with applicable 
                        Federal law; and
                          (ii) shall not constitute a waiver 
                        of, or otherwise affect, any privilege 
                        under Federal or State law (including 
                        any privilege referred to in 
                        subparagraph (A) and the rules of any 
                        Federal or State court) to which the 
                        data or information is otherwise 
                        subject.
                  (D) Agency disclosure requirements.--Section 
                552 of title 5, United States Code, including 
                any exceptions thereunder, shall apply to any 
                data or information submitted under this 
                subsection to the Secretary by an insurer or 
                affiliate of an insurer.

           *       *       *       *       *       *       *


SEC. 108. TERMINATION OF PROGRAM.

  (a) Termination of Program.--The Program shall terminate on 
[December 31, 2014] December 31, 2019.

           *       *       *       *       *       *       *

  (h) Study of Small Insurer Market Competitiveness.--
          (1) In general.--The Secretary shall conduct an 
        annual study of small insurers participating in the 
        Program, and identify any competitive challenges small 
        insurers face in the terrorism risk insurance 
        marketplace, including--
                  (A) changes to the market share, premium 
                volume, and policyholder surplus of small 
                insurers relative to large insurers;
                  (B) how the property and casualty insurance 
                market for terrorism risk differs between small 
                and large insurers, and whether such a 
                difference exists within other perils;
                  (C) the impact of the Program's mandatory 
                availability requirement under section 103(c) 
                and the voluntary opt-out for small insurers;
                  (D) the effect of increasing the trigger 
                amount for the Program under section 
                103(e)(1)(B)(iii)(I) on small insurers;
                  (E) the availability and cost of private 
                reinsurance for small insurers; and
                  (F) the impact that State workers 
                compensation laws have on small insurers, 
                particularly the impact of mandatory, non-
                excludable participation and unlimited 
                financial liability.
          (2) Timing and report.--The Secretary shall complete 
        the first study under paragraph (1) and submit a report 
        to the Congress setting forth the findings and 
        conclusions of the study not later than June 30, 2016, 
        and shall complete an annual study under paragraph (1) 
        and submit a report regarding such study to the 
        Congress by June 1 annually thereafter.

           *       *       *       *       *       *       *

                              ----------                              


                         GRAMM-LEACH-BLILEY ACT

SEC. 1. SHORT TITLE; TABLE OF CONTENTS

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

Sec. 1. Short title; table of contents.
     * * * * * * *

                          TITLE III--INSURANCE

     * * * * * * *

   [Subtitle C--National Association of Registered Agents and Brokers

[Sec. 321. State flexibility in multistate licensing reforms.
[Sec. 322. National Association of Registered Agents and Brokers.
[Sec. 323. Purpose.
[Sec. 324. Relationship to the Federal Government.
[Sec. 325. Membership.
[Sec. 326. Board of directors.
[Sec. 327. Officers.
[Sec. 328. Bylaws, rules, and disciplinary action.
[Sec. 329. Assessments.
[Sec. 330. Functions of the NAIC.
[Sec. 331. Liability of the association and the directors, officers, and 
          employees of the association.
[Sec. 332. Elimination of NAIC oversight.
[Sec. 333. Relationship to State law.
[Sec. 334. Coordination with other regulators.
[Sec. 335. Judicial review.
[Sec. 336. Definitions.]

    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.

           *       *       *       *       *       *       *


TITLE III--INSURANCE

           *       *       *       *       *       *       *


   [Subtitle C--National Association of Registered Agents and Brokers

[SEC. 321. STATE FLEXIBILITY IN MULTISTATE LICENSING REFORMS.

  [(a) In General.--The provisions of this subtitle shall take 
effect unless, not later than 3 years after the date of the 
enactment of this Act, at least a majority of the States--
          [(1) have enacted uniform laws and regulations 
        governing the licensure of individuals and entities 
        authorized to sell and solicit the purchase of 
        insurance within the State; or
          [(2) have enacted reciprocity laws and regulations 
        governing the licensure of nonresident individuals and 
        entities authorized to sell and solicit insurance 
        within those States.
  [(b) Uniformity Required.--States shall be deemed to have 
established the uniformity necessary to satisfy subsection 
(a)(1) if the States--
          [(1) establish uniform criteria regarding the 
        integrity, personal qualifications, education, 
        training, and experience of licensed insurance 
        producers, including the qualification and training of 
        sales personnel in ascertaining the appropriateness of 
        a particular insurance product for a prospective 
        customer;
          [(2) establish uniform continuing education 
        requirements for licensed insurance producers;
          [(3) establish uniform ethics course requirements for 
        licensed insurance producers in conjunction with the 
        continuing education requirements under paragraph (2);
          [(4) establish uniform criteria to ensure that an 
        insurance product, including any annuity contract, sold 
        to a consumer is suitable and appropriate for the 
        consumer based on financial information disclosed by 
        the consumer; and
          [(5) do not impose any requirement upon any insurance 
        producer to be licensed or otherwise qualified to do 
        business as a nonresident that has the effect of 
        limiting or conditioning that producer's activities 
        because of its residence or place of operations, except 
        that countersignature requirements imposed on 
        nonresident producers shall not be deemed to have the 
        effect of limiting or conditioning a producer's 
        activities because of its residence or place of 
        operations under this section.
  [(c) Reciprocity Required.--States shall be deemed to have 
established the reciprocity required to satisfy subsection 
(a)(2) if the following conditions are met:
          [(1) Administrative licensing procedures.--At least a 
        majority of the States permit a producer that has a 
        resident license for selling or soliciting the purchase 
        of insurance in its home State to receive a license to 
        sell or solicit the purchase of insurance in such 
        majority of States as a nonresident to the same extent 
        that such producer is permitted to sell or solicit the 
        purchase of insurance in its State, if the producer's 
        home State also awards such licenses on such a 
        reciprocal basis, without satisfying any additional 
        requirements other than submitting--
                  [(A) a request for licensure;
                  [(B) the application for licensure that the 
                producer submitted to its home State;
                  [(C) proof that the producer is licensed and 
                in good standing in its home State; and
                  [(D) the payment of any requisite fee to the 
                appropriate authority.
          [(2) Continuing education requirements.--A majority 
        of the States accept an insurance producer's 
        satisfaction of its home State's continuing education 
        requirements for licensed insurance producers to 
        satisfy the States' own continuing education 
        requirements if the producer's home State also 
        recognizes the satisfaction of continuing education 
        requirements on such a reciprocal basis.
          [(3) No limiting nonresident requirements.--A 
        majority of the States do not impose any requirement 
        upon any insurance producer to be licensed or otherwise 
        qualified to do business as a nonresident that has the 
        effect of limiting or conditioning that producer's 
        activities because of its residence or place of 
        operations, except that countersignature requirements 
        imposed on nonresident producers shall not be deemed to 
        have the effect of limiting or conditioning a 
        producer's activities because of its residence or place 
        of operations under this section.
          [(4) Reciprocal reciprocity.--Each of the States that 
        satisfies paragraphs (1), (2), and (3) grants 
        reciprocity to residents of all of the other States 
        that satisfy such paragraphs.
  [(d) Determination.--
          [(1) NAIC determination.--At the end of the 3-year 
        period beginning on the date of the enactment of this 
        Act, the National Association of Insurance 
        Commissioners (hereafter in this subtitle referred to 
        as the ``NAIC'') shall determine, in consultation with 
        the insurance commissioners or chief insurance 
        regulatory officials of the States, whether the 
        uniformity or reciprocity required by subsections (b) 
        and (c) has been achieved.
          [(2) Judicial review.--The appropriate United States 
        district court shall have exclusive jurisdiction over 
        any challenge to the NAIC's determination under this 
        section and such court shall apply the standards set 
        forth in section 706 of title 5, United States Code, 
        when reviewing any such challenge.
  [(e) Continued Application.--If, at any time, the uniformity 
or reciprocity required by subsections (b) and (c) no longer 
exists, the provisions of this subtitle shall take effect 2 
years after the date on which such uniformity or reciprocity 
ceases to exist, unless the uniformity or reciprocity required 
by those provisions is satisfied before the expiration of that 
2-year period.
  [(f) Savings Provision.--No provision of this section shall 
be construed as requiring that any law, regulation, provision, 
or action of any State which purports to regulate insurance 
producers, including any such law, regulation, provision, or 
action which purports to regulate unfair trade practices or 
establish consumer protections, including countersignature 
laws, be altered or amended in order to satisfy the uniformity 
or reciprocity required by subsections (b) and (c), unless any 
such law, regulation, provision, or action is inconsistent with 
a specific requirement of any such subsection and then only to 
the extent of such inconsistency.
  [(g) Uniform Licensing.--Nothing in this section shall be 
construed to require any State to adopt new or additional 
licensing requirements to achieve the uniformity necessary to 
satisfy subsection (a)(1).

[SEC. 322. NATIONAL ASSOCIATION OF REGISTERED AGENTS AND BROKERS.

  [(a) Establishment.--There is established the National 
Association of Registered Agents and Brokers (hereafter in this 
subtitle referred to as the ``Association'').
  [(b) Status.--The Association shall--
          [(1) be a nonprofit corporation;
          [(2) have succession until dissolved by an Act of 
        Congress;
          [(3) not be an agent or instrumentality of the United 
        States Government; and
          [(4) except as otherwise provided in this Act, 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. 29y-1001 et 
        seq.).

[SEC. 323. PURPOSE.

  [The purpose of the Association shall be to provide a 
mechanism through which uniform licensing, appointment, 
continuing education, and other insurance producer sales 
qualification requirements and conditions can be adopted and 
applied on a multistate basis, while preserving the right of 
States to license, supervise, and discipline insurance 
producers and to prescribe and enforce laws and regulations 
with regard to insurance-related consumer protection and unfair 
trade practices.

[SEC. 324. RELATIONSHIP TO THE FEDERAL GOVERNMENT.

  [The Association shall be subject to the supervision and 
oversight of the NAIC.

[SEC. 325. MEMBERSHIP.

  [(a) Eligibility.--
          [(1) In general.--Any State-licensed insurance 
        producer shall be eligible to become a member in the 
        Association.
          [(2) Ineligibility for suspension or revocation of 
        license.--Notwithstanding paragraph (1), a State-
        licensed insurance producer shall not be eligible to 
        become a member 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.
          [(3) Resumption of eligibility.--Paragraph (2) shall 
        cease to apply to any insurance producer if--
                  [(A) the State insurance regulator renews the 
                license of such producer in the State in which 
                the license was suspended or revoked; or
                  [(B) the suspension or revocation is 
                subsequently overturned.
  [(b) Authority To Establish Membership Criteria.--The 
Association shall have the authority to establish membership 
criteria that--
          [(1) bear a reasonable relationship to the purposes 
        for which the Association was established; and
          [(2) do not unfairly limit the access of smaller 
        agencies to the Association membership.
  [(c) Establishment of Classes and Categories.--
          [(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, or experience.
          [(2) Categories.--The Association may establish 
        separate categories of membership for individuals and 
        for other persons. The establishment of any such 
        categories of membership shall be based either on the 
        types of licensing categories that exist under State 
        laws or on the aggregate amount of business handled by 
        an insurance producer. No special categories of 
        membership, and no distinct membership criteria, shall 
        be established for members which are depository 
        institutions or for their employees, agents, or 
        affiliates.
  [(d) Membership Criteria.--
          [(1) In general.--The Association may establish 
        criteria for membership which shall include standards 
        for integrity, personal qualifications, education, 
        training, and experience.
          [(2) Minimum standard.--In establishing criteria 
        under paragraph (1), the Association shall consider the 
        highest levels of insurance producer qualifications 
        established under the licensing laws of the States.
  [(e) Effect of Membership.--Membership in the Association 
shall entitle the member to licensure in each State for which 
the member pays the requisite fees, including licensing fees 
and, where applicable, bonding requirements, set by such State.
  [(f) Annual Renewal.--Membership in the Association shall be 
renewed on an annual basis.
  [(g) Continuing Education.--The Association shall establish, 
as a condition of membership, continuing education requirements 
which shall be comparable to or greater than the continuing 
education requirements under the licensing laws of a majority 
of the States.
  [(h) Suspension and Revocation.--The Association may--
          [(1) inspect and examine the records and offices of 
        the members of the Association to determine compliance 
        with the criteria for membership established by the 
        Association; and
          [(2) suspend or revoke the membership of an insurance 
        producer if--
                  [(A) the producer fails to meet the 
                applicable membership criteria of the 
                Association; or
                  [(B) the producer has been subject to 
                disciplinary action pursuant to a final 
                adjudicatory proceeding under the jurisdiction 
                of a State insurance regulator, and the 
                Association concludes that retention of 
                membership in the Association would not be in 
                the public interest.
  [(i) Office of Consumer Complaints.--
          [(1) In general.--The Association shall establish an 
        office of consumer complaints that shall--
                  [(A) receive and investigate complaints from 
                both consumers and State insurance regulators 
                related to members of the Association; and
                  [(B) recommend to the Association any 
                disciplinary actions that the office considers 
                appropriate, to the extent that any such 
                recommendation is not inconsistent with State 
                law.
          [(2) Records and referrals.--The office of consumer 
        complaints of the Association shall--
                  [(A) maintain records of all complaints 
                received in accordance with paragraph (1) and 
                make such records available to the NAIC and to 
                each State insurance regulator for the State of 
                residence of the consumer who filed the 
                complaint; and
                  [(B) refer, when appropriate, any such 
                complaint to any appropriate State insurance 
                regulator.
          [(3) Telephone and other access.--The office of 
        consumer complaints 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 home 
        page.

[SEC. 326. BOARD OF DIRECTORS.

  [(a) Establishment.--There is established the board of 
directors of the Association (hereafter in this subtitle 
referred to as the ``Board'') for the purpose of governing and 
supervising the activities of the Association and the members 
of the Association.
  [(b) Powers.--The Board shall have such powers and authority 
as may be specified in the bylaws of the Association.
  [(c) Composition.--
          [(1) Members.--The Board shall be composed of 7 
        members appointed by the NAIC.
          [(2) Requirement.--At least 4 of the members of the 
        Board shall each have significant experience with the 
        regulation of commercial lines of insurance in at least 
        1 of the 20 States in which the greatest total dollar 
        amount of commercial-lines insurance is placed in the 
        United States.
          [(3) Initial board membership.--
                  [(A) In general.--If, by the end of the 2-
                year period beginning on the date of the 
                enactment of this Act, the NAIC has not 
                appointed the initial 7 members of the Board of 
                the Association, the initial Board shall 
                consist of the 7 State insurance regulators of 
                the 7 States with the greatest total dollar 
                amount of commercial-lines insurance in place 
                as of the end of such period.
                  [(B) Alternate composition.--If any of the 
                State insurance regulators described in 
                subparagraph (A) declines to serve on the 
                Board, the State insurance regulator with the 
                next greatest total dollar amount of 
                commercial-lines insurance in place, as 
                determined by the NAIC as of the end of such 
                period, shall serve as a member of the Board.
                  [(C) Inoperability.--If fewer than 7 State 
                insurance regulators accept appointment to the 
                Board, the Association shall be established 
                without NAIC oversight pursuant to section 332.
  [(d) Terms.--The term of each director shall, after the 
initial appointment of the members of the Board, be for 3 
years, with one-third of the directors to be appointed each 
year.
  [(e) Board Vacancies.--A vacancy on the Board shall be filled 
in the same manner as the original appointment of the initial 
Board for the remainder of the term of the vacating member.
  [(f) Meetings.--The Board shall meet at the call of the 
chairperson, or as otherwise provided by the bylaws of the 
Association.

[SEC. 327. OFFICERS.

  [(a) In General.--
          [(1) Positions.--The officers of the Association 
        shall consist of a chairperson and a vice chairperson 
        of the Board, a president, secretary, and treasurer of 
        the Association, and such other officers and assistant 
        officers as may be deemed necessary.
          [(2) Manner of selection.--Each officer of the Board 
        and the Association shall be elected or appointed at 
        such time and in such manner and for such terms not 
        exceeding 3 years as may be prescribed in the bylaws of 
        the Association.
  [(b) Criteria for Chairperson.--Only individuals who are 
members of the NAIC shall be eligible to serve as the 
chairperson of the board of directors.

[SEC. 328. BYLAWS, RULES, AND DISCIPLINARY ACTION.

  [(a) Adoption and Amendment of Bylaws.--
          [(1) Copy required to be filed with the naic.--The 
        board of directors of the Association shall file with 
        the NAIC a copy of the proposed bylaws or any proposed 
        amendment to the bylaws, accompanied by a concise 
        general statement of the basis and purpose of such 
        proposal.
          [(2) Effective date.--Except as provided in paragraph 
        (3), any proposed bylaw or proposed amendment shall 
        take effect--
                  [(A) 30 days after the date of the filing of 
                a copy with the NAIC;
                  [(B) upon such later date as the Association 
                may designate; or
                  [(C) upon such earlier date as the NAIC may 
                determine.
          [(3) Disapproval by the naic.--Notwithstanding 
        paragraph (2), a proposed bylaw or amendment shall not 
        take effect if, after public notice and opportunity to 
        participate in a public hearing--
                  [(A) the NAIC disapproves such proposal as 
                being contrary to the public interest or 
                contrary to the purposes of this subtitle and 
                provides notice to the Association setting 
                forth the reasons for such disapproval; or
                  [(B) the NAIC finds that such proposal 
                involves a matter of such significant public 
                interest that public comment should be 
                obtained, in which case it may, after notifying 
                the Association in writing of such finding, 
                require that the procedures set forth in 
                subsection (b) be followed with respect to such 
                proposal, in the same manner as if such 
                proposed bylaw change were a proposed rule 
                change within the meaning of such subsection.
  [(b) Adoption and Amendment of Rules.--
          [(1) Filing proposed regulations with the naic.--
                  [(A) In general.--The board of directors of 
                the Association shall file with the NAIC a copy 
                of any proposed rule or any proposed amendment 
                to a rule of the Association which shall be 
                accompanied by a concise general statement of 
                the basis and purpose of such proposal.
                  [(B) Other rules and amendments 
                ineffective.--No proposed rule or amendment 
                shall take effect unless approved by the NAIC 
                or otherwise permitted in accordance with this 
                paragraph.
          [(2) Initial consideration by the naic.--Not later 
        than 35 days after the date of publication of notice of 
        filing of a proposal, or before the end of such longer 
        period not to exceed 90 days as the NAIC may designate 
        after such date, if the NAIC finds such longer period 
        to be appropriate and sets forth its reasons for so 
        finding, or as to which the Association consents, the 
        NAIC shall--
                  [(A) by order approve such proposed rule or 
                amendment; or
                  [(B) institute proceedings to determine 
                whether such proposed rule or amendment should 
                be modified or disapproved.
          [(3) NAIC proceedings.--
                  [(A) In general.--Proceedings instituted by 
                the NAIC with respect to a proposed rule or 
                amendment pursuant to paragraph (2) shall--
                          [(i) include notice of the grounds 
                        for disapproval under consideration;
                          [(ii) provide opportunity for 
                        hearing; and
                          [(iii) be concluded not later than 
                        180 days after the date of the 
                        Association's filing of such proposed 
                        rule or amendment.
                  [(B) Disposition of proposal.--At the 
                conclusion of any proceeding under subparagraph 
                (A), the NAIC shall, by order, approve or 
                disapprove the proposed rule or amendment.
                  [(C) Extension of time for consideration.--
                The NAIC may extend the time for concluding any 
                proceeding under subparagraph (A) for--
                          [(i) not more than 60 days if the 
                        NAIC finds good cause for such 
                        extension and sets forth its reasons 
                        for so finding; or
                          [(ii) such longer period as to which 
                        the Association consents.
          [(4) Standards for review.--
                  [(A) Grounds for approval.--The NAIC shall 
                approve a proposed rule or amendment if the 
                NAIC finds that the rule or amendment is in the 
                public interest and is consistent with the 
                purposes of this Act.
                  [(B) Approval before end of notice period.--
                The NAIC shall not approve any proposed rule 
                before the end of the 30-day period beginning 
                on the date on which the Association files 
                proposed rules or amendments in accordance with 
                paragraph (1), unless the NAIC finds good cause 
                for so doing and sets forth the reasons for so 
                finding.
          [(5) Alternate procedure.--
                  [(A) In general.--Notwithstanding any 
                provision of this subsection other than 
                subparagraph (B), a proposed rule or amendment 
                relating to the administration or organization 
                of the Association shall take effect--
                          [(i) upon the date of filing with the 
                        NAIC, if such proposed rule or 
                        amendment is designated by the 
                        Association as relating solely to 
                        matters which the NAIC, consistent with 
                        the public interest and the purposes of 
                        this subsection, determines by rule do 
                        not require the procedures set forth in 
                        this paragraph; or
                          [(ii) upon such date as the NAIC 
                        shall for good cause determine.
                  [(B) Abrogation by the naic.--
                          [(i) In general.--At any time within 
                        60 days after the date of filing of any 
                        proposed rule or amendment under 
                        subparagraph (A)(i) or clause (ii) of 
                        this subparagraph, the NAIC may repeal 
                        such rule or amendment and require that 
                        the rule or amendment be refiled and 
                        reviewed in accordance with this 
                        paragraph, if the NAIC finds that such 
                        action is necessary or appropriate in 
                        the public interest, for the protection 
                        of insurance producers or 
                        policyholders, or otherwise in 
                        furtherance of the purposes of this 
                        subtitle.
                          [(ii) Effect of reconsideration by 
                        the naic.--Any action of the NAIC 
                        pursuant to clause (i) shall--
                                  [(I) not affect the validity 
                                or force of a rule change 
                                during the period such rule or 
                                amendment was in effect; and
                                  [(II) not be considered to be 
                                a final action.
  [(c) Action Required by the NAIC.--The NAIC may, in 
accordance with such rules as the NAIC determines to be 
necessary or appropriate to the public interest or to carry out 
the purposes of this subtitle, require the Association to 
adopt, amend, or repeal any bylaw, rule, or amendment of the 
Association, whenever adopted.
  [(d) Disciplinary Action by the Association.--
          [(1) Specification of charges.--In any proceeding to 
        determine whether membership shall be denied, 
        suspended, revoked, or not renewed (hereafter in this 
        section referred to as a ``disciplinary action''), the 
        Association shall bring specific charges, notify such 
        member of such charges, give the member an opportunity 
        to defend against the charges, and keep a record.
          [(2) Supporting statement.--A determination to take 
        disciplinary action shall be supported by a statement 
        setting forth--
                  [(A) any act or practice in which such member 
                has been found to have been engaged;
                  [(B) the specific provision of this subtitle, 
                the rules or regulations under this subtitle, 
                or the rules of the Association which any such 
                act or practice is deemed to violate; and
                  [(C) the sanction imposed and the reason for 
                such sanction.
  [(e) NAIC Review of Disciplinary Action.--
          [(1) Notice to the naic.--If the Association orders 
        any disciplinary action, the Association shall promptly 
        notify the NAIC of such action.
          [(2) Review by the naic.--Any disciplinary action 
        taken by the Association shall be subject to review by 
        the NAIC--
                  [(A) on the NAIC's own motion; or
                  [(B) upon application by any person aggrieved 
                by such action if such application is filed 
                with the NAIC not more than 30 days after the 
                later of--
                          [(i) the date the notice was filed 
                        with the NAIC pursuant to paragraph 
                        (1); or
                          [(ii) the date the notice of the 
                        disciplinary action was received by 
                        such aggrieved person.
  [(f) Effect of Review.--The filing of an application to the 
NAIC for review of a disciplinary action, or the institution of 
review by the NAIC on the NAIC's own motion, shall not operate 
as a stay of disciplinary action unless the NAIC otherwise 
orders.
  [(g) Scope of Review.--
          [(1) In general.--In any proceeding to review such 
        action, after notice and the opportunity for hearing, 
        the NAIC shall--
                  [(A) determine whether the action should be 
                taken;
                  [(B) affirm, modify, or rescind the 
                disciplinary sanction; or
                  [(C) remand to the Association for further 
                proceedings.
          [(2) Dismissal of review.--The NAIC may dismiss a 
        proceeding to review disciplinary action if the NAIC 
        finds that--
                  [(A) the specific grounds on which the action 
                is based exist in fact;
                  [(B) the action is in accordance with 
                applicable rules and regulations; and
                  [(C) such rules and regulations are, and 
                were, applied in a manner consistent with the 
                purposes of this subtitle.

[SEC. 329. ASSESSMENTS.

  [(a) Insurance Producers Subject to Assessment.--The 
Association may establish such application and membership fees 
as the Association finds necessary to cover the costs of its 
operations, including fees made reimbursable to the NAIC under 
subsection (b), except that, in setting such fees, the 
Association may not discriminate against smaller insurance 
producers.
  [(b) NAIC Assessments.--The NAIC may assess the Association 
for any costs that the NAIC incurs under this subtitle.

[SEC. 330. FUNCTIONS OF THE NAIC.

  [(a) Administrative Procedure.--Determinations of the NAIC, 
for purposes of making rules pursuant to section 328, shall be 
made after appropriate notice and opportunity for a hearing and 
for submission of views of interested persons.
  [(b) Examinations and Reports.--
          [(1) Examinations.--The NAIC may make such 
        examinations and inspections of the Association and 
        require the Association to furnish to the NAIC such 
        reports and records or copies thereof as the NAIC may 
        consider necessary or appropriate in the public 
        interest or to effectuate the purposes of this 
        subtitle.
          [(2) Report by association.--As soon as practicable 
        after the close of each fiscal year, the Association 
        shall submit to 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. Such report 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. The 
        NAIC shall transmit such report to the President and 
        the Congress with such comment thereon as the NAIC 
        determines to be appropriate.

[SEC. 331. LIABILITY OF THE ASSOCIATION AND THE DIRECTORS, OFFICERS, 
                    AND EMPLOYEES OF THE ASSOCIATION.

  [(a) In General.--The Association shall not be deemed to be 
an insurer or insurance producer within the meaning of any 
State law, rule, regulation, or order regulating or taxing 
insurers, insurance producers, or other entities engaged in the 
business of insurance, including provisions imposing premium 
taxes, regulating insurer solvency or financial condition, 
establishing guaranty funds and levying assessments, or 
requiring claims settlement practices.
  [(b) Liability of the Association, Its Directors, Officers, 
and Employees.--Neither the Association nor any of its 
directors, officers, or employees shall have any liability to 
any person for any action taken or omitted in good faith under 
or in connection with any matter subject to this subtitle.

[SEC. 332. ELIMINATION OF NAIC OVERSIGHT.

  [(a) In General.--The Association shall be established 
without NAIC oversight and the provisions set forth in section 
324, subsections (a), (b), (c), and (e) of section 328, and 
sections 329(b) and 330 of this subtitle shall cease to be 
effective if, at the end of the 2-year period beginning on the 
date on which the provisions of this subtitle take effect 
pursuant to section 321--
          [(1) at least a majority of the States representing 
        at least 50 percent of the total United States 
        commercial-lines insurance premiums have not satisfied 
        the uniformity or reciprocity requirements of 
        subsections (a), (b), and (c) of section 321; and
          [(2) the NAIC has not approved the Association's 
        bylaws as required by section 328 or is unable to 
        operate or supervise the Association, or the 
        Association is not conducting its activities as 
        required under this Act.
  [(b) Board Appointments.--If the repeals required by 
subsection (a) are implemented, the following shall apply:
          [(1) General appointment power.--The President, with 
        the advice and consent of the Senate, shall appoint the 
        members of the Association's Board established under 
        section 326 from lists of candidates recommended to the 
        President by the NAIC.
          [(2) Procedures for obtaining naic appointment 
        recommendations.--
                  [(A) Initial determination and 
                recommendations.--After the date on which the 
                provisions of subsection (a) take effect, the 
                NAIC shall, not later than 60 days thereafter, 
                provide a list of recommended candidates to the 
                President. If the NAIC fails to provide a list 
                by that date, or if any list that is provided 
                does not include at least 14 recommended 
                candidates or comply with the requirements of 
                section 326(c), the President shall, with the 
                advice and consent of the Senate, make the 
                requisite appointments without considering the 
                views of the NAIC.
                  [(B) Subsequent appointments.--After the 
                initial appointments, the NAIC shall provide a 
                list of at least six recommended candidates for 
                the Board to the President by January 15 of 
                each subsequent year. If the NAIC fails to 
                provide a list by that date, or if any list 
                that is provided does not include at least six 
                recommended candidates or comply with the 
                requirements of section 326(c), the President, 
                with the advice and consent of the Senate, 
                shall make the requisite appointments without 
                considering the views of the NAIC.
                  [(C) Presidential oversight.--
                          [(i) Removal.--If the President 
                        determines that the Association is not 
                        acting in the interests of the public, 
                        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, with the 
                        advice and consent of the Senate, new 
                        members to fill the vacancies on the 
                        Board for the remainder of such terms.
                          [(ii) 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 public interest.
  [(c) Annual Report.--As soon as practicable after the close 
of each fiscal year, the Association shall submit to the 
President and to the Congress a written report relative to the 
conduct of its business, and the exercise of the other rights 
and powers granted by this subtitle, during such fiscal year. 
Such report 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.

[SEC. 333. RELATIONSHIP TO STATE LAW.

  [(a) Preemption of State Laws.--State laws, regulations, 
provisions, or other actions purporting to regulate insurance 
producers shall be preempted as provided in subsection (b).
  [(b) Prohibited Actions.--No State shall--
          [(1) impede the activities of, take any action 
        against, or apply any provision of law or regulation 
        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;
          [(2) impose any requirement upon a member of the 
        Association that it pay different fees to be licensed 
        or otherwise qualified to do business in that State, 
        including bonding requirements, based on its residency;
          [(3) impose any licensing, appointment, integrity, 
        personal or corporate qualifications, education, 
        training, experience, residency, or continuing 
        education requirement upon a member of the Association 
        that is different from the criteria for membership in 
        the Association or renewal of such membership, except 
        that countersignature requirements imposed on 
        nonresident producers shall not be deemed to have the 
        effect of limiting or conditioning a producer's 
        activities because of its residence or place of 
        operations under this section; or
          [(4) implement the procedures of such State's system 
        of licensing or renewing the licenses of insurance 
        producers in a manner different from the authority of 
        the Association under section 325.
  [(c) Savings Provision.--Except as provided in subsections 
(a) and (b), 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 insurance producers, including any such 
law, regulation, provision, or action which purports to 
regulate unfair trade practices or establish consumer 
protections, including countersignature laws.

[SEC. 334. COORDINATION WITH OTHER REGULATORS.

  [(a) Coordination With State Insurance Regulators.--The 
Association shall have the authority to--
          [(1) issue uniform insurance producer applications 
        and renewal applications that may be used to apply for 
        the issuance or removal of State licenses, while 
        preserving the ability of each State to impose such 
        conditions on the issuance or renewal of a license as 
        are consistent with section 333;
          [(2) establish a central clearinghouse through which 
        members of the Association may apply for the issuance 
        or renewal of licenses in multiple States; and
          [(3) establish or utilize a national database for the 
        collection of regulatory information concerning the 
        activities of insurance producers.
  [(b) Coordination With the National Association of Securities 
Dealers.--The Association shall coordinate with the National 
Association of Securities Dealers in order to ease any 
administrative burdens that fall on persons that are members of 
both associations, consistent with the purposes of this 
subtitle and the Federal securities laws.

[SEC. 335. JUDICIAL REVIEW.

  [(a) Jurisdiction.--The appropriate United States district 
court shall have exclusive jurisdiction over litigation 
involving the Association, including disputes between the 
Association and its members that arise under this subtitle. 
Suits brought in State court involving the Association shall be 
deemed to have arisen under Federal law and therefore be 
subject to jurisdiction in the appropriate United States 
district court.
  [(b) Exhaustion of Remedies.--An aggrieved person shall be 
required to exhaust all available administrative remedies 
before the Association and the NAIC before it may seek judicial 
review of an Association decision.
  [(c) Standards of Review.--The standards set forth in section 
553 of title 5, United States Code, shall be applied whenever a 
rule or bylaw of the Association is under judicial review, and 
the standards set forth in section 554 of title 5, United 
States Code, shall be applied whenever a disciplinary action of 
the Association is judicially reviewed.

[SEC. 336. DEFINITIONS.

  [For purposes of this subtitle, the following definitions 
shall apply:
          [(1) Home state.--The term ``home State'' means the 
        State in which the insurance producer maintains its 
        principal place of residence and is licensed to act as 
        an insurance producer.
          [(2) Insurance.--The term ``insurance'' means any 
        product, other than title insurance, defined or 
        regulated as insurance by the appropriate State 
        insurance regulatory authority.
          [(3) Insurance producer.--The term ``insurance 
        producer'' means any insurance agent or broker, surplus 
        lines broker, insurance consultant, limited insurance 
        representative, and any other person that solicits, 
        negotiates, effects, procures, delivers, renews, 
        continues or binds policies of insurance or offers 
        advice, counsel, opinions or services related to 
        insurance.
          [(4) State.--The term ``State'' includes any State, 
        the District of Columbia, any territory of the United 
        States, Puerto Rico, Guam, American Samoa, the Trust 
        Territory of the Pacific Islands, the Virgin Islands, 
        and the Northern Mariana Islands.
          [(5) State law.--The term ``State law'' includes all 
        laws, decisions, rules, regulations, or other State 
        action having the effect of law, of any State. A law of 
        the United States applicable only to the District of 
        Columbia shall be treated as a State law rather than a 
        law of the United States.]

   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 
                        fingerprints or other 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 fingerprints or 
                        other identification information and 
                        criminal history record information, 
                        including the establishment of 
                        reasonable fees to defray the expenses 
                        of the Association in connection with 
                        the performance of a criminal history 
                        record check and appropriate safeguards 
                        for maintaining confidentiality and 
                        security of the information. Any fees 
                        charged pursuant to this clause shall 
                        be separate and distinct from those 
                        charged by the Attorney General 
                        pursuant to subparagraph (I).
                  (D) Form of request.--A submission under 
                subparagraph (C)(i) shall include such 
                fingerprints or other 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 
                fingerprints or other 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 not more than 
                $50,000 per violation as determined by a court 
                of competent jurisdiction.
                  (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, standards, 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 referred to 
        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 subparagraph (B) or (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.

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[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                             MINORITY VIEWS

    The Terrorism Risk Insurance Act of 2002 (TRIA) authorized 
the creation of the Terrorism Risk Insurance Program to ensure 
the availability and affordability of terrorism coverage. The 
Program contains several safeguards to limit taxpayer exposure 
and increase private sector participation. These safeguards 
include a $100 million program trigger, a 20 percent deductible 
requirement, a 15 percent insurer co-pay, a hard cap of $100 
billion, and a recoupment mechanism.
    Increasing the Program trigger five-fold will have a 
punitive effect on smaller, regional, and niche insurers who 
would be forced from the market. The dramatic increase will 
increase the potential exposure for companies, making terrorism 
coverage too great a risk for small and mid-sized companies to 
participate in the program. With fewer companies able to offer 
coverage, take-up rates may suffer and uninsured losses in the 
event of a terrorist attack may be greater, thus increasing 
taxpayer exposure. The increase will also disproportionately 
affect the workers' compensation market, which functions 
differently from other insurance markets, including property 
and casualty insurers. State workers' compensation statutes 
dictate that workers' compensation insurers cannot exclude or 
limit terrorism coverage. Because workers' compensation 
coverage for terrorism is mandatory for the vast majority of 
U.S. employers, carriers are unable to take advantage of the 
small insurer opt out included in the bill.
    Increasing the program trigger from the current $100 
million threshold would significantly increase potential 
exposure for workers' compensation carriers. This policy change 
would force them to limit their exposure by declining to cover 
employers faced with high terrorism risk--in some cases, many 
of the smaller workers' compensation insurers would be forced 
to pull completely out of certain regional markets to limit 
exposure. Those insurers that choose to continue to offer 
workers' compensation insurance coverage in and near perceived 
terror targets would severely jeopardize their financial 
stability and would likely face downward pressure from ratings 
agencies. This will force small workers' compensation carriers 
out of the market resulting in decreased competition. This will 
then lead to increased costs for employers, as well as reduced 
labor incomes and economic growth--while at the same time 
uninsured losses in the event of a terrorist attack will be 
greater, increasing pressure to the federal government to pay 
for those losses.
    Bifurcating conventional terrorism and nuclear, biological, 
chemical, and radiological (NBCR) terrorism may bring 
uncertainty to the Program post-attack. Distinguishing between 
an NBCR and non-NBCR event may lead to practical challenges 
with the certification and claims process.
    TRIA has been a resounding success. The Program has made 
terrorism coverage both available and affordable, all while 
costing taxpayers nothing. The Program also provides 
policyholders with the certainty they need to continue to 
develop, create jobs, and contribute to our economic growth. It 
is clear that such drastic reforms to TRIA do nothing to reduce 
taxpayer exposure or increase capacity, but only serve to 
phase-out the already limited backstop and leave our nation 
unprotected in the case of a terrorist attack.

                                   Maxine Waters.
                                   Dan Kildee.
                                   Ruben Hinojosa.
                                   Steven Horsford.
                                   Joyce Beatty.
                                   Emanuel Cleaver.
                                   Michael E. Capuano.
                                   Gary C. Peters.
                                   Carolyn B. Maloney.
                                   Al Green.
                                   Keith Ellison.
                                   Denny Heck.
                                   Gwen Moore.
                                   Ed Perlmutter.
                                   Wm. Lacy Clay.