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115th Congress      }                                 {      Report
                        HOUSE OF REPRESENTATIVES
 2d Session         }                                 {      115-1008

======================================================================



 
              FEDERAL INSURANCE OFFICE REFORM ACT OF 2018

                                _______
                                

November 2, 2018.--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. 3861]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 3861) to reform the Federal Insurance Office of 
the Department of the Treasury, 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.

  This Act may be cited as the ``Federal Insurance Office Reform Act of 
2018''.

SEC. 2. REFORM OF FEDERAL INSURANCE OFFICE.

  (a) In General.--Section 313 of title 31, United States Code, is 
amended as follows:
          (1) Leadership.--In the first sentence of subsection (b), by 
        inserting before the period at the end the following: ``after 
        consultation with State insurance commissioners''.
          (2) Functions.--In subsection (c)(1)--
                  (A) in subparagraph (E), by striking ``to 
                coordinate'' and all that follows through ``United 
                States'' and inserting the following: ``to coordinate 
                Federal efforts, and to coordinate with the States, in 
                developing Federal policy on prudential aspects of 
                international insurance matters, including representing 
                the Federal Government'';
                  (B) in subparagraph (F), by striking ``to determine'' 
                and inserting ``to assist the Secretary in 
                determining''; and
                  (C) by striking subparagraph (G) and inserting the 
                following:
                  ``(G) to consult and work toward consensus with the 
                States (including State insurance regulators) on 
                matters of international importance; and''.
          (3) Gathering of information.--In subsection (e)--
                  (A) in paragraph (1)--
                          (i) in the matter preceding subparagraph (A), 
                        by striking ``may--'' and inserting ``may enter 
                        into information-sharing agreements.''; and
                          (ii) by striking subparagraphs (A) through 
                        (D);
                  (B) by striking paragraphs (2), (3), (4), and (6); 
                and
                  (C) by redesignating paragraph (5) as paragraph (2).
          (4) Preemption of state insurance measures.--In subsection 
        (f), by striking ``Director'' each place such term appears and 
        inserting ``Secretary''.
          (5) Consultation.--In subsection (i)--
                  (A) by striking ``to the extent the Director 
                determines appropriate,''; and
                  (B) by inserting before the period at the end the 
                following: ``and shall seek to include in such 
                meetings, State insurance commissioners, or at the 
                option of the State insurance commissioners, designees 
                acting at the direction of the State insurance 
                commissioners, throughout the negotiations of a covered 
                agreement''.
          (6) Retention of existing state regulatory authority.--In 
        subsection (k), by inserting before the period at the end the 
        following: ``or with the authority to participate in a 
        supervisory college or similar regulatory process''.
          (7) Repeal of certain reports requirements.--By striking 
        subsections (o) and (p) and redesignating subsections (q) 
        through (s) as subsections (o) through (q), respectively.
          (8) Definition.--In subsection (p)(2), as so redesignated by 
        paragraph (7)--
                  (A) in subparagraph (A), by striking ``and'' at the 
                end;
                  (B) in subparagraph (B), by striking the period at 
                the end and inserting ``; and''; and
                  (C) by adding at the end the following new 
                subparagraph:
                  ``(C) does not include new prudential requirements 
                for United States insurers.''.
  (b) Conforming Amendment.--Subparagraph (E) of section 313(c)(1) of 
title 31, United States Code, is amended by striking ``subsection (r)'' 
and inserting ``subsection (p)''.

SEC. 3. TREATMENT OF TERRORISM RISK INSURANCE ACT.

  This Act and the amendments made by this Act may not be construed to 
affect any responsibilities, duties, or authorities of the Secretary of 
the Treasury under the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 
6701 note).

                          Purpose and Summary

    On September 28, 2017, Representative Sean Duffy introduced 
H.R. 3861, the ``Federal Insurance Office Reform Act of 2017'', 
which would streamline the operations of the Federal Insurance 
Office (FIO), within the U.S. Department of the Treasury 
(Treasury), eliminate duplicative duties performed by state 
insurance regulators and re-focus the FIO's mission on the 
coordination between state insurance regulators and the federal 
government on issues of international importance.
    As amended, H.R. 3861 eliminates FIO's subpoena authority, 
and general authority, to collect information directly from 
insurers, eliminates the authority of FIO to study and issue 
reports, unless requested by Congress, eliminates the Treasury 
Department's authority to assign new duties or authorities to 
the FIO, and clarifies that neither FIO nor the Treasury 
Department has the authority to participate in supervisory 
colleges. To improve the coordination of issues of 
international importance, the legislation requires the FIO to 
work towards consensus with the states about international 
matters. The legislation also directs FIO to seek to include 
state insurance commissioners in meetings throughout the 
negotiation of covered agreements with international bodies, 
and defines that a covered agreement shall not include new 
prudential requirements.

                  Background and Need for Legislation

    The goal of H.R. 3861 is to: (1) streamline the Federal 
Insurance Office (FIO) by eliminating duplicative duties 
performed by state insurance regulators and (2) focus the 
office's mission on the coordination between state insurance 
regulators and the federal government on issues of 
international importance.
    For nearly 150 years, the states have primarily regulated 
U.S. insurance companies of every kind--including property-
casualty, life, reinsurance, health, and auto--have been 
regulated primarily by the states. Congress and the states have 
occasionally reviewed the effectiveness of the state-based 
regulation of insurance and coordinated efforts to achieve 
greater regulatory uniformity. In 1945, Congress passed the 
McCarran-Ferguson Act (15 U.S.C. Sec. Sec. 1011 et seq.), which 
confirmed the states' regulatory authority over insurance 
except where a federal law expressly provides otherwise.
    Title V of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Pub. L. No. 111-203) enlarged the federal 
government's role in the insurance industry by creating a 
federal office specifically tasked with insurance matters. 
Title V does not give the federal government a role in 
licensing or regulating the insurance industry in the United 
States. Title V of the Dodd-Frank Act did establish a Federal 
Insurance Office (FIO) at the Treasury Department and charged 
the FIO director with representing the interests of U.S. 
insurers during the negotiation of international agreements and 
advising the Office of the U.S. Trade Representative (USTR) 
during trade negotiations. The Subcommittee on Housing and 
Insurance received testimony on October 24, 2017 from Paul 
Ehlert, President of Germania Insurance and Chairman of the 
National Association of Mutual Insurance Companies, who noted, 
``the legislation moves the office under the Treasury 
Department's Office of International Affairs. This will help 
keep the mission focused on coordinating federal efforts and 
representing the U.S. market, insurers, and policyholders 
abroad rather than attempting to regulate the insurance 
industry here at home.''
    The FIO's authority extends to all lines of insurance 
except health insurance, most long-term care insurance, and 
crop insurance. The Treasury Secretary has general rulemaking 
authority to implement the Federal Insurance Office and the 
Office has access to personnel and other resources of the 
Treasury available to the Treasury Secretary. Title V of the 
Dodd-Frank Act charges FIO with eight specific mandates: (1) 
monitoring all aspects of the insurance industry; (2) 
monitoring the extent to which underserved communities have 
access to affordable insurance; (3) making recommendations to 
the FSOC on insurance companies to be designated for heightened 
prudential standards and supervision by the Federal Reserve 
because of their size or interconnectedness; (4) assisting the 
Treasury Secretary in administering the Terrorism Risk 
Insurance Act (TRIA); (5) coordinating federal involvement and 
policymaking on international insurance matters, which includes 
representing the U.S. on the International Association of 
Insurance Supervisors (IAIS)--an international insurance 
standard-setting body--and in negotiations of international 
insurance agreements; (6) consulting with state insurance 
regulators on matters of national or international importance; 
(7) determining whether state insurance laws that treat non-
U.S. insurers less favorably than U.S. insurers are preempted 
by international agreements; and (8) other duties assigned by 
the Secretary of the Treasury.
    There has been some concern, since the enactment of the 
Dodd-Frank Act, that FIO is not a unified voice on matters of 
insurance regulation. This lack of a cohesive voice also 
impacts FIO's ability to successfully advocate on behalf of the 
U.S. insurance business and the U.S. insurance regulatory 
structure. H.R. 3861 seeks to rectify this lack of a cohesive 
voice. Katharine L. Wade, Commissioner, Connecticut Insurance 
Department, testified that, ``By making clear that FIO 
represents the Treasury Department and is responsible for 
coordinating federal agencies' international insurance 
policymaking, the legislation provides clear lines of 
demarcation and definition to the role of FIO internationally 
and domestically.''

                                Hearings

    The Committee on Financial Services, Subcommittee on 
Housing and Insurance, held a hearing examining matters 
relating to H.R. 3861 on October 24, 2017.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
June 7, 2018, and ordered H.R. 3861 to be reported favorably to 
the House AS AMENDED by a recorded vote of 36 yeas to 21 nays 
(Record vote no. FC-184), a quorum being present. Before the 
motion to report was offered, the Committee adopted an 
amendment in the nature of a substitute offered by Mr. Duffy by 
voice vote.

                            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. The 
sole recorded vote was on a motion by Chairman Hensarling to 
report the bill favorably to the House as amended. The motion 
was agreed to by a recorded vote of 36 yeas to 21 nays (Record 
vote no. FC-184), a quorum being present.





{GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]








                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

   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.

                 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, June 25, 2018.
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. 3861, the Federal 
Insurance Office Reform Act of 2017.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 3861--Federal Insurance Office Reform Act of 2017

    H.R. 3861 would amend the duties of the Federal Insurance 
Office (FIO) within the Department of the Treasury to focus on 
international insurance markets and improving coordination with 
state insurance authorities and federal agencies. FIO's work 
plans already address those matters; consequently, CBO 
estimates that implementing this bill would have no significant 
effect on the office's operations or administrative costs.
    Enacting H.R. 3861 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    CBO estimates that enacting H.R. 3861 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2029.
    H.R. 3861 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Matthew 
Pickford. The estimate was reviewed by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995.
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                      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

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    Duplication of Federal Programs

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
from the Government Accountability Office to Congress pursuant 
to section 21 of Public Law 111-139; or (3) a program related 
to a program identified in the most recent Catalog of Federal 
Domestic Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(i) of H. Res. 5, (115th Congress), 
the following statement is made concerning directed rule 
makings: The Committee estimates that the bill requires no 
directed rule makings within the meaning of such section.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section cites H.R. 3861 as the ``Federal Insurance 
Office Reform Act of 2017.''

Section 2. Reform of Federal Insurance Office

    The section instructs the Treasury Secretary to consult 
with state insurance commissioners on the appointment of the 
Director of the FIO.
    It further eliminates the authority of the Director to 
determine whether State insurance measures are preempted by 
covered agreements and places that authority with the Treasury 
Secretary and instructs the FIO to work towards consensus with 
states regarding insurance matters of international importance.
    The section also allows FIO to enter into information 
sharing agreements and eliminates the authority of FIO to 
subpoena data directly from the insurance industry. It 
eliminates authority of the FIO to issue reports not requested 
by Congress and eliminates subpoena authority given to the FIO.
    Conforming language strikes ``Director'' and inserts 
``Secretary'' to determine whether State insurance measures are 
preempted by covered agreements. The section further instructs 
the Director to seek inclusion of state insurance commissioners 
in meetings throughout negotiations of a covered agreement.
    Finally, section 2 clarifies that the FIO or Treasury does 
not have authority to participate in supervisory colleges, 
eliminates reports from statute that have already been issued 
and defines that a covered agreement shall not include new 
prudential requirements.

         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, and existing law in which no 
change is proposed is shown in roman):

         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, and existing law in which no 
change is proposed is shown in roman):

                      TITLE 31, UNITED STATES CODE




           *       *       *       *       *       *       *
SUBTITLE I--GENERAL

           *       *       *       *       *       *       *


CHAPTER 3--DEPARTMENT OF THE TREASURY

           *       *       *       *       *       *       *



SUBCHAPTER I--ORGANIZATION

           *       *       *       *       *       *       *



Sec. 313. Federal Insurance Office

  (a) Establishment.--There is established within the 
Department of the Treasury the Federal Insurance Office.
  (b) Leadership.--The Office shall be headed by a Director, 
who shall be appointed by the Secretary of the Treasury after 
consultation with State insurance commissioners. The position 
of Director shall be a career reserved position in the Senior 
Executive Service, as that position is defined under section 
3132 of title 5, United States Code.
  (c) Functions.--
          (1) Authority pursuant to direction of Secretary.--
        The Office, pursuant to the direction of the Secretary, 
        shall have the authority--
                  (A) to monitor all aspects of the insurance 
                industry, including identifying issues or gaps 
                in the regulation of insurers that could 
                contribute to a systemic crisis in the 
                insurance industry or the United States 
                financial system;
                  (B) to monitor the extent to which 
                traditionally underserved communities and 
                consumers, minorities (as such term is defined 
                in section 1204(c) of the Financial 
                Institutions Reform, Recovery, and Enforcement 
                Act of 1989 (12 U.S.C. 1811 note)), and low- 
                and moderate-income persons have access to 
                affordable insurance products regarding all 
                lines of insurance, except health insurance;
                  (C) to recommend to the Financial Stability 
                Oversight Council that it designate an insurer, 
                including the affiliates of such insurer, as an 
                entity subject to regulation as a nonbank 
                financial company supervised by the Board of 
                Governors pursuant to title I of the Dodd-Frank 
                Wall Street Reform and Consumer Protection Act;
                  (D) to assist the Secretary in administering 
                the Terrorism Insurance Program established in 
                the Department of the Treasury under the 
                Terrorism Risk Insurance Act of 2002 (15 U.S.C. 
                6701 note);
                  (E) [to coordinate Federal efforts and 
                develop Federal policy on prudential aspects of 
                international insurance matters, including 
                representing the United States] to coordinate 
                Federal efforts, and to coordinate with the 
                States, in developing Federal policy on 
                prudential aspects of international insurance 
                matters, including representing the Federal 
                Government, as appropriate, in the 
                International Association of Insurance 
                Supervisors (or a successor entity) and 
                assisting the Secretary in negotiating covered 
                agreements (as such term is defined in 
                [subsection (r)] subsection (p));
                  (F) [to determine] to assist the Secretary in 
                determining, in accordance with subsection (f), 
                whether State insurance measures are preempted 
                by covered agreements;
                  [(G) to consult with the States (including 
                State insurance regulators) regarding insurance 
                matters of national importance and prudential 
                insurance matters of international importance; 
                and]
                  (G) to consult and work toward consensus with 
                the States (including State insurance 
                regulators) on matters of international 
                importance; and
                  (H) to perform such other related duties and 
                authorities as may be assigned to the Office by 
                the Secretary.
          (2) Advisory functions.--The Office shall advise the 
        Secretary on major domestic and prudential 
        international insurance policy issues.
          (3) Advisory capacity on Council.--The Director shall 
        serve
in an advisory capacity on the Financial Stability Oversight 
Council established under the Financial Stability Act of 2010.
  (d) Scope.--The authority of the Office shall extend to all 
lines of insurance except--
          (1) health insurance, as determined by the Secretary 
        in coordination with the Secretary of Health and Human 
        Services based on section 2791 of the Public Health 
        Service Act (42 U.S.C. 300gg-91);
          (2) long-term care insurance, except long-term care 
        insurance that is included with life or annuity 
        insurance components, as determined by the Secretary in 
        coordination with the Secretary of Health and Human 
        Services, and in the case of long-term care insurance 
        that is included with such components, the Secretary 
        shall coordinate with the Secretary of Health and Human 
        Services in performing the functions of the Office; and
          (3) crop insurance, as established by the Federal 
        Crop Insurance Act (7 U.S.C. 1501 et seq.).
  (e) Gathering of Information.--
          (1) In general.--In carrying out the functions 
        required under subsection (c), the Office [may--] may 
        enter into information-sharing agreements.
                  [(A) receive and collect data and information 
                on and from the insurance industry and 
                insurers;
                  [(B) enter into information-sharing 
                agreements;
                  [(C) analyze and disseminate data and 
                information; and
                  [(D) issue reports regarding all lines of 
                insurance except health insurance.]
          [(2) Collection of information from insurers and 
        affiliates.--
                  [(A) In general.--Except as provided in 
                paragraph (3), the Office may require an 
                insurer, or any affiliate of an insurer, to 
                submit such data or information as the Office 
                may reasonably require in carrying out the 
                functions described under subsection (c).
                  [(B) Rule of construction.--Notwithstanding 
                any other provision of this section, for 
                purposes of subparagraph (A), the term 
                ``insurer'' means any entity that writes 
                insurance or reinsures risks and issues 
                contracts or policies in 1 or more States.
          [(3) Exception for small insurers.--Paragraph (2) 
        shall not apply with respect to any insurer or 
        affiliate thereof that meets a minimum size threshold 
        that the Office may establish, whether by order or 
        rule.
          [(4) Advance coordination.--Before collecting any 
        data or information under paragraph (2) from an 
        insurer, or affiliate of an insurer, the Office shall 
        coordinate with each relevant Federal agency and State 
        insurance regulator (or other relevant Federal or State 
        regulatory agency, if any, in the case of an affiliate 
        of an insurer) and any publicly available sources to 
        determine if the information to be collected is 
        available from, and may be obtained in a timely manner 
        by, such Federal agency or State insurance regulator, 
        individually or collectively, other regulatory agency, 
        or publicly available sources. If the Director 
        determines that such data or information is available, 
        and may be obtained in a timely manner, from such an 
        agency, regulator, regulatory agency, or source, the 
        Director shall obtain the data or information from such 
        agency, regulator, regulatory agency, or source. If the 
        Director determines that such data or information is 
        not so available, the Director may collect such data or 
        information from an insurer (or affiliate) only if the 
        Director complies with the requirements of subchapter I 
        of chapter 35 of title 44, United States Code (relating 
        to Federal information policy; commonly known as the 
        Paperwork Reduction Act), in collecting such data or 
        information. Notwithstanding any other provision of 
        law, each such relevant Federal agency and State 
        insurance regulator or other Federal or State 
        regulatory agency is authorized to provide to the 
        Office such data or information.]
          [(5)] (2) Confidentiality.--
                  (A) Retention of privilege.--The submission 
                of any nonpublicly available data and 
                information to the Office 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 nonpublicly 
                available data or information and the source of 
                such data or information to the Office, 
                regarding the privacy or confidentiality of any 
                data or information in the possession of the 
                source to the Office, shall continue to apply 
                to such data or information after the data or 
                information has been provided pursuant to this 
                subsection to the Office.
                  (C) Information-sharing agreement.--Any data 
                or information obtained by the Office may be 
                made available to State insurance regulators, 
                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 
                        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, shall apply 
                to any data or information submitted to the 
                Office by an insurer or an affiliate of an 
                insurer.
          [(6) Subpoenas and enforcement.--The Director shall 
        have the power to require by subpoena the production of 
        the data or information requested under paragraph (2), 
        but only upon a written finding by the Director that 
        such data or information is required to carry out the 
        functions described under subsection (c) and that the 
        Office has coordinated with such regulator or agency as 
        required under paragraph (4). Subpoenas shall bear the 
        signature of the Director and shall be served by any 
        person or class of persons designated by the Director 
        for that purpose. In the case of contumacy or failure 
        to obey a subpoena, the subpoena shall be enforceable 
        by order of any appropriate district court of the 
        United States. Any failure to obey the order of the 
        court may be punished by the court as a contempt of 
        court.]
  (f) Preemption of State Insurance Measures.--
          (1) Standard.--A State insurance measure shall be 
        preempted pursuant to this section or section 314 if, 
        and only to the extent that the [Director] Secretary 
        determines, in accordance with this subsection, that 
        the measure--
                  (A) results in less favorable treatment of a 
                non-United States insurer domiciled in a 
                foreign jurisdiction that is subject to a 
                covered agreement than a United States insurer 
                domiciled, licensed, or otherwise admitted in 
                that State; and
                  (B) is inconsistent with a covered agreement.
          (2) Determination.--
                  (A) Notice of potential inconsistency.--
                Before making any determination under paragraph 
                (1), the [Director] Secretary shall--
                          (i) notify and consult with the 
                        appropriate State regarding any 
                        potential inconsistency or preemption;
                          (ii) notify and consult with the 
                        United States Trade Representative 
                        regarding any potential inconsistency 
                        or preemption;
                          (iii) cause to be published in the 
                        Federal Register notice of the issue 
                        regarding the potential inconsistency 
                        or preemption, including a description 
                        of each State insurance measure at 
                        issue and any applicable covered 
                        agreement;
                          (iv) provide interested parties a 
                        reasonable opportunity to submit 
                        written comments to the Office; and
                          (v) consider any comments received.
                  (B) Scope of review.--For purposes of this 
                subsection, any determination of the [Director] 
                Secretary regarding State insurance measures, 
                and any preemption under paragraph (1) as a 
                result of such determination, shall be limited 
                to the subject matter contained within the 
                covered agreement involved and shall achieve a 
                level of protection for insurance or 
                reinsurance consumers that is substantially 
                equivalent to the level of protection achieved 
                under State insurance or reinsurance 
                regulation.
                  (C) Notice of determination of 
                inconsistency.--Upon making any determination 
                under paragraph (1), the [Director] Secretary 
                shall--
                          (i) notify the appropriate State of 
                        the determination and the extent of the 
                        inconsistency;
                          (ii) establish a reasonable period of 
                        time, which shall not be less than 30 
                        days, before the determination shall 
                        become effective; and
                          (iii) notify the Committees on 
                        Financial Services and Ways and Means 
                        of the House of Representatives and the 
                        Committees on Banking, Housing, and 
                        Urban Affairs and Finance of the 
                        Senate.
          (3) Notice of effectiveness.--Upon the conclusion of 
        the period referred to in paragraph (2)(C)(ii), if the 
        basis for such determination still exists, the 
        determination shall become effective and the [Director] 
        Secretary shall--
                  (A) cause to be published a notice in the 
                Federal Register that the preemption has become 
                effective, as well as the effective date; and
                  (B) notify the appropriate State.
          (4) Limitation.--No State may enforce a State 
        insurance measure to the extent that such measure has 
        been preempted under this subsection.
  (g) Applicability of Administrative Procedures Act.--
Determinations of inconsistency made pursuant to subsection 
(f)(2) shall be subject to the applicable provisions of 
subchapter II of chapter 5 of title 5, United States Code 
(relating to administrative procedure), and chapter 7 of such 
title (relating to judicial review), except that in any action 
for judicial review of a determination of inconsistency, the 
court shall determine the matter de novo.
  (h) Regulations, Policies, and Procedures.--The Secretary may 
issue orders, regulations, policies, and procedures to 
implement this section.
  (i) Consultation.--The Director shall consult with State 
insurance regulators, individually or collectively, [to the 
extent the Director determines appropriate,] in carrying out 
the functions of the Office and shall seek to include in such 
meetings, State insurance commissioners, or at the option of 
the State insurance commissioners, designees acting at the 
direction of the State insurance commissioners, throughout the 
negotiations of a covered agreement.
  (j) Savings Provisions.--Nothing in this section shall--
          (1) preempt--
                  (A) any State insurance measure that governs 
                any insurer's rates, premiums, underwriting, or 
                sales practices;
                  (B) any State coverage requirements for 
                insurance;
                  (C) the application of the antitrust laws of 
                any State to the business of insurance; or
                  (D) any State insurance measure governing the 
                capital or solvency of an insurer, except to 
                the extent that such State insurance measure 
                results in less favorable treatment of a non-
                United State insurer than a United States 
                insurer;
          (2) be construed to alter, amend, or limit any 
        provision of
the Consumer Financial Protection Agency Act of 2010; or
          (3) affect the preemption of any State insurance 
        measure
otherwise inconsistent with and preempted by Federal law.
  (k) Retention of Existing State Regulatory Authority.--
Nothing in this section or section 314 shall be construed to 
establish or provide the Office or the Department of the 
Treasury with general supervisory or regulatory authority over 
the business of insurance or with the authority to participate 
in a supervisory college or similar regulatory process.
  (l) Retention of Authority of Federal Financial Regulatory 
Agencies.--Nothing in this section or section 314 shall be 
construed to limit the authority of any Federal financial 
regulatory agency, including the authority to develop and 
coordinate policy, negotiate, and enter into agreements with 
foreign governments, authorities, regulators, and multinational 
regulatory committees and to preempt State measures to affect 
uniformity with international regulatory agreements.
  (m) Retention of Authority of United States Trade 
Representative.--Nothing in this section or section 314 shall 
be construed to affect the authority of the Office of the 
United States Trade Representative pursuant to section 141 of 
the Trade Act of 1974 (19 U.S.C. 2171) or any other provision 
of law, including authority over the development and 
coordination of United States international trade policy and 
the administration of the United States trade agreements 
program.
  (n) Annual Reports to Congress.--
          (1) Section 313(f) reports.--Beginning September 30, 
        2011, the Director shall submit a report on or before 
        September 30 of each calendar year to the President and 
        to the Committees on Financial Services and Ways and 
        Means of the House of Representatives and the 
        Committees on Banking, Housing, and Urban Affairs and 
        Finance of the Senate on any actions taken by the 
        Office pursuant to subsection (f) (regarding preemption 
        of inconsistent State insurance measures).
          (2) Insurance industry.--Beginning September 30, 
        2011, the Director shall submit a report on or before 
        September 30 of each calendar year to the President and 
        to the Committee on Financial Services of the House of 
        Representatives and the Committee on Banking, Housing, 
        and Urban Affairs of the Senate on the insurance 
        industry and any other information as deemed relevant 
        by the Director or requested by such Committees.
  [(o) Reports on U.S. and Global Reinsurance Market.--The 
Director shall submit to the Committee on Financial Services of 
the House of Representatives and the Committee on Banking, 
Housing, and Urban Affairs of the Senate--
          [(1) a report received not later than September 30, 
        2012, describing the breadth and scope of the global 
        reinsurance market and the critical role such market 
        plays in supporting insurance in the United States; and
          [(2) a report received not later than January 1, 
        2013, and updated not later than January 1, 2015, 
        describing the impact of part II of the Nonadmitted and 
        Reinsurance Reform Act of 2010 on the ability of State 
        regulators to access reinsurance information for 
        regulated companies in their jurisdictions.
  [(p) Study and Report on Regulation of Insurance.--
          [(1) In general.--Not later than 18 months after the 
        date of enactment of this section, the Director shall 
        conduct a study and submit a report to Congress on how 
        to modernize and improve the system of insurance 
        regulation in the United States.
          [(2) Considerations.--The study and report required 
        under paragraph (1) shall be based on and guided by the 
        following considerations:
                  [(A) Systemic risk regulation with respect to 
                insurance.
                  [(B) Capital standards and the relationship 
                between capital allocation and liabilities, 
                including standards relating to liquidity and 
                duration risk.
                  [(C) Consumer protection for insurance 
                products and practices, including gaps in State 
                regulation.
                  [(D) The degree of national uniformity of 
                State insurance regulation.
                  [(E) The regulation of insurance companies 
                and affiliates on a consolidated basis.
                  [(F) International coordination of insurance 
                regulation.
          [(3) Additional factors.--The study and report 
        required under paragraph (1) shall also examine the 
        following factors:
                  [(A) The costs and benefits of potential 
                Federal regulation of insurance across various 
                lines of insurance (except health insurance).
                  [(B) The feasibility of regulating only 
                certain lines of insurance at the Federal 
                level, while leaving other lines of insurance 
                to be regulated at the State level.
                  [(C) The ability of any potential Federal 
                regulation or Federal regulators to eliminate 
                or minimize regulatory arbitrage.
                  [(D) The impact that developments in the 
                regulation of insurance in foreign 
                jurisdictions might have on the potential 
                Federal regulation of insurance.
                  [(E) The ability of any potential Federal 
                regulation or Federal regulator to provide 
                robust consumer protection for policyholders.
                  [(F) The potential consequences of subjecting 
                insurance companies to a Federal resolution 
                authority, including the effects of any Federal 
                resolution authority--
                          [(i) on the operation of State 
                        insurance guaranty fund systems, 
                        including the loss of guaranty fund 
                        coverage if an insurance company is 
                        subject to a Federal resolution 
                        authority;
                          [(ii) on policyholder protection, 
                        including the loss of the priority 
                        status of policyholder claims over 
                        other unsecured general creditor 
                        claims;
                          [(iii) in the case of life insurance 
                        companies, on the loss of the special 
                        status of separate account assets and 
                        separate account liabilities; and
                          [(iv) on the international 
                        competitiveness of insurance companies.
                  [(G) Such other factors as the Director 
                determines necessary or appropriate, consistent 
                with the principles set forth in paragraph (2).
          [(4) Required recommendations.--The study and report 
        required under paragraph (1) shall also contain any 
        legislative, administrative, or regulatory 
        recommendations, as the Director determines 
        appropriate, to carry out or effectuate the findings 
        set forth in such report.
          [(5) Consultation.--With respect to the study and 
        report required under paragraph (1), the Director shall 
        consult with the State insurance regulators, consumer 
        organizations, representatives of the insurance 
        industry and policyholders, and other organizations and 
        experts, as appropriate.]
  [(q)] (o) Use of Existing Resources.--To carry out this 
section, the Office may employ personnel, facilities, and any 
other resource of the Department of the Treasury available to 
the Secretary and the Secretary shall dedicate specific 
personnel to the Office.
  [(r)] (p) Definitions.--In this section and section 314, the 
following definitions shall apply:
          (1) Affiliate.--The term ``affiliate'' means, with 
        respect to an insurer, any person who controls, is 
        controlled by, or is under common control with the 
        insurer.
          (2) Covered agreement.--The term ``covered 
        agreement'' means a written bilateral or multilateral 
        agreement regarding prudential measures with respect to 
        the business of insurance or reinsurance that--
                  (A) is entered into between the United States 
                and one or more foreign governments, 
                authorities, or regulatory entities; [and]
                  (B) relates to the recognition of prudential 
                measures with respect to the business of 
                insurance or reinsurance that achieves a level 
                of protection for insurance or reinsurance 
                consumers that is substantially equivalent to 
                the level of protection achieved under State 
                insurance or reinsurance regulation[.]; and
                  (C) does not include new prudential 
                requirements for United States insurers.
          (3) Insurer.--The term ``insurer'' means any person 
        engaged in the business of insurance, including 
        reinsurance.
          (4) Federal financial regulatory agency.--The term 
        ``Federal financial regulatory agency'' means the 
        Department of the Treasury, the Board of Governors of 
        the Federal Reserve System, the Office of the 
        Comptroller of the Currency, the Office of Thrift 
        Supervision, the Securities and Exchange Commission, 
        the Commodity Futures Trading Commission, the Federal 
        Deposit Insurance Corporation, the Federal Housing 
        Finance Agency, or the National Credit Union 
        Administration.
          (5) Non-United States insurer.--The term ``non-United 
        States insurer'' means an insurer that is organized 
        under the laws of a jurisdiction other than a State, 
        but does not include any United States branch of such 
        an insurer.
          (6) Office.--The term ``Office'' means the Federal 
        Insurance Office established by this section.
          (7) State insurance measure.--The term ``State 
        insurance measure'' means any State law, regulation, 
        administrative ruling, bulletin, guideline, or practice 
        relating to or affecting prudential measures applicable 
        to insurance or reinsurance.
          (8) State insurance regulator.--The term ``State 
        insurance regulator'' means any State regulatory 
        authority responsible for the supervision of insurers.
          (9) Substantially equivalent to the level of 
        protection achieved.--The term ``substantially 
        equivalent to the level of protection achieved'' means 
        the prudential measures of a foreign government, 
        authority, or regulatory entity achieve a similar 
        outcome in consumer protection as the outcome achieved 
        under State insurance or reinsurance regulation.
          (10) United States insurer.--The term ``United States 
        insurer'' means--
                  (A) an insurer that is organized under the 
                laws of a State; or
                  (B) a United States branch of a non-United 
                States insurer.
  [(s)] (q) Authorization of Appropriations.--There are 
authorized to be appropriated for the Office for each fiscal 
year such sums as may be necessary.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    H.R. 3861 would make several changes to the authorities of 
the Federal Insurance Office (FIO). Following the 2007-2009 
financial crisis, and specifically after the near-collapse of 
AIG, it became clear that although the state-based system of 
regulating the insurance industry has its strengths, there were 
significant gaps in oversight with regard to systemic risks 
that insurance companies can pose. The Dodd-Frank Wall Street 
Reform and Consumer Protection Act (Dodd-Frank) expanded the 
federal role for insurance regulation by creating a new 
supervisory and regulatory framework to examine insurance 
companies both domestically and internationally for risks to 
U.S. financial stability.
    With these and other concerns about increasing coordination 
on insurance matters in mind, FIO was created under Title V of 
Dodd-Frank. Although not a regulator, FIO was designed to play 
an important role in both domestic and international insurance 
issues through monitoring, data collection, and leadership in 
the coordination of the United States' efforts abroad. 
Unfortunately, H.R. 3861 would repeal or otherwise weaken many 
of FIO's authorities.
    First, the bill eliminates FIO's authority to receive and 
collect data on and from the insurance industry, including its 
subpoena authority, as well as its ability to analyze and 
disseminate data and information. The elimination of this 
authority could have far reaching consequences, including 
harmful impacts on the federal government's ability to respond 
to terror attacks. Specifically, FIO is tasked with assisting 
the Treasury Secretary in administering the Terrorism Risk 
Insurance Program--a program created in the aftermath of the 
September 11, 2001 terrorist attacks to enable communities to 
better recover following a terrorist attack. FIO is also the 
only entity with the authority to subpoena the insurance 
industry for data necessary to meet the requirements of the 
Terrorism Risk Insurance Act (TRIA). By repealing the subpoena 
authority and all of FIO's data collection authorities, the 
federal government's response to terrorism under TRIA could be 
seriously hampered. Furthermore, FIO is tasked with monitoring 
the extent to which traditionally underserved communities and 
consumers, minorities and low- and moderate-income persons have 
access to affordable insurance products. This important 
responsibility is impossible to successfully implement without 
FIO's data collection tools. FIO has never used its subpoena 
authority, but its power to collect data is critical to its 
functions.
    Second, the bill would significantly weaken FIO's authority 
to negotiate agreements internationally by: (1) revising its 
authority to only represent the interests of the Federal 
Government rather than the United States as a whole, which is 
its current role; (2) transferring FIO's role to make 
preemption determinations to the Treasury Secretary; and (3) 
stipulating that covered agreements negotiated by FIO cannot 
include new prudential requirements for U.S. insurers. Taken 
together, these changes severely weaken the U.S. position 
internationally on international insurance matters, including 
covered agreements.
    Third, the bill places cumbersome consultation and 
consensus requirements on FIO with regard to state involvement 
by: (1) requiring the Secretary of Treasury to consult with 
State insurance commissioners before appointing the Director of 
FIO; (2) redefining FIO's role in coordinating international 
insurance policy as including the goal of achieving consensus 
with the States; and (3) requiring the Director of FIO to seek 
to include state insurance commissioners or their designees 
(the NAIC) in meetings throughout the negotiations of a covered 
agreement. Although the requirements to reach consensus with 
the States and ensure their participation in meetings are 
aspirational rather than mandatory, it is unclear whether the 
language addresses constitutional concerns raised by the 
Department of Justice on a similar matter.
    Democrats strongly support the existing state-based system 
for insurance regulation. However, H.R. 3861 would harm our 
domestic and international interests. For all these reasons, we 
oppose H.R. 3861.

                                   Maxine Waters.
                                   William Lacy Clay.
                                   Stephen F. Lynch.
                                   Daniel T. Kildee.
                                   Carolyn B. Maloney.
                                   Al Green.
                                   Michael E. Capuano.

                                  [all]