Federal License for Reinsurers Act of 2010 - Requires the Director of the Federal Insurance Office, in the Department of the Treasury, to fix the number of employees of the Office and their compensation. Authorizes the Director to provide additional compensation and benefits if the same types are then being provided or, if not, could be provided by any federal banking agency.
Grants the Office general licensure and regulatory oversight over the business of national reinsurance.
Requires the Director to establish criteria necessary for the licensing and operation of a national reinsurer. Makes both U.S. and non-U.S. entities with U.S. branches eligible to obtain a federal license.
Authorizes a national reinsurer to convert to a state-licensed reinsurer, subject to the Director's approval.
Authorizes the Secretary of the Treasury and the United States Trade Representative (USTR), jointly, to enter into supervisory arrangements for the recognition of qualified reinsurance supervisory authorities of non-U.S. jurisdictions that provide a level of protection for U.S. reinsurance consumers that is substantially equivalent to the level of protection achieved under federal regulation.
Amends the Dodd-Frank Wall Street Reform and Consumer Protection Act to reflect the provisions of this Act.
[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6529 Introduced in House (IH)]
111th CONGRESS
2d Session
H. R. 6529
To amend title 31, United States Code, to provide for a Federal license
for reinsurers, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 16, 2010
Mr. Moore of Kansas introduced the following bill; which was referred
to the Committee on Financial Services
_______________________________________________________________________
A BILL
To amend title 31, United States Code, to provide for a Federal license
for reinsurers, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Federal License for Reinsurers Act
of 2010''.
SEC. 2. AMENDMENTS TO TITLE 31, UNITED STATES CODE.
Section 313 of title 31, United States Code, is amended--
(1) in subsection (b)--
(A) by striking ``The Office'' and inserting the
following:
``(1) Leadership.--The Office''; and
(B) by adding at the end the following new
paragraph:
``(2) Employees.--
``(A) Number and compensation.--The Director shall
fix the number of employees of the Office and the
compensation of such employees, as necessary to carry
out the provisions of this section without regard to
chapter 51 or subchapter III of chapter 53 of title 5.
``(B) Additional compensation and benefits.--
Notwithstanding subparagraph (A), the Director may
provide additional compensation and benefits if the
same type of compensation or benefits are then being
provided by any Federal banking agency or, if not then
being provided, could be provided by any such agency
under applicable provisions of law or regulation. In
setting and adjusting the total amount of compensation
and benefits for employees of the Office, the Director
shall consult, and seek to maintain comparability with,
the Federal banking agencies.'';
(2) in subsection (c)(1)--
(A) in subparagraph (E), by striking ``subsection
(r)'' and inserting ``subsection (s)'';
(B) by redesignating subparagraphs (G) and (H) as
subparagraphs (H) and (I), respectively; and
(C) by inserting after subparagraph (F) the
following new subparagraph:
``(G) with respect to the business of reinsurance--
``(i) to license entities to transact the
business of reinsurance as a national reinsurer
pursuant to subsection (h)(1);
``(ii) to revoke, suspend, or restrict a
Federal license pursuant to (h)(1)(B);
``(iii) to coordinate Federal efforts and
establish Federal policy on international
matters related to reinsurance, including
working with international regulatory and
standard-setting bodies;
``(iv) to assist the Secretary in entering
into supervisory arrangements authorized under
subsection (h);
``(v) to establish and enforce appropriate
standards and requirements governing national
reinsurers consistent with criteria in
subsection (h)(5);
``(vi) to determine that any State law,
regulation, or action is preempted as being
contrary to or inconsistent with the purposes
of subsection (h) and this subparagraph;
``(vii) to assess and collect reasonable
fees from authorized foreign reinsurers for
reimbursement of costs incurred by the Director
related to supervisory arrangements; and
``(viii) to assess and collect reasonable
fees from national reinsurers for the
reimbursement of costs incurred by the Director
for licensing and examination of national
reinsurers;'';
(3) in subsection (f)--
(A) in paragraph (1), by striking ``A State'' and
inserting ``Except as provided in subsection (h), a
State''; and
(B) in paragraph (2)(B), by inserting after
``insurance measures,'' the following: ``except as
provided in subsection (h),'';
(4) in subsection (g), by inserting after ``determination
of inconsistency,'' the following: ``except as provided in
subsection (h),'';
(5) by redesignating subsections (h), (i), (j), (k), (l),
(m), (n), (o), (p), (q), (r), and (s) as subsections (i), (j),
(k), (l), (m), (n), (o), (p), (q), (r), (s), and (t),
respectively;
(6) by inserting after subsection (g) the following new
subsection:
``(h) Authority With Respect to Reinsurance.--
``(1) Licensing of national reinsurers.--
``(A) Licensing.--
``(i) In general.--The Director shall
establish criteria necessary for the licensing
and operation of a national reinsurer.
``(ii) Eligibility.--A United States entity
shall be eligible to apply for a Federal
license under this subsection to transact the
business of reinsurance upon demonstration to
the Director that the entity meets the
definition of reinsurer under this section and
all other criteria established by the Director.
``(iii) Non-united states entities.--A non-
United States entity may obtain a Federal
license under this subsection through the
establishment of a United States branch which
meets the eligibility requirements under clause
(ii) and such other regulations as the Director
may prescribe.
``(iv) Issuance of license.--If the
Director determines that the applicant has
satisfied the applicable eligibility
requirements, the Director shall issue a
Federal license to the applicant to transact
the business of reinsurance.
``(B) Revocation, suspension, or restriction of
federal license.--The Director may revoke, suspend, or
restrict a Federal license whenever the Director
determines that the licensed entity is no longer
operating in a manner consistent with the criteria for
licensing and operation established by the Director.
``(C) Conversion to state license.--A national
reinsurer may convert to a State-licensed reinsurer in
accordance with applicable State law if--
``(i) such entity notifies the Director of
its intention to convert in accordance with
such procedures as the Director may prescribe
by regulation;
``(ii) after conducting an appropriate
review, the Director approves the conversion.
``(D) Applicability of the bankruptcy code.--A
delinquency proceeding for the liquidation or
reorganization of a United States national reinsurer
shall proceed under the provisions of title 11.
``(2) Supervisory arrangements.--
``(A) Authority.--In order to realize the
efficiencies and consumer benefits of a more harmonized
international reinsurance regulatory system, the
Secretary and the United States Trade Representative,
jointly, shall be authorized to enter into supervisory
arrangements for the recognition of qualified
reinsurance supervisory authorities of non-United
States jurisdictions that provide a level of protection
for United States reinsurance consumers that is
substantially equivalent to the level of protection
achieved by the Director pursuant to the provisions of
this subsection.
``(B) Exchange of information.--The entry into
supervisory arrangements with qualified supervisory
authorities of non-United States jurisdictions shall be
preceded by an exchange and evaluation of relevant
information regarding the form and nature of regulation
in each such jurisdiction and the Secretary's
determination that such jurisdiction's supervisory
authority maintains and applies legal standards,
regulatory requirements, and enforcement capabilities
substantially equivalent to those applied by the
Director, and that the awards of arbitration panels and
judgments of appropriate United States courts are
enforceable and collectable in the jurisdiction,
pursuant to treaty, other agreement, or operation of
that jurisdiction's law.
``(C) Requirements for validity.--The Secretary and
the United States Trade Representative may enter into
supervisory arrangements only in cases in which the
Secretary has determined that the requirements of
subparagraph (B) have been satisfied and the
arrangement explicitly provides for all of the
following:
``(i) Identification of areas of regulation
that will be the exclusive responsibility of
the respective jurisdictions.
``(ii) The reciprocal treatment of
reinsurance entities in accordance with each
subject jurisdiction's rules and regulations.
``(iii) A commitment to exchange relevant
information on an on-going basis.
``(iv) A process for resolving disputed
issues.
``(v) The application of chapter 15 of
title 11 to cross-border insolvency cases
involving entities from the subject
jurisdiction.
``(vi) The terms and conditions for
terminating the supervisory arrangement.
``(D) Status of authorized foreign reinsurers.--An
authorized foreign reinsurer shall be authorized to
transact the business of reinsurance to the extent
authorized by the applicable supervisory arrangement.
``(3) Preemption of state law.--
``(A) Inconsistent laws.--All laws, regulations,
provisions, or other actions of a State contrary to or
inconsistent with the purposes of this subsection,
except those which may be applicable to corporate taxes
generally, are preempted to the extent that they apply
to national reinsurers or authorized foreign
reinsurers, or to their reinsurance agreements.
``(B) Laws with disparate treatment.--All laws,
regulations, provisions, or other actions of a State
are preempted to the extent that national reinsurers or
authorized foreign reinsurers receive more or less
favorable treatment than State licensed insurers or
reinsurers pursuant to such laws, regulations,
provisions, or other actions, solely on the basis of an
entity's status as a national reinsurer or authorized
foreign reinsurer.
``(C) Prohibition of interference.--No State shall
interfere, directly or indirectly, with a United States
insurer or reinsurer--
``(i) applying for a Federal license or
operating as a national reinsurer; or
``(ii) ceding insurance to a national
reinsurer or an authorized foreign reinsurer
for any purpose under this subsection.
``(D) Credit for reinsurance.--No State shall deny
credit, either as an asset or a reduction of
liabilities, on account of reinsurance ceded to a
national reinsurer or an authorized foreign reinsurer
under this subsection.
``(E) Prohibition of enforcement.--No State shall
enforce a State law, regulation, provision, or other
action to the extent that it is preempted pursuant to
this paragraph.
``(F) Determinations by director.--
``(i) Preemption.--The Director shall be
authorized to determine that any State law,
regulation, provision, or action shall be
preempted pursuant to this paragraph.
``(ii) Judicial review.--Any State or any
other person aggrieved by action of the
Director under this paragraph may seek judicial
review in the manner specified in chapter 7 of
title 5.
``(4) Cooperation between the director and state insurance
regulators.--The Director shall--
``(A) consult, as the Director deems appropriate,
with the relevant State insurance regulators concerning
regulatory matters;
``(B) notify all State insurance regulators of
supervisory arrangements entered into pursuant to
paragraph (2); and
``(C) notify the relevant State insurance
regulators of a change in the status of, or any
administrative action taken by the Director against, a
national reinsurer or an authorized foreign reinsurer.
``(5) Rules and regulations.--
``(A) In general.--The Director shall adopt
regulations implementing the provisions of this
subsection. The Director may issue any other rules,
regulations, orders, or interpretations as the Director
determines to be necessary to carry out the purposes of
this subsection.
``(B) Criteria.--The rules and regulations
prescribed under subparagraph (A) shall give due
consideration to--
``(i) promoting financially secure
reinsurance recoverables and capacity that
protects the solvency of United States ceding
insurers;
``(ii) the need for a competitive and
healthy reinsurance market that provides
sufficient capacity to meet ceding companies'
risk management needs through open market
contracting and pricing practices;
``(iii) global capital and risk management,
taking into account capital adequacy,
assessment of internal controls, recognition of
qualified internal capital models, and
effective corporate governance;
``(iv) financial transparency that
encourages and supports the cedents' ability to
assess counter party credit risk, including
information regarding the national reinsurer's
financial condition and the national
reinsurer's performance in paying covered
claims;
``(v) access to all necessary financial
information, with appropriate provision for the
confidentiality of that information; and
``(vi) harmonization with international
standards for the prudential regulation of the
business of reinsurance.
``(6) Implementation.--
``(A) Licensing.--The Director shall commence
licensing of national reinsurers and the entry into
supervisory arrangements after promulgation of final
rules and regulations under this subsection, which
shall occur not later than the expiration of the 2-year
period beginning on the date of the enactment of this
subsection.
``(B) Applicability.--The provisions of this
subsection shall apply only to reinsurance agreements
and supervisory arrangements entered into on or after
the date of the enactment of this subsection.
``(7) Effect of status.--There shall be no determination
under section 113 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act that an entity is subject to
supervision by the Board of Governors of the Federal Reserve
System and subject to prudential standards (as such term is
defined in such Act), in accordance with title I of such Act,
on account of an entity's status as a national reinsurer or
authorized foreign reinsurer.'';
(7) in subsection (k)(1), as so redesignated, by inserting
``except as provided in subsection (h),'' before ``preempt--'';
(8) in subsection (l), as so redesignated, by striking
``Nothing'' and inserting ``Except as provided in subsections
(c) and (h), nothing''; and
(9) in subsection (s), as so redesignated--
(A) by redesignating paragraphs (2), (3), (4), (5),
(6), (7), (8), (9), and (10) as paragraphs (3), (4),
(6), (8), (9), (12), (13), (14), and (15),
respectively;
(B) by inserting after paragraph (1) the following
new paragraph:
``(2) Authorized foreign reinsurer.--The term `authorized
foreign reinsurer' means a reinsurer that is domiciled in and
subject to the regulation of a non-United States jurisdiction's
supervisory authority that has entered into a supervisory
arrangement with the Director.'';
(C) by inserting after paragraph (4), as so
redesignated, the following new paragraph:
``(5) Federal banking agency.--The term `Federal banking
agency' shall have the meaning give such term under section 2
of the Dodd-Frank Wall Street Reform and Consumer Protection
Act.'';
(D) by inserting after paragraph (6), as so
redesignated, the following new paragraph:
``(7) National reinsurer.--The term `national reinsurer'
means an entity to which the Director has issued a Federal
license under subsection (h)(1) to transact the business of
reinsurance.''; and
(E) by inserting after paragraph (9), as so
redesignated, the following new paragraphs:
``(10) Reinsurance.--The term `reinsurance' means the
assumption by an insurer of all or part of a risk undertaken
originally by another insurer.
``(11) Reinsurer.--The term `reinsurer' means, as
determined by the Director, an insurer, to the extent that the
insurer--
``(A) is principally engaged in the business of
reinsurance;
``(B) does not conduct significant amounts of
direct insurance as a percentage of its net premiums;
and
``(C) is not engaged in an ongoing basis in the
business of soliciting direct insurance.''.
SEC. 3. AMENDMENTS TO DODD-FRANK.
(a) Section 111.--Section 111(b) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act is amended--
(1) in paragraph (1)--
(A) in subparagraph (I), by striking ``and'' at the
end;
(B) by redesignating subparagraph (J) as
subparagraph (K); and
(C) by inserting after subparagraph (I) the
following new subparagraph:
``(J) the Director of the Federal Insurance Office;
and''; and
(2) in paragraph (2)--
(A) by striking subparagraph (B); and
(B) by redesignating subparagraphs (C), (D), and
(E) as subparagraphs (B), (C), and (D), respectively.
(b) Section 112.--Section 112 of such Act is amended--
(1) in subsection (a)(2), by striking ``the Federal
Insurance Office''; and
(2) in subsection (d)--
(A) in paragraph (1), by striking ``, member
agencies, and the Federal Insurance Office'' and
inserting ``and member agencies'';
(B) in paragraph (2), by striking ``, any member
agency, and the Federal Insurance Office,'' and
inserting ``and any member agency''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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