Federal Insurance Solvency Act of 1993

TABLE OF CONTENTS:

Title I: Establishment of Federal Insurance Solvency

Commission

Title II: National Standards for the Financial Condition of

Insurers in Interstate Commerce and Federal Certificates

of Solvency for Insurers

Title III: Federal Certificates to Provide Reinsurance

Title IV: Regulatory Enforcement

Title V: National Insurance Protection Corporation

Title VI: National Association of Registered Agents and

Brokers

Title VII: Rehabilitation and Liquidation

Title VIII: Definitions

Title IX: Technical and Conforming Amendments

Federal Insurance Solvency Act of 1993 - Title I: Establishment of Federal Insurance Solvency Commission - (Sec. 101) Establishes the Federal Insurance Solvency Commission (the Commission) as an independent regulatory agency to oversee the financial soundness of the insurance industry.

(Sec. 107) Directs the Commission to investigate: (1) each insolvent insurer or reinsurer which holds a Federal certificate of solvency to determine the causes of the insolvency; and (2) the insolvencies of other insurers relevant to the financial condition of the national insurance industry.

(Sec. 108) Requires the Commission to establish an information data base regarding persons convicted of a crime or administratively disciplined for insurance related activity, or who have been senior officers or directors of insolvent insurers or reinsurers.

(Sec. 110) Establishes the Federal Insurance Regulation Advisory Committee.

(Sec. 112) Authorizes appropriations.

Title II: National Standards for the Financial Condition of Insurers in Interstate Commerce and Federal Certificates of Solvency for Insurers - (Sec. 201) Directs the Commission to: (1) establish national standards for the financial soundness of all insurers in interstate commerce according to prescribed criteria; and (2) regulate the financial condition of insurers in interstate commerce that obtain a Federal certificate of solvency under such standards. Prohibits any State insurance regulatory agency from regulating the financial condition of such an insurer.

(Secs. 202-204) Authorizes the Commission to issue Federal certificates of solvency to insurers meeting such standards. Directs the Commission to establish standards for domestic insurers, including U.S. branches of foreign insurers, according to prescribed guidelines. Sets forth additional criteria for Federal solvency certificates for domestic and foreign insurers to write surplus line insurance.

(Sec. 205) Requires each federally certified insurer to be a member of the National Insurance Protection Corporation (NIPC) established by this Act.

(Sec 206) Authorizes the Commission to suspend or revoke a certificate of solvency for non-compliance with its standards. States that as a result of such action an insurer will lose NIPC membership status and will be prohibited from selling insurance.

(Sec. 207) Subjects federally certified insurers to State regulatory and oversight within certain parameters.

Exempts from State regulations certain federally certified insurers designated as highly capitalized by the Commission. Vests the Commission with: (1) responsibility to establish standards for such insurers; and (2) exclusive Federal jurisdiction over complaints regarding the business conduct of such insurers with respect to large insurance buyers.

Title III: Federal Certificates for Providers of Reinsurance - (Sec. 301) - Authorizes the Commission to establish standards and procedures for granting certificates: (1) for professional reinsurers; and (2) to provide reinsurance for certain other reinsurers and insurers.

Directs the Commission to: (1) require each certificate holder to submit an annual financial status report; and (2) establish criteria for becoming a qualified financial institution for the purpose of establishing certain trust funds (thus permitting foreign banks with a United States presence to apply for such acceptance).

(Sec. 303) Directs the Commission to establish certification standards and procedures for: (1) reinsurance; (2) trust funds; and (3) foreign applicants.

(Sec. 306) Exempts certain certified professional reinsurers from a State licensing or regulatory scheme. Subjects to State regulation certain insurers and reinsurers that do not seek certification as professionals.

Title IV: Regulatory Enforcement - (Sec. 403) Sets forth an accounting standards and regulatory scheme.

(Sec. 405) Requires federally certified insurers and reinsurers who are incorporated and part of a holding company system to register with the Commission.

(Sec. 407) Grants the Commission exclusive jurisdiction over mergers, acquisitions, and transactions that involve only federally certified insurers or reinsurers. Provides for shared jurisdiction between the Commission and State insurance regulators over a holding company system which includes both federally certified and non-federally certified insurers and reinsurers. Provides that if either regulator disapproves of a holding company system transaction within its respective jurisdiction, the transaction shall not proceed.

(Sec. 408) Enumerates the criteria for transactions within a holding company system which includes an insurer or reinsurer. Requires the Commission's or the State's prior approval for certain transactions between insurer or reinsurer and any affiliate within a holding company system.

Grants the Commission and State insurance regulators civil penalty and enforcement powers.

(Sec. 410) Provides whistleblower protection and remedies to employees of federally certified insurers and reinsurers.

Title V: National Insurance Protection Corporation - (Secs. 501-502) Establishes the National Insurance Protection Corporation as a non-governmental, nonprofit corporation to provide: (1) timely payment and protection against losses; and (2) continuation of coverage in the event of financial impairment or insolvency of federally certificated insurers.

(Sec. 503) Grants the Commission oversight and supervisory powers over the NIPC.

(Sec. 512) Establishes the NIPC Fund solely to pay NIPC administrative expenses and covered claims.

(Sec. 513) Specifies the scope of insurance contracts guaranteed under this Act.

(Sec. 514) Sets forth guidelines for assessments on NIPC member insurers.

(Sec. 517) Requires the NIPC to notify the Commission whenever it concludes that changes in the insurance marketplace may impact negatively on the financial condition of federally certified insurers and reinsurers.

(Sec. 518) Limits the liability of member insurers to claims covered by NIPC assessments. Sets forth liability and assessment parameters for member insurers with respect to State law or a State guaranty fund.

(Sec. 521) Requires the NIPC to assist the Commission in developing improved standards for insurance solvency prevention and detection.

Title VI: National Association of Registered Agents and Brokers - (Secs. 601-603) Establishes the National Association of Registered Agents and Brokers (NARAB) as a nonprofit, nongovernmental corporation to provide a mechanism by which the multi-State services of State-licensed insurance producers may be more efficiently provided to policyholders, while preserving the rights of States to regulate insurance producers. Subjects NARAB to Commission oversight and supervision.

(Sec. 604) Makes NARAB membership available to all State-licensed insurance producers.

(Sec. 613) Subjects all NARAB members that are insurance producers to assessments to cover administrative costs.

(Sec. 616) Retains the States' regulatory mechanisms regarding insurance producers. Preempts State regulatory mechanisms purporting to restrict NARAB members, or impose discriminatory conditions upon them.

Title VII: Rehabilitation and Liquidation - (Secs. 701-703) Requires the Commission: (1) to act as receiver of any federally certified insurer or reinsurer for rehabilitation or liquidation purposes; and (2) to be appointed as receiver in proceedings instituted pursuant to this Act. States that the appropriate State insurance regulator shall act as receiver of any insurer or reinsurer which does not have a Federal certificate.

(Sec. 719) Directs the Commission and the appropriate State insurance regulator to administratively seize an insurer or reinsurer whose financial condition is substantially and imminently threatened.

(Secs. 714-728) Prescribes the administrative and procedural guidelines for both foreign and domestic insurers and reinsurers placed under Commission or State receivership, rehabilitation, or liquidation.

Title VIII: Definitions - (Sec. 801) Defines terms used in this Act.

Title IX: Technical and Conforming Amendments - (Sec. 901) Makes technical and conforming amendments to the United States Code.