Federal Insurance Act

Federal Insurance Act - Establishes a Federal Insurance Administration within the Department of Housing and Urban Development to be headed by an Administrator: (1) authorized to issue Federal charters for carrying on the business of insurance to corporations deemed to be eligible based on the capital and surplus of such corporations and other organizational criteria required by the Administrator, and contingent upon majority stockholder or policyholder approval, such charters preempting and terminating any State charter except for purposes of corporate existence; and (2) required to prescribe rules and regulations governing the conduct of the insurers, including the payment of a guaranty fee, maintenance of reserves, control of assets, performance of obligations, production of official records, and corporate reorganization schemes, and to establish an "early warning system" for detection of financial instability of such corporations. Exempts such insurers from any State laws involving reserves, assumption of obligations in the event of insolvency of other persons, regulation of investments and fixing of rates. Limits the State tax liability of such insurers to an amount no greater than the tax imposed upon an equal amount of gross or net premiums of the least taxed insurer organized under the laws of any State. Specifies the types of assets in which such insurers are permitted to invest capital and surplus or guaranty funds, and limits the percent of the total policyholder obligation permitted to be invested in certain assets.

Grants the Administrator supervisory powers over persons participating in the conduct of affairs of such insurer, including authority to: (1) issue and serve upon such person or insurer notice of charges of violation of this Act or rules promulgated thereunder, such notice to contain a statement of relevant facts and the time of hearing on whether a cease and desist order should issue; (2) issue a temporary cease and desist order in certain circumstances; and (3) suspend or prohibit from further participation in the affairs of the insurer any officer, director, or participating person if such action is deemed necessary for protection of the corporation or the interests of its policyholders.

Confers jurisdiction over all proceedings under this Act to the United States district courts and courts of appeals of the United States in the district or circuit in which the principal place of business of the insurer is located or, in some cases, in the District of Columbia. Authorizes the Administrator to make loans to federally chartered insurers to facilitate a merger between two such insurers or a sale of assets or assumption of liabilities of a financially unsound insurer by another insurer for the purpose of averting a loss to the Federal Insurance Fund. Permits the Administrator to institute proceedings to revoke such a charter and dissolve such insurer upon a determination that such insurer cannot pay claims when due. Guarantees that any insurance obligation incurred by a federally chartered insurer shall, upon default, be met by proceeds in the Federal Insurance Fund, established by this Act and paid into by such insurers.

Prohibits the Administrator from approving mergers or consolidations or any surrender or amendment of a Federal charter if such action would have an adverse impact on the insurance industry. Requires the Administrator to consult with the Attorney General before approving any merger or reorganization, except in cases of imminent insolvency or default.

Transfers to the Federal Insurance Administration all functions, powers, and duties conferred upon the Secretary of Housing and Urban Development pursuant to title XII of the National Housing Act (the Urban Property Protection and Reinsurance Act of 1968), title XIII of the Housing and Urban Development Act of 1968 (the National Flood Insurance Act of 1968), the Flood Disaster Protection Act of 1973, and the Federal Flood Insurance Act of 1956.