Federal Insurance Act

Federal Insurance Act - Title I: Federal Insurance Guaranty Program - Establishes a Federal Insurance Commission as an independent agency in the executive branch.

Creates an Advisory Committee to review the policies and procedures of the Commission; and assist in obtaining the cooperation of insurers and Federal and State agencies in carrying out the purposes of this Act.

Transfers to the Commission certain powers and duties conferred upon the Secretary of Housing and Urban Development with respect to specified Federal insurance programs.

Creates a Federal insurance guaranty program to establish uniform standards for guaranty status of private insurers, and maximize the efficient utilization of the capabilities of such insurers in the discharge of policy obligations in the event of insolvency.

Establishes a Federal Insurance Guaranty Fund containing fees paid by companies whose obligations are guaranteed by the Commission, the proceeds of certain notes issued by the Commission to cover losses, and receipts from any other sources.

Directs the Commission to collect from each insurer guaranteed under this Act an annual fee based on net direct premiums.

Authorizes the Commission to issue a Federal guaranty certificate to any insurer which meets the financial and other requirements prescribed by the Commission. Sets forth the procedures for applying for and issuance of such certificate.

Specifies the grounds for refusal to grant or for revocation of such certificate. Requires notification of policyholders of policies guaranteed under this Act with respect to loss of the insurer's guaranty status.

Stipulates that investments of certain federally guaranteed insurers shall be regulated by the laws and regulations of such insurers' domiciles and the states in which they transact insurance unless such laws and regulations do not meet specified requirements.

Exempts federally guaranteed insurers from the laws of any State which require participation in a State insolvency guaranty plan whereby such insurers are required to assume obligations of other insurers in the event of insolvency.

Stipulates that whenever any federally guaranteed insurer is adjudicated as insolvent, the Commission shall satisfy all of the insurer's guaranteed obligations.

Authorizes the Commission to employ certain methods to avoid the default or facilitate the merger or consolidation of federally guaranteed insurers.

Sets forth procedures for the rehabilitation, reorganization, or dissolution of a federally guaranteed insurer upon a determination that such insurer is unable or likely to become unable to fulfill its obligations when due.

Authorizes the Commission to prescribe specified rules and regulations necessary to carry out the purposes of this Act.

Requires the Commission to establish an "early warning system" to detect certain financial conditions of insurers which could lead to insolvency or inability to fulfill obligations to policyholders or claimants.

Prohibits any federally guaranteed insurer from refusing to insure any individual or group solely because of age, sex, race, religion, or national origin, or to impose discriminatory rate structures.

Authorizes the Commission to serve upon any federally guaranteed insurer or officer, director employee, or agent thereof, who has engaged or is about to engage in any practice which violates this Act or any rules prescribed by the Commission, notice of such violations.

Requires the Commission to notify such insurer or person of the time, date, and place at which a hearing will be held to determine whether a cease and desist order should issue. Authorizes the Commission to issue temporary cease and desist orders to stop certain violations or practices by such insurers. Gives the Commission specified supervisory powers over federally guaranteed insurers or any officer, director, employee, or agent thereof including authority to impose civil penalties for violations of final orders issued by the District Courts.

Prohibits the Commission from adopting any rule or regulation, or exercising any other authority granted by this Act which would impose a burden on competition not necessary in furthering the purposes of this Act.

Title II: Federal Chartering of Insurance Companies - Authorizes the Commission to issue a charter to any stock, mutual, or reciprocal insurer, reinsurer, or surety, or alien insurer maintaining trust funds of a specified amount.

Requires the Commission to issue a Federal charter to certain eligible insurers, notwithstanding any State law, upon the majority vote of stockholders or policyholders. Stipulates that upon issuance of such charter (1) the State charter of such insurer shall be preempted and terminated (2) such insurer shall be deemed to be authorized to do business in any State, and (3) the obligations of such federally chartered insurer shall be guaranteed according to title I of this Act.

Authorizes the Commission to prohibit alien insurers from transacting an insurance business in any State unless such insurer is federally chartered.

Establishes the procedure for issuing a Federal charter.

Exempts federally chartered insurers from State laws regarding reserves, State insolvency guaranty plans, investment regulation, and rate structures.

Requires that funds of any federally chartered insurer in an amount equal to the sum of its policyholders obligations and minimum capital and surplus, or guaranty fund, be invested in certain classes of assets. Sets forth the classes of investments to be used by such insurers in covering obligations and maintaining minimum capital. Prohibits certain investments by federally chartered insurers.