[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5143 Introduced in House (IH)]
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114th CONGRESS
2d Session
H. R. 5143
To provide greater transparency and congressional oversight of
international insurance standards setting processes, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 29, 2016
Mr. Luetkemeyer (for himself, Mr. Huizenga of Michigan, Mr. Pearce,
Mrs. Wagner, Mr. Barr, Mr. Rothfus, and Mr. Westmoreland) introduced
the following bill; which was referred to the Committee on Financial
Services
_______________________________________________________________________
A BILL
To provide greater transparency and congressional oversight of
international insurance standards setting processes, 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 ``Transparent Insurance Standards Act
of 2016''.
SEC. 2. CONGRESSIONAL FINDINGS.
The Congress finds the following:
(1) The State-based system for insurance regulation in the
United States has served American consumers well for more than
150 years and has fostered an open and competitive marketplace
with a diversity of insurance products to the benefit of
policyholders and consumers.
(2) Protecting policyholders by regulating to ensure an
insurer's ability to pay claims has been the hallmark of the
successful United States system and should be the paramount
objective of domestic prudential regulation and emerging
international standards.
(3) United States officials participating in discussions or
negotiations regarding international insurance standards shall
support standards designed for the protection of policyholders.
(4) The Secretary of the Treasury shall seek advice and
recommendations from a diverse group of outside experts in
performing the duties and authorities of the Secretary to
coordinate Federal efforts and develop Federal policy on
prudential aspects of international insurance matters.
(5) The draft of the Higher Loss Absorbency capital
standard adopted in 2015 by the International Association of
Insurance Supervisors, notwithstanding the concerns of U.S.
parties to the International Association of Insurance
Supervisors, unequally affects insurance products offered in
the United States, an issue that must be addressed.
(6) Any international standard agreed to at the
International Association of Insurance Supervisors is not self-
executing in the United States for any insurer until
implemented through the required Federal or State legislative
or regulatory process.
SEC. 3. OBJECTIVES FOR INTERNATIONAL INSURANCE STANDARDS.
The objectives of the United States regarding international
insurance standards are as follows:
(1) To ensure standards that maintain strong protection of
policy holders, as reflected in the United States solvency
regime.
(2) To ensure, pursuant to enactment of the Insurance
Capital Standards Clarification Act of 2014 (Public Law 113-
279), standards that are appropriate for insurers and are not
bank-centric in nature.
(3) To promote a principles-based approach to insurance
supervision, in which capital adequacy is assessed using risk-
based capital requirements for insurance combined with
qualitative risk assessment and management tools.
(4) To consider the most efficient and least disruptive
approaches to enhancing regulatory assessment of the capital
adequacy of insurance groups, including tools that are already
in place.
(5) To ensure that any international insurance standard
recognizes prudential measures used within the United States as
satisfying standards finalized by international standard-
setting organizations.
(6) To support increasing transparency at any global
insurance or international standard-setting organization in
which the United States participates, including advocating for
greater stakeholder public observer access to working groups
and committee meetings of the International Association of
Insurance Supervisors.
(7) To ensure that there is a sufficient period for public
consultation and comment regarding any proposed international
insurance standard before it takes effect.
(8) To ensure that the Secretary of the Treasury and the
Board of Governors of the Federal Reserve System achieve
consensus positions with State insurance commissioners when the
Secretary and the Board are United States participants in
discussions on insurance issues before the International
Association of Insurance Supervisors, Financial Stability
Board, or any other international forum of financial regulators
or supervisors that considers such issues.
(9) To consider the impact of any such standard on the
availability and cost of products to consumers.
(10) To avoid measures that could limit the availability
and accessibility of risk protection and retirement security
products that are essential to meeting the needs of aging
populations.
(11) To ensure that the merits of existing State-based
capital standards are recognized and incorporated in any
domestic or global insurance capital standard.
(12) To advocate for insurance regulatory standards that
are based on the nature, scale, and complexity of the risks
posed by the regulated insurance group and entity or activity.
SEC. 4. REQUIREMENTS FOR CONSENT TO ADOPT INTERNATIONAL INSURANCE
STANDARDS.
(a) Publication of Standards; Adoption of Capital and Prudential
Standards.--The United States may not agree to, accept, establish,
enter into, or consent to the adoption of a final international
insurance standard with an international standard-setting organization
or a foreign government, authority, or regulatory entity unless the
requirements under both of the following paragraphs are complied with:
(1) Publication.--The requirements under this paragraph are
complied with if the conditions under one of the following
subparagraphs have been met:
(A) By federal reserve and treasury.--The Chairman
of the Board of Governors of the Federal Reserve System
and the Secretary of the Treasury have caused the
proposed text of the proposed international insurance
standard to be published in the Federal Register and
made available for public comment for a period of not
fewer than 30 days (which period may run concurrently
with the 90-day period referred to in subsection
(b)(3)).
(B) By state insurance commissioners.--The State
insurance commissioners have caused the proposed text
of the proposed international insurance standard to be
published in a similar form and manner that provides
for notice and public comment.
(2) Capital standard.--In the case only of a final
international insurance standard setting forth any capital
standard or standards for insurers--
(A) such international capital standard is
consistent with capital requirements set forth in the
State-based system of insurance regulation;
(B) the Board has issued capital requirements for
insurance companies supervised by the Board and subject
to such requirements, which shall be issued through
rulemaking in accordance with the procedures
established under section 553 of title 5, United States
Code, regarding substantive rules, under which the
periods for notice and public comment shall each have a
duration of not fewer than 60 days; and
(C) to the extent that such international capital
standard is intended to be applied to a company or
companies supervised by the Board of Governors of the
Federal Reserve System, is consistent with the capital
requirements of the Board for such companies.
(b) Submission and Layover Provisions.--The Secretary and the Board
may not agree to, accept, establish, enter into, or consent to the
adoption of an international insurance standard established through an
international standard-setting organization or a foreign government,
authority, or regulatory entity unless--
(1) the Secretary and the Board have--
(A) conducted an analysis under subsection (c) of
the proposed international insurance standard; and
(B) submitted to the covered congressional
committees, on a day on which both Houses of Congress
are in session, a copy of the proposed final text of
the proposed international insurance standard and the
report required under subsection (c)(2) regarding such
analysis;
(2) the Secretary and the Chairman of the Board have
determined, pursuant to such analysis, that the proposed
standard will not result in any change in State law; and
(3) a period of 90 calendar days beginning on the date on
which the copy of the proposed final text of the standard is
submitted to the covered congressional committees under
paragraph (1)(B) has expired, during which period the Congress
may take action to approve or reject such final standard.
(c) Joint Analysis by Chair of the Federal Reserve and Secretary of
the Treasury.--
(1) In general.--An analysis under this subsection of a
proposed final international insurance standard shall be an
analysis conducted by the Secretary and the Chairman of the
Board of Governors of the Federal Reserve System, in
consultation with the State insurance commissioners, of the
impact of such standard on consumers and markets in the United
States and whether any changes in State law will result from
such final standard.
(2) Report.--Upon completion of an analysis under this
subsection of a final international insurance standard, the
Secretary and the Board shall submit a report on the results of
the analysis to the covered congressional committees and the
Comptroller General of the United States. The report shall
include a statement setting forth the determination made
pursuant to paragraph (1) regarding any changes in State law
resulting from such final standard.
(3) Notice and comment.--
(A) Notice.--The Secretary and the Chairman of the
Board of Governors of the Federal Reserve System shall
provide notice before the date on which drafting the
report is commenced and after the date on which the
draft of the report is completed.
(B) Opportunity for comment.--There shall be an
opportunity for public comment for a period beginning
on the date on which the report is submitted under
paragraph (2) and ending on the date that is not fewer
than 60 days after the date on which the report is
submitted. Nothing in this subparagraph shall affect
the authority of the Board to issue the rule referred
to in subsection (a)(2).
(4) Review by comptroller general.--Upon submission of a
report pursuant to paragraph (2) to the Comptroller General,
the Comptroller General shall review the report and shall
submit a report to the Congress setting forth the conclusions
of the Comptroller General's review.
(d) Limited Effect.--This section may not be construed to establish
or expand any authority to implement an international insurance
standard in the United States or for the United States or any
representative of the Federal Government to adopt or enter into any
international insurance standard.
(e) Treatment of State Law.--In accordance with the Act of March 9,
1945 (Chapter 20; 59 Stat. 33; 15 U.S.C. 1011 et seq.), commonly
referred to as the ``McCarran-Ferguson Act'', this section may not be
construed to preempt State law.
SEC. 5. REPORTS.
(a) Reports and Testimony by Secretary of the Treasury and Chair of
the Federal Reserve.--The Secretary and the Chairman of the Board of
Governors of the Federal Reserve System shall submit to the covered
congressional committees an annual report and provide testimony, not
less often than every 6 months, to the covered congressional committees
on the efforts of the Secretary and the Chairman with the State
insurance commissioners with respect to international insurance
standard-setting organizations and international insurance standards,
including--
(1) a description of the insurance standard-setting issues
under discussion at international standard-setting bodies,
including the Financial Stability Board and the International
Association of Insurance Supervisors;
(2) a description of the effects that international
insurance standards could have on consumers and insurance
markets in the United States;
(3) a description of any position taken by the Secretary
and the Board in international insurance discussions or on any
international insurance standard;
(4) a description of the efforts by the Secretary and the
Board to increase transparency and accountability at the
Financial Stability Board with respect to insurance proposals
and the International Association of Insurance Supervisors,
including efforts to provide additional public access to
working groups and committees of the International Association
of Insurance Supervisors; and
(5) a description of how the Secretary and the Board are
meeting the objectives set forth in section 3, or, if such
objectives are not being met, an explanation of the reasons for
not meeting such objectives.
(b) Reports and Testimony by State Insurance Commissioners.--The
State insurance commissioners may provide testimony or reports to the
Congress on the issues described in subsection (a).
(c) Report on Transparency.--Not later than 180 days after the date
of enactment of this Act, the Chairman of the Board of Governors of the
Federal Reserve System and the Secretary shall submit to the Congress a
report and provide testimony to the Congress on the efforts of the
Chairman and the Secretary pursuant to subsection (a)(4) of this
section to increase transparency at meetings of the International
Association of Insurance Supervisors.
SEC. 6. DEFINITIONS.
In this Act:
(1) Board.--The term ``Board'' means the Board of Governors
of the Federal Reserve System, or the designee of the Board.
(2) Covered congressional committees.--The term ``covered
congressional committees'' means the Committee on Financial
Services of the House of Representatives and the Committee on
Banking, Housing and Urban Affairs of the Senate.
(3) International insurance standard.--The term
``international insurance standard'' means any international
insurance supervisory standard developed by an international
standards setting organization, or regulatory or supervisory
forum, in which the United States participates, including the
Common Framework for the Supervision of Internationally Active
Insurance Groups, the Financial Stability Board, and the
International Association of Insurance Supervisors.
(4) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury, or the Secretary's designee.
(5) State insurance commissioners.--The term ``State
insurance commissioners'' means the heads of the insurance
commissions for the States, or State employees who are the
designees of such officials.
SEC. 7. TREATMENT OF COVERED AGREEMENTS.
Section 314 of title 31, United States Code is amended--
(1) in subsection (c)--
(A) by designating paragraphs (1) and (2) as
paragraphs (2) and (3), respectively; and
(B) by inserting before paragraph (2), as so
redesignated, the following new paragraph:
``(1) the Secretary of the Treasury and the United States
Trade Representative have caused to be published in the Federal
Register, and made available for public comment for a period of
not fewer than 30 days (which period may run concurrently with
the 90-day period for the covered agreement referred to in
paragraph (3)), the proposed text of the covered agreement;'';
and
(2) by adding at the end the following new subsections:
``(d) Consultation With State Insurance Commissioners.--In any
negotiations regarding a contemplated covered agreement, the Secretary
and the United States Trade Representative shall consult with and
directly include State insurance commissioners.
``(e) Prohibition on Regulatory Authority.--In accordance with
subsections (k) and (l) of section 313, a covered agreement shall not
be used to establish or provide the Federal Insurance Office or the
Treasury with any general supervisory or regulatory authority over the
business of insurance or with the authority to participate in a
supervisory college or similar process.
``(f) Treatment Under Other Law.--A covered agreement shall not be
considered an international insurance standard for purposes of the
Transparent Insurance Standards Act of 2016 and shall not be subject to
such Act.''.
SEC. 8. DUTIES OF INDEPENDENT MEMBER OF FINANCIAL STABILITY OVERSIGHT
COUNCIL.
Subsection (a) of section 112 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act (12 U.S.C. 5322(a)) is amended by adding at
the end the following new paragraph:
``(3) Duties of independent member.--To assist the Council
with its responsibilities to monitor international insurance
developments, advise Congress, and make recommendations, the
Independent Member of the Council shall have the authority to--
``(A) regularly consult with international
insurance supervisors and international financial
stability counterparts;
``(B) consult with, advise, and assist the
Secretary of the Treasury with respect to representing
the Federal Government of the United States, as
appropriate, in the International Association of
Insurance Supervisors (including to become a non-voting
member thereof), particularly on matters of systemic
risk, and to consult with the Board of Governors of the
Federal Reserve System and the States concerning such
matters;
``(C) attend the Financial Stability Board of The
Group of Twenty and join with other members from the
United States, including on matters related to
insurance and financial stability, and provide for the
attendance and participation at such Board, on matters
related to insurance and financial stability, of State
insurance commissioners; and
``(D) attend, with the United States delegation,
the Organization for Economic Cooperation and
Development and observe and participate at the
Insurance and Private Pensions Committee of such
Organization on matters related to insurance and
financial stability.''.
SEC. 9. STATE INSURANCE REGULATOR INVOLVEMENT IN INTERNATIONAL STANDARD
SETTING.
Parties representing the United States at the Financial Stability
Board of the Group of Twenty on matters, and in meetings, related to
insurance and financial stability shall consult with, and seek to
include in such meetings, the State insurance commissioners.
SEC. 10. RULE OF CONSTRUCTION.
Nothing in this Act or the amendments made by this Act may be
construed to support or endorse the domestic capital standard for
insurers referred to in section 4(a)(2) or any such domestic capital
standards established by the Board.
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