State Insurance Regulation Preservation Act

II 116TH CONGRESS 1ST SESSION S. 3123 To amend the Home Owners’ Loan Act with respect to the registration and supervision of insurance savings and loan holding companies, and for other purposes. IN THE SENATE OF THE UNITED STATES DECEMBER 19, 2019 Mr. TILLIS (for himself and Ms. SINEMA) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To amend the Home Owners’ Loan Act with respect to the registration and supervision of insurance savings and loan holding companies, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘State Insurance Regu- 4 lation Preservation Act’’. 5 VerDate Sep 11 2014 15:57 Dec 28, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3123.IS S3123 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 3123 IS SEC. 2. SUPERVISION OF INSURANCE SAVINGS AND LOAN 1 HOLDING COMPANIES. 2 (a) DEFINITIONS.—Section 10(a)(1) of the Home 3 Owners’ Loan Act (12 U.S.C. 1467a(a)(1)) is amended 4 by adding at the end the following: 5 ‘‘(K) DOMICILE.—The term ‘domicile’ 6 means the State in which an insurance under- 7 writing company or the holding company for 8 the insurance underwriting company is incor- 9 porated, chartered, or organized. 10 ‘‘(L) BUSINESS OF INSURANCE.—The term 11 ‘business of insurance’ means any activity that 12 is regulated in accordance with the relevant 13 State insurance laws and regulations, including 14 the writing of insurance and the reinsuring of 15 risks. 16 ‘‘(M) INSURANCE SAVINGS AND LOAN 17 HOLDING COMPANY.—The term ‘insurance sav- 18 ings and loan holding company’ means— 19 ‘‘(i) a savings and loan holding com- 20 pany with 75 percent or more of its total 21 consolidated assets in not less than 1 in- 22 surance underwriting company, other than 23 assets associated with insurance for credit 24 risk, during the 4 most recent consecutive 25 quarters, as calculated in accordance with 26 VerDate Sep 11 2014 15:57 Dec 28, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3123.IS S3123 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 3123 IS generally accepted accounting principles or 1 the statutory accounting principles in ac- 2 cordance with State law; 3 ‘‘(ii) a company that— 4 ‘‘(I) was a savings and loan hold- 5 ing company as of July 21, 2010, and 6 through date of enactment of this 7 clause; and 8 ‘‘(II) was not subject to the 9 Basel III capital regulation promul- 10 gated by the Board of Governors of 11 the Federal Reserve System and the 12 Comptroller of the Currency on Octo- 13 ber 11, 2013 (78 Fed. Reg. 62018), 14 because the savings and loan holding 15 company held 25 percent or more of 16 its total consolidated assets in subsidi- 17 aries that are insurance underwriting 18 companies (other than assets associ- 19 ated with insurance for credit risk); or 20 ‘‘(iii) a top-tier savings and loan hold- 21 ing company that— 22 ‘‘(I) was registered as a savings 23 and loan holding company before July 24 21, 2010; and 25 VerDate Sep 11 2014 15:57 Dec 28, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3123.IS S3123 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 3123 IS ‘‘(II) is a New York not-for-prof- 1 it corporation formed for the purpose 2 of holding the stock of a New York in- 3 surance company. 4 ‘‘(N) INSURANCE UNDERWRITING COM- 5 PANY.—The term ‘insurance underwriting com- 6 pany’ means an insurer that is subject to regu- 7 lation by a State insurance authority of the 8 domicile of the insurer. 9 ‘‘(O) STATE INSURANCE AUTHORITY.—The 10 term ‘State insurance authority’ means the 11 State insurance authority of the State in which 12 an insurance underwriting company or the hold- 13 ing company for the insurance underwriting 14 company is domiciled. 15 ‘‘(P) TOP-TIER SAVINGS AND LOAN HOLD- 16 ING COMPANY.—The term ‘top-tier savings and 17 loan holding company’ means the ultimate par- 18 ent company in a savings and loan holding com- 19 pany structure.’’. 20 (b) REGISTRATION.—Section 10(b)(1) of the Home 21 Owners’ Loan Act (12 U.S.C. 1467a(b)(1)) is amended 22 by adding at the end the following: ‘‘A savings and loan 23 holding company that is an insurance savings and loan 24 VerDate Sep 11 2014 15:57 Dec 28, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3123.IS S3123 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 3123 IS holding company shall register as an insurance savings 1 and loan holding company.’’. 2 (c) REPORTS.—Section 10(b)(2) of the Home Own- 3 ers’ Loan Act (12 U.S.C. 1467a(b)(2)) is amended by add- 4 ing at the end the following: 5 ‘‘(D) INSURANCE SAVINGS AND LOAN 6 HOLDING COMPANIES.—The Board, to the full- 7 est extent possible, shall request reports and 8 other information filed by insurance savings 9 and loan holding companies and any insurance 10 underwriting company that is a subsidiary of 11 the insurance savings and loan holding com- 12 pany with other Federal authorities and the 13 State insurance authority for the insurance sav- 14 ings and loan holding company before request- 15 ing those reports or information from the insur- 16 ance savings and loan holding company or any 17 insurance underwriting company that is a sub- 18 sidiary of the insurance savings and loan hold- 19 ing company. 20 ‘‘(E) RULE OF CONSTRUCTION.—Nothing 21 in this section may be construed as prohibiting 22 the Board from requesting reports and other in- 23 formation that is not otherwise collected and 24 VerDate Sep 11 2014 15:57 Dec 28, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3123.IS S3123 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 3123 IS shared with other Federal or State authori- 1 ties.’’. 2 (d) BOOKS AND RECORDS.—Section 10(b)(3) of the 3 Home Owners’ Loan Act (12 U.S.C. 1467a(b)(3)) is 4 amended— 5 (1) by striking ‘‘Each’’ and inserting the fol- 6 lowing: 7 ‘‘(A) IN GENERAL.—Each’’; and 8 (2) by inserting at the end the following: 9 ‘‘(B) INSURANCE SAVINGS AND LOAN 10 HOLDING COMPANIES.—The Board, to the full- 11 est extent possible, shall align any prescribed 12 recordkeeping requirements for an insurance 13 savings and loan holding company with the rec- 14 ordkeeping requirements imposed by the State 15 insurance authority of the insurance savings 16 and loan holding company and any insurance 17 underwriting company that is a subsidiary of 18 the insurance savings and loan holding com- 19 pany.’’. 20 (e) EXAMINATIONS.—Section 10(b)(4)(C) of the 21 Home Owners’ Loan Act (12 U.S.C. 1467a(b)(4)(C)) is 22 amended— 23 (1) in clause (i), by striking the word ‘‘and’’ at 24 the end; 25 VerDate Sep 11 2014 15:57 Dec 28, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3123.IS S3123 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 3123 IS (2) in clause (ii), by striking the period at the 1 end and inserting ‘‘; and’’; and 2 (3) by adding at the end the following: 3 ‘‘(iii) INSURANCE SAVINGS AND LOAN 4 HOLDING COMPANIES.— 5 ‘‘(I) COORDINATION.—The 6 Board, to the fullest extent possible, 7 shall coordinate examinations of an 8 insurance savings and loan holding 9 company in conjunction with the State 10 insurance authority of the insurance 11 savings and loan holding company and 12 any insurance underwriting company 13 that is a subsidiary of insurance sav- 14 ings and loan holding company and 15 other State and Federal authorities in 16 order to minimize the potential for 17 duplication and conflict between the 18 examinations conducted by the Board 19 and the examinations conducted by 20 other State and Federal authorities. 21 ‘‘(II) SCOPE AND FREQUENCY.— 22 Following public notice and comment, 23 the Board shall establish a schedule 24 for the frequency and the scope of ex- 25 VerDate Sep 11 2014 15:57 Dec 28, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3123.IS S3123 pamtmann on DSKBC07HB2PROD with BILLS 8 •S 3123 IS aminations of insurance savings and 1 loan holding companies that is con- 2 sistent with the supervisory frame- 3 work required under paragraph (7).’’. 4 (f) SUPERVISION.—Section 10(b) of the Home Own- 5 ers’ Loan Act (12 U.S.C. 1467a(b)) is amended by insert- 6 ing at the end the following: 7 ‘‘(7) INSURANCE SAVINGS AND LOAN HOLDING 8 COMPANIES.— 9 ‘‘(A) TAILORED SUPERVISION.—The 10 Board, by rule, shall establish a supervisory 11 framework for insurance savings and loan hold- 12 ing companies that— 13 ‘‘(i) is tailored to the unique risks, op- 14 erations, and activities of insurance sav- 15 ings and loan holding companies; and 16 ‘‘(ii) to the fullest extent possible, and 17 consistent with the safe and sound oper- 18 ation of insurance savings and loan holding 19 companies, does not unnecessarily dupli- 20 cate the supervision of insurance under- 21 writing companies by the State insurance 22 authorities for insurance savings and loan 23 holding companies or insurance under- 24 writing companies that are subsidiaries of 25 VerDate Sep 11 2014 15:57 Dec 28, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3123.IS S3123 pamtmann on DSKBC07HB2PROD with BILLS 9 •S 3123 IS insurance savings and loan holding compa- 1 nies. 2 ‘‘(B) REVIEW OF SUPERVISORY GUID- 3 ANCE.—Following public notice and comment, 4 the Board shall review and revise supervisory 5 policy letters and guidance applicable to insur- 6 ance savings and loan holding companies to en- 7 sure that those letters and guidance are not in- 8 consistent with the supervisory framework re- 9 quired under this paragraph.’’. 10 SEC. 3. ASSESSMENTS AND FEES FOR INSURANCE SAVINGS 11 AND LOAN HOLDING COMPANIES. 12 The second subsection (s) of section 11 of the Federal 13 Reserve Act (12 U.S.C. 248; relating to assessments and 14 fees) is amended by adding at the end the following: 15 ‘‘(4) EXCLUDED ASSETS.—For purposes of 16 paragraph (2)(B), the total consolidated assets of an 17 insurance savings and loan holding company, as de- 18 fined in section 10(a)(1) of the Home Owners’ Loan 19 Act (12 U.S.C. 1467a(a)(1)), shall not include as- 20 sets attributable to the business of insurance con- 21 ducted by the insurance savings and loan holding 22 company or any affiliate of the insurance savings 23 and loan holding company, other than assets associ- 24 ated with insurance for credit risk.’’. 25 VerDate Sep 11 2014 15:57 Dec 28, 2019 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S3123.IS S3123 pamtmann on DSKBC07HB2PROD with BILLS 10 •S 3123 IS SEC. 4. IMPLEMENTATION. 1 (a) DEFINITION OF BOARD.—In this section, the 2 term ‘‘Board’’ means the Board of Governors of the Fed- 3 eral Reserve System. 4 (b) IMPLEMENTATION OF SUPERVISORY FRAME- 5 WORK.—Not later than 2 years after the date of enact- 6 ment of this Act, the Board shall establish the supervisory 7 framework required under paragraph (7) of section 10(b) 8 of the Home Owners’ Loan Act (12 U.S.C. 1467a(b)), as 9 added by this Act. 10 (c) REVIEW OF SUPERVISORY GUIDANCE.—Not later 11 than 30 months after the date of enactment of this Act, 12 the Board shall complete the review of supervisory policy 13 letters and policy guidance required under paragraph (7) 14 of section 10(b) of the Home Owners’ Loan Act (12 15 U.S.C. 1467a(b)), as added by this Act. 16 (d) REPORT TO CONGRESS.—Not later than 3 years 17 after the date of enactment of this Act, the Board shall 18 submit to the Committee on Banking, Housing, and 19 Urban Affairs of the Senate and the Committee on Finan- 20 cial Services of the House of Representatives a report on 21 the implementation of this Act. 22 SEC. 5. RELATIONSHIP TO OTHER LAWS. 23 This Act and the amendments made by this Act shall 24 not limit any authority over insurance savings and loan 25 holding companies, as defined in section 10(a)(1) of the 26 VerDate Sep 11 2014 15:57 Dec 28, 2019 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S3123.IS S3123 pamtmann on DSKBC07HB2PROD with BILLS 11 •S 3123 IS Home Owners’ Loan Act (12 U.S.C. 1467a(a)(1)), as 1 added by this Act, that is provided by a Federal law other 2 than the Home Owners’ Loan Act (12 U.S.C. 1461 et 3 seq.). 4 SEC. 6. RULEMAKING AUTHORITY. 5 The Board may issue regulations and orders as may 6 be necessary to— 7 (1) administer and carry out this Act and the 8 amendments made by this Act; and 9 (2) prevent evasions of this Act and the amend- 10 ments made by this Act. 11 SEC. 7. RULE OF CONSTRUCTION. 12 Nothing in this Act or the amendments made by this 13 Act may be construed to affect the authority of the Board 14 of Governors of the Federal Reserve System over any sub- 15 sidiary of an insurance savings and loan holding company 16 that is not an insurance underwriting company, as those 17 terms are defined in section 10(a)(1) of the Home Owners’ 18 Loan Act (12 U.S.C. 1467a(a)(1)), as added by this Act. 19 Æ VerDate Sep 11 2014 15:57 Dec 28, 2019 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 E:\BILLS\S3123.IS S3123 pamtmann on DSKBC07HB2PROD with BILLS