Sec. 501. Repeal of the Federal Insurance Office; Creation of the Office of the Independent Insurance Advocate

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Section 313 of title 31, United States Code, is amended to read as follows (and conforming the table of contents for chapter 3 of such title accordingly): There is established in the Department of the Treasury a bureau to be known as the Office of the Independent Insurance Advocate (in this section referred to as the Office ). The chief officer of the Office of the Independent Insurance Advocate shall be known as the Independent Insurance Advocate. The Independent Insurance Advocate shall perform the duties of such office under the general direction of the Secretary of the Treasury.

The Independent Insurance Advocate shall be appointed by the President, by and with the advice and consent of the Senate, from among persons having insurance expertise. The Independent Insurance Advocate shall serve a term of 6 years, unless sooner removed by the President upon reasons which shall be communicated to the Senate. If a successor is not nominated and confirmed by the end of the term of service of the Independent Insurance Advocate, the person serving as Independent Insurance Advocate shall continue to serve until such time a successor is appointed and confirmed.

An Independent Insurance Advocate who is appointed to serve the remainder of a predecessor’s uncompleted term shall be eligible thereafter to be appointed to a full 6 year term. In the event of a vacancy in the office of the Independent Insurance Advocate, and pending the appointment and confirmation of a successor, or during the absence or disability of the Independent Insurance Advocate, the Independent Member shall appoint a federal official appointed by the President and confirmed by the Senate from a member agency of the Financial Stability Oversight Council, not otherwise serving on the Council, who shall serve as a member of the Council and act in the place of the Independent Insurance Advocate until such vacancy, absence, or disability concludes.

The Independent Insurance Advocate shall be an employee of the Federal Government within the definition of employee under section 2105 of title 5, United States Code. The Secretary of the Treasury may not delay or prevent the issuance of any rule or the promulgation of any regulation by the Independent Insurance Advocate, and may not intervene in any matter or proceeding before the Independent Insurance Advocate, unless otherwise specifically provided by law. The Office of the Independent Insurance Advocate shall be an office in the establishment of the Department of the Treasury for purposes of the Inspector General Act of 1978 (5 U.S.C.

App.). Nothing in this section or section 314 shall be construed to establish or provide the Office or the Department of the Treasury with general supervisory or regulatory authority over the business of insurance. For each fiscal year, the Independent Insurance Advocate shall transmit a budget estimate and request to the Secretary of the Treasury, which shall specify the aggregate amount of funds requested for such fiscal year for the operations of the Office of the Independent Insurance Advocate.

In transmitting the proposed budget to the President for approval, the Secretary of the Treasury shall include— an aggregate request for the Independent Insurance Advocate; and any comments of the Independent Insurance Advocate with respect to the proposal. The President shall include in each budget of the United States Government submitted to the Congress— a separate statement of the budget estimate prepared in accordance with paragraph (1); the amount requested by the President for the Independent Insurance Advocate; and any comments of the Independent Insurance Advocate with respect to the proposal if the Independent Insurance Advocate concludes that the budget submitted by the President would substantially inhibit the Independent Insurance Advocate from performing the duties of the office.

The Secretary of the Treasury shall provide the Independent Insurance Advocate such services, funds, facilities and other support services as the Independent Insurance Advocate may request and as the Secretary may approve. The Independent Insurance Advocate may fix the number of, and appoint and direct, the employees of the Office, in accordance with the applicable provisions of title 5, United States Code. The Independent Insurance Advocate is authorized to employ attorneys, analysts, economists, and other employees as may be deemed necessary to assist the Independent Insurance Advocate to carry out the duties and functions of the Office.

Unless otherwise provided expressly by law, any individual appointed under this paragraph shall be an employee as defined in section 2105 of title 5, United States Code, and subject to the provisions of such title and other laws generally applicable to the employees of the Executive Branch. Employees of the Office shall be paid in accordance with the provisions of chapter 51 and subchapter III of chapter 53 of title 5, United States Code, relating to classification and General Schedule pay rates.

The Independent Insurance Advocate may procure temporary and intermittent services under section 3109(b) of title 5, United States Code, at rates for individuals which do not exceed the daily equivalent of the annual rate of basic pay prescribed for Level V of the Executive Schedule under section 5316 of such title. Any employee of the Federal Government may be detailed to the Office with or without reimbursement, and such detail shall be without interruption or loss of civil service status or privilege.

An employee of the Federal Government detailed to the Office shall report to and be subject to oversight by the Independent Insurance Advocate during the assignment to the office, and may be compensated by the branch, department, or agency from which the employee was detailed. The Independent Insurance Advocate may enter into agreements under subchapter VI of chapter 33 of title 5, United States Code, with State and local governments, institutions of higher education, Indian tribal governments, and other eligible organizations for the assignment of intermittent, part-time, and full-time personnel, on a reimbursable or non-reimbursable basis.

The Legal Counsel of the Financial Stability Oversight Council, or in the absence of a Legal Counsel of the Council, the designated ethics official of any Council member agency, as chosen by the Independent Insurance Advocate, shall be the ethics official for the Independent Insurance Advocate. In addition to any restriction under section 205(c) of title18, United States Code, except as provided in subsections

(d)through

(i)of section 205 of such title, the Independent Insurance Advocate (except in the proper discharge of official duties) shall not, with or without compensation, represent anyone to or before any officer or employee of— the Financial Stability Oversight Council on any matter; or the Department of Justice with respect to litigation involving a matter described in subparagraph (A). For purposes of section 203 of title 18, United States Code, and if a special government employee— the Independent Insurance Advocate shall not be subject to the restrictions of subsection (a)(1) of section 203,of title 18, United States Code, for sharing in compensation earned by another for representations on matters covered by such section; and a person shall not be subject to the restrictions of subsection (a)(2) of such section for sharing such compensation with the Independent Insurance Advocate. The Independent Insurance Advocate may appoint such special advisory, technical, or professional committees as may be useful in carrying out the functions of the Office and the members of such committees may be staff of the Office, or other persons, or both. In carrying out the functions under this subsection, the mission of the Office shall be to act as an independent advocate on behalf of the interests of United States policyholders on prudential aspects of insurance matters of importance, and to provide perspective on protecting their interests, separate and apart from any other Federal agency or State insurance regulator. The Office shall have the authority— to coordinate Federal efforts on prudential aspects of international insurance matters, including representing the United States, as appropriate, in the International Association of Insurance Supervisors (or a successor entity) and assisting the Secretary in negotiating covered agreements (as such term is defined in subsection (q)) in coordination with States (including State insurance commissioners) and the United States Trade Representative; to consult with the States (including State insurance regulators) regarding insurance matters of national importance and prudential insurance matters of international importance; to assist the Secretary in administering the Terrorism Insurance Program established in the Department of the Treasury under the Terrorism Risk Insurance Act of 2002 ( 15 U.S.C. 6701 note); to observe all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that could contribute to a systemic crisis in the insurance industry or the United States financial system; and to make determinations and exercise the authority under subsection

(m)with respect to covered agreements and State insurance measures. The Independent Insurance Advocate shall serve, pursuant to section 111(b)(1)(J) of the Financial Stability Act of 2010 ( 12 U.S.C. 5321(b)(1)(J) ), as a member on the Financial Stability Oversight Council. To assist the Financial Stability Oversight Council with its responsibilities to monitor international insurance developments, advise the Congress, and make recommendations, the Independent Insurance Advocate shall have the authority— to regularly consult with international insurance supervisors and international financial stability counterparts; to consult with the Board of Governors of the Federal Reserve System and the States with respect to representing 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; to participate at the Financial Stability Board of The Group of Twenty and to join with other members from the United States including on matters related to insurance; and to participate with the United States delegation to the Organization for Economic Cooperation and Development and observe and participate at the Insurance and Private Pensions Committee. The Office may not engage in any activities that it is not specifically authorized to engage in under this section or any other provision of law, including participation in any supervisory college or other meetings or fora for cooperation and communication between the involved insurance supervisors established for the fundamental purpose of facilitating the effectiveness of supervision of entities which belong to an insurance group. The authority of the Office as specified and limited in this section shall extend to all lines of insurance except— health insurance, as determined by the Secretary in coordination with the Secretary of Health and Human Services based on section 2791 of the Public Health Service Act ( 42 U.S.C. 300gg-91 ); long-term care insurance, except long-term care insurance that is included with life or annuity insurance components, as determined by the Secretary in coordination with the Secretary of Health and Human Services, and in the case of long-term care insurance that is included with such components, the Secretary shall coordinate with the Secretary of Health and Human Services in performing the functions of the Office; and crop insurance, as established by the Federal Crop Insurance Act ( 7 U.S.C. 1501 et seq. ). In carrying out the functions required under subsection (j), the Office may coordinate with any relevant Federal agency and any State insurance regulator (or other relevant Federal or State regulatory agency, if any, in the case of an affiliate of an insurer) and any publicly available sources for the provision to the Office of publicly available information. Notwithstanding any other provision of law, each such relevant Federal agency and State insurance regulator or other Federal or State regulatory agency is authorized to provide to the Office such data or information. A State insurance measure shall be preempted pursuant to this section or section 314 if, and only to the extent that the Independent Insurance Advocate determines, in accordance with this subsection, that the measure— results in less favorable treatment of a non-United States insurer domiciled in a foreign jurisdiction that is subject to a covered agreement than a United States insurer domiciled, licensed, or otherwise admitted in that State; and is inconsistent with a covered agreement. Before making any determination under paragraph (1), the Independent Insurance Advocate shall— notify and consult with the appropriate State regarding any potential inconsistency or preemption; notify and consult with the United States Trade Representative regarding any potential inconsistency or preemption; cause to be published in the Federal Register notice of the issue regarding the potential inconsistency or preemption, including a description of each State insurance measure at issue and any applicable covered agreement; provide interested parties a reasonable opportunity to submit written comments to the Office; and consider any comments received. For purposes of this subsection, any determination of the Independent Insurance Advocate regarding State insurance measures, and any preemption under paragraph

(1)as a result of such determination, shall be limited to the subject matter contained within the covered agreement involved and shall achieve a level of protection for insurance or reinsurance consumers that is substantially equivalent to the level of protection achieved under State insurance or reinsurance regulation. Upon making any determination under paragraph (1), the Director shall— notify the appropriate State of the determination and the extent of the inconsistency; establish a reasonable period of time, which shall not be less than 30 days, before the determination shall become effective; and notify the Committees on Financial Services and Ways and Means of the House of Representatives and the Committees on Banking, Housing, and Urban Affairs and Finance of the Senate. Upon the conclusion of the period referred to in paragraph (2)(C)(ii), if the basis for such determination still exists, the determination shall become effective and the Independent Insurance Advocate shall— cause to be published a notice in the Federal Register that the preemption has become effective, as well as the effective date; and notify the appropriate State. No State may enforce a State insurance measure to the extent that such measure has been preempted under this subsection. Determinations of inconsistency made pursuant to paragraph

(2)shall be subject to the applicable provisions of subchapter II of chapter 5 of title 5, United States Code (relating to administrative procedure), and chapter 7 of such title (relating to judicial review), except that in any action for judicial review of a determination of inconsistency, the court shall determine the matter de novo. The Independent Insurance Advocate shall consult with State insurance regulators, individually or collectively, to the extent the Independent Insurance Advocate determines appropriate, in carrying out the functions of the Office. In addition to the other functions and duties specified in this section, the Independent Insurance Advocate may prescribe such notices and requests for comment in the Federal Register as are deemed necessary related to and governing the manner in which the duties and authorities of the Independent Insurance Advocate are carried out; Nothing in this section shall— preempt— any State insurance measure that governs any insurer's rates, premiums, underwriting, or sales practices; any State coverage requirements for insurance; the application of the antitrust laws of any State to the business of insurance; or any State insurance measure governing the capital or solvency of an insurer, except to the extent that such State insurance measure results in less favorable treatment of a non-United State insurer than a United States insurer; or affect the preemption of any State insurance measure otherwise inconsistent with and preempted by Federal law. Nothing in this section or section 314 shall be construed to limit the authority of any Federal financial regulatory agency, including the authority to develop and coordinate policy, negotiate, and enter into agreements with foreign governments, authorities, regulators, and multinational regulatory committees and to preempt State measures to affect uniformity with international regulatory agreements. Nothing in this section or section 314 shall be construed to affect the authority of the Office of the United States Trade Representative pursuant to section 141 of the Trade Act of 1974 ( 19 U.S.C. 2171 ) or any other provision of law, including authority over the development and coordination of United States international trade policy and the administration of the United States trade agreements program. The Independent Insurance Advocate shall appear before the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs at semi-annual hearings and shall provide testimony, which shall include submitting written testimony in advance of such appearances to such committees and to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate, on the following matters: The efforts, activities, objectives, and plans of the Office. Any actions taken by the Office pursuant to subsection

(l)(regarding preemption pursuant to covered agreements). The state of, and developments in, the insurance industry. The breadth and scope of the global insurance and reinsurance markets and the critical role such markets plays in supporting insurance in the United States and the ongoing impacts of part II of the Nonadmitted and Reinsurance Reform Act of 2010 on the ability of State regulators to access reinsurance information for regulated companies in their jurisdictions. Any other matters as deemed relevant by the Independent Insurance Advocate or requested by such Committees. Not later than two months prior to the expiration of the term of office, or discontinuation of service, of each individual serving as the Independent Insurance Advocate, the Independent Insurance Advocate shall submit a report to the Committees on Financial Services and Ways and Means of the House of Representatives and the Committees on Banking, Housing, and Urban Affairs and Finance of the Senate setting forth recommendations regarding the Financial Stability Oversight Council and the role, duties, and functions of the Independent Insurance Advocate. In this section and section 314, the following definitions shall apply: The term affiliate means, with respect to an insurer, any person who controls, is controlled by, or is under common control with the insurer. The term covered agreement means a written bilateral or multilateral agreement regarding prudential measures with respect to the business of insurance or reinsurance that— is entered into between the United States and one or more foreign governments, authorities, or regulatory entities; and relates to the recognition of prudential measures with respect to the business of insurance or reinsurance that achieves a level of protection for insurance or reinsurance consumers that is substantially equivalent to the level of protection achieved under State insurance or reinsurance regulation. The term insurer means any person engaged in the business of insurance, including reinsurance. The term Federal financial regulatory agency means the Department of the Treasury, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, or the National Credit Union Administration. The term Financial Stability Oversight Council means the Financial Stability Oversight Council established under section 111(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5321(a) ). The term member agency has the meaning given such term in section 111(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5321(a) ). The term non-United States insurer means an insurer that is organized under the laws of a jurisdiction other than a State, but does not include any United States branch of such an insurer. The term Office means the Office of the Independent Insurance Advocate established by this section. The term State insurance measure means any State law, regulation, administrative ruling, bulletin, guideline, or practice relating to or affecting prudential measures applicable to insurance or reinsurance. The term State insurance regulator means any State regulatory authority responsible for the supervision of insurers. The term substantially equivalent to the level of protection achieved means the prudential measures of a foreign government, authority, or regulatory entity achieve a similar outcome in consumer protection as the outcome achieved under State insurance or reinsurance regulation. The term United States insurer means— an insurer that is organized under the laws of a State; or a United States branch of a non-United States insurer. . Section 5314 of title 5, United States Code, is amended by adding at the end the following new item: Independent Insurance Advocate, Department of the Treasury. . Paragraph

(1)of section 111(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5321(b)(1) ) is amended by striking subparagraph

(J)and inserting the following new subparagraph: the Independent Insurance Advocate appointed pursuant to section 313 of title 31, United States Code. . Section 111 of Public Law 93–495 ( 12 U.S.C. 250 ) is amended— by inserting the Independent Insurance Advocate of the Department of the Treasury, after Federal Housing Finance Agency, ; and by inserting or official before submitting them . All employees of the Department of Treasury who are performing staff functions for the independent member of the Financial Stability Oversight Council under section 111(b)(2)(J) of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5321(b)(2)(J) ) on a full-time equivalent basis as of the date of enactment of this Act shall be eligible for transfer to the Office of the Independent Insurance Advocate established pursuant to the amendment made by subsection

(a)of this section for appointment as an employee and shall be transferred at the joint discretion of the Independent Insurance Advocate and the eligible employee. Any employee eligible for transfer that is not appointed within 360 days from the date of enactment of this Act shall be eligible for detail under section 313(f)(4) of title 31, United States Code. Notwithstanding the amendment made by subsection

(a)of this section, during the period beginning on the date of the enactment of this Act and ending on the date on which the Independent Insurance Advocate is appointed and confirmed pursuant to section 313(b)(2) of title 31, United States Code, as amended by such amendment, the person serving, on such date of enactment, as the independent member of the Financial Stability Oversight Council pursuant to section 111(b)(1)(J) of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5321(b)(1)(J) ) shall act for all purposes as, and with the full powers of, the Independent Insurance Advocate. Subsection

(a)of section 1206 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ( 12 U.S.C. 1833b(a) ) is amended by inserting and the Office of the Independent Insurance Advocate of the Department of the Treasury, after Farm Credit Administration, . Subparagraph

(D)of section 3132(a)(1) of title 5, United States Code, is amended by inserting the Office of the Independent Insurance Advocate of the Department of the Treasury, after Finance Agency, .

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