On community reinvestment, the legislation would require federally-chartered insurers to establish a written investment policy which must be reviewed annually. During that review, an insurer's board of directors must consider the amount of investments in the communities where it does business.

The draft legislation does not require community investments, but does say that insurance company boards should consider such investments.

Regarding alleged redlining, the LaFalce draft would require national insurers to file annual reports with an Office of National Insurers identifying the communities in which they sell insurance policies and the types of policies sold in these communities.

According to a summary of the legislation developed by Rep. LaFalce, these reports could be used by consumers in the effort to combat redlining practices that bar sales of insurance to geographic areas based on the population's income level and racial composition.

Moreover, the legislation would bar national insurers from refusing to cover a property based solely on its location.

In addition, the LaFalce draft would scale back the insurance industry's antitrust protection under the McCarran-Ferguson Act for both national and state insurers.

Federal antitrust laws would apply to both national and state insurers except for the sharing of historical loss data and participation in mandatory state residual market mechanisms.

Moreover, the LaFalce bill would preempt state form regulation for national insurers, but not rate regulation.

Under the LaFalce draft, states would continue to regulate the rates charged by national insurers.

As for producers, the LaFalce draft would not establish national licensing of agents and brokers. This contrasts with legislation introduced in the Senate by Sen. Charles Schumer, D-N.Y., which says that agents would have to obtain a national license in order to sell insurance for a national insurer.

Proposals for optional federal chartering developed by three trade associations?the American Insurance Association, the American Council of Life Insurers and the American Bankers Insurance Association, all of Washington?also call for national licensing of agents and brokers that sell for national insurers.

However, the LaFalce bill says that the Office of National Insurers would have authority to enforce unfair and deceptive trade practice rules against state-licensed agents and brokers regarding the sale of products for national insurers.

As with the other optional federal chartering proposals, the LaFalce bill calls for national insurers to pay the same state taxes as state-chartered insurers and to participate in qualified state insurance guaranty associations.

A Federal Insurance Guaranty Association would be formed to provide solvency protection only in states that do not have qualified associations.

In a "Dear Colleague" letter dated Jan. 18, Rep. LaFalce said that he planned to introduce his legislation, called the Insurance Industry Modernization Act, on Jan. 23.

However, he did not introduce the legislation on Jan. 23 and a call to his office to inquire about the introduction date was not immediately returned. In his letter, Rep. LaFalce said that the disruptions in the insurance industry following the Sept. 11. terrorist attack underscore the importance of the insurance industry to the American economy. "A healthy domestic insurance industry is an issue of national importance," he said.