HB 838 - Insurance; risk-based capital levels; provisions
Georgia House of Representatives - 1995/1996 Sessions
HB 838 - Insurance; risk-based capital levels; provisions
1. Culbreth 132nd 2. Lord 121st 3. Heard 89th
4. Williams 114th
House Comm: Ins / Senate Comm: I&L /
House Vote: Yeas 95 Nays 1 Senate Vote: Yeas 49 Nays 0
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House Action Senate
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2/22/95 Read 1st Time 2/12/96
2/27/95 Read 2nd Time 3/13/96
1/31/96 Favorably Reported 3/13/96
Sub Committee Amend/Sub Sub
2/9/96 Read 3rd Time 3/15/96
2/9/96 Passed/Adopted 3/15/96
CS Comm/Floor Amend/Sub CS
3/18/96 Amend/Sub Agreed To
4/2/96 Sent to Governor
4/15/96 Signed by Governor
912 Act/Veto Number
4/15/96 Effective Date
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Code Sections amended: 33-56-1, 33-56-2, 33-56-3, 33-56-4, 33-56-5, 33-56-6,
33-56-7, 33-56-8, 33-56-9, 33-56-10, 33-56-11, 33-56-12, 33-56-13, 33-37-8.1
HB 838 HB 838/AP
H. B. No. 838 (AS PASSED HOUSE AND SENATE)
By: Representatives Culbreth of the 132nd, Lord of the
121st, Heard of the 89th and Williams of the 114th
A BILL TO BE ENTITLED
AN ACT
1- 1 To amend Title 33 of the Official Code of Georgia Annotated,
1- 2 relating to insurance, so as to provide definitions; to
1- 3 provide for the submission of reports by insurers of
1- 4 risk-based capital levels; to provide for the computation of
1- 5 risk-based capital levels for various kinds of insurers; to
1- 6 provide for administrative hearings and procedures relative
1- 7 to such hearings; to provide for risk-based capital plans to
1- 8 be submitted by insurers to the Commissioner of Insurance;
1- 9 to provide for the content of reports and plans; to provide
1-10 for the filing of reports and plans with insurance
1-11 commissioners of other states and with the National
1-12 Association of Insurance Commissioners; to authorize
1-13 examinations by the Commissioner of Insurance and the
1-14 issuance of orders for corrective actions to be taken by
1-15 insurers; to provide for the authority of the Commissioner
1-16 of Insurance to take actions pursuant to Chapter 37 of this
1-17 title; to provide for the confidentiality of certain
1-18 information and corrective orders; to provide for
1-19 legislative intent and purpose; to prohibit certain actions
1-20 relative to advertising or publishing information regarding
1-21 risk-based capital levels; to provide for construction; to
1-22 authorize rules and regulations; to authorize exemptions for
1-23 domestic property and casualty insurers which meet certain
1-24 requirements; to provide for immunity from suit for the
1-25 Commissioner of Insurance and the Insurance Department; to
1-26 provide for severability; to provide for the effectiveness
1-27 of notices; to provide official immunity from civil action
1-28 to receivers responsible for the conduct of a delinquency
1-29 proceeding under said chapter and their employees; to
1-30 provide indemnification from the assets of the insurer for
1-31 legal expenses and similar expenses in the event legal
1-32 action is commenced against the receiver or an employee; to
1-33 provide that indemnification costs paid by the insurer shall
1-34 be considered an administrative expense of the insurer; to
1-35 provide for the segregation and reserving of funds from the
1-36 assets of the insurer in the event of actual or threatened
1-37 legal action against the receiver or an employee; to provide
H. B. No. 838
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HB 838/AP
2- 1 for determinations by the Commissioner of Insurance
2- 2 regarding payments in the event of settlements of legal
2- 3 action prior to final adjudication; to provide for approval
2- 4 of settlements by the court before which an action is
2- 5 pending; to provide for construction; to provide for
2- 6 applicability; to provide for other matters relative to the
2- 7 foregoing; to provide for effective dates; to repeal
2- 8 conflicting laws; and for other purposes.
2- 9 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION 1.
2-10 Title 33 of the Official Code of Georgia Annotated, relating
2-11 to insurance, is amended by adding a new Chapter 56 to read
2-12 as follows:
"CHAPTER 56
2-13 33-56-1. (Index)
2-14 As used in this chapter, the term:
2-15 (1) 'Adjusted RBC report' means an RBC report which has
2-16 been adjusted in accordance with subsection (e) of Code
2-17 Section 33-56-2.
2-18 (2) 'Corrective order' means an order issued by the
2-19 Commissioner specifying corrective actions which the
2-20 Commissioner has determined are required.
2-21 (3) 'Domestic insurer' means an insurer as defined in
2-22 paragraph (4) of Code Section 33-3-1.
2-23 (4) 'Foreign insurer' means any insurance company which
2-24 is licensed to do business in this state under Chapter 3
2-25 of this title, but is not a domestic insurer.
2-26 (5) 'Life and health insurer' means any insurance
2-27 company licensed to write insurance as defined in Code
2-28 Section 33-7-2 or 33-7-4 or a licensed property and
2-29 casualty insurer writing only accident and health
2-30 insurance.
2-31 (6) 'NAIC' means the National Association of Insurance
2-32 Commissioners.
2-33 (7) 'Negative trend' means, with respect to a life and
2-34 health insurer, a negative trend over a period of time,
2-35 as determined in accordance with the trend test
2-36 calculation included in the RBC instructions.
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3- 1 (8) 'Property and casualty insurer' means any insurance
3- 2 company licensed to write insurance as defined in Code
3- 3 Section 33-7-3 or 33-7-6 but shall not include monoline
3- 4 mortgage guaranty insurers, financial guaranty insurers,
3- 5 and title insurers.
3- 6 (9) 'RBC' means risk-based capital.
3- 7 (10) 'RBC instructions' means the RBC report including
3- 8 risk-based capital instructions adopted by the NAIC, as
3- 9 such RBC instructions may be amended by the NAIC from
3-10 time to time in accordance with the procedures adopted
3-11 by the NAIC.
3-12 (11) 'RBC level' means an insurer's company action level
3-13 RBC, regulatory action level RBC, authorized control
3-14 level RBC, or mandatory control level RBC where:
3-15 (A) 'Authorized control level RBC' means the number
3-16 determined under the risk-based capital formula in
3-17 accordance with the RBC instructions;
3-18 (B) 'Company action level RBC' means, with respect to
3-19 any insurer, the product of 2.0 and its authorized
3-20 control level RBC;
3-21 (C) 'Mandatory control level RBC' means the product of
3-22 .70 and the authorized control level RBC; and
3-23 (D) 'Regulatory action level RBC' means the product of
3-24 1.5 and its authorized control level RBC.
3-25 (12) 'RBC plan' means a comprehensive financial plan
3-26 containing the elements specified in subsection (b) of
3-27 Code Section 33-56-3. If the Commissioner rejects the
3-28 RBC plan and it is revised by the insurer, with or
3-29 without the Commissioner's recommendation, the plan
3-30 shall be called the revised RBC plan.
3-31 (13) 'RBC report' means the report required in Code
3-32 Section 33-56-2.
3-33 (14) 'Total adjusted capital' means the sum of:
3-34 (A) An insurer's statutory capital and surplus; and
3-35 (B) Such other items, if any, as the RBC instructions
3-36 may provide.
3-37 33-56-2. (Index)
3-38 (a) Every domestic insurer shall, on or prior to each
3-39 March 1, prepare and submit to the Commissioner a report
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HB 838/AP
4- 1 of its RBC levels, as of the end of the previous calendar
4- 2 year, containing such information as is required by the
4- 3 RBC instructions. In addition, every domestic insurer
4- 4 shall file its RBC report:
4- 5 (1) With the NAIC in accordance with the RBC
4- 6 instructions; and
4- 7 (2) With the insurance commissioner in any state in
4- 8 which the insurer is authorized to do business, if the
4- 9 insurance commissioner has notified the insurer of its
4-10 request in writing, in which case the insurer shall file
4-11 its RBC report not later than the later of:
4-12 (A) Fifteen days from the receipt of notice to file
4-13 its RBC report with that state; or
4-14 (B) March 1.
4-15 (b) A life and health insurer's RBC shall be determined in
4-16 accordance with the formula set forth in the RBC
4-17 instructions. The formula shall take into account and may
4-18 adjust for the covariance between:
4-19 (1) The risk with respect to the insurer's assets;
4-20 (2) The risk of adverse insurance experience with
4-21 respect to the insurer's liabilities and obligations;
4-22 (3) The interest rate risk with respect to the insurer's
4-23 business; and
4-24 (4) All other business risks and such other relevant
4-25 risks as are set forth in the RBC instructions,
4-26 determined in each case by applying the factors in the
4-27 manner set forth in the RBC instructions.
4-28 (c) A property and casualty insurer's RBC shall be
4-29 determined in accordance with the formula set forth in the
4-30 RBC instructions. The formula shall take into account and
4-31 may adjust for the covariance between:
4-32 (1) Asset risk;
4-33 (2) Credit risk;
4-34 (3) Underwriting risk; and
4-35 (4) All other business risks and such other relevant
4-36 risks as are set forth in the RBC instructions,
4-37 determined in each case by applying the factors in the
4-38 manner set forth in the RBC instructions.
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5- 1 (d) An excess of capital over the amount produced by the
5- 2 risk-based capital requirements contained in the chapter
5- 3 and the formulas, schedules, and instructions referenced
5- 4 in this chapter is desirable in the business of insurance.
5- 5 Accordingly, insurers should seek to maintain capital
5- 6 above the RBC levels required by this chapter. Additional
5- 7 capital is useful in the insurance business and helps to
5- 8 secure an insurer against various risks inherent in or
5- 9 affecting the business of insurance and is not accounted
5-10 for or only partially measured by the risk-based capital
5-11 requirements contained in this chapter.
5-12 (e) If a domestic insurer files an RBC report which in the
5-13 judgment of the Commissioner is inaccurate, then the
5-14 Commissioner shall adjust the RBC report and notify the
5-15 insurer of the inaccuracy. The notice shall contain a
5-16 statement of the reason for the inaccuracy. The insurer
5-17 must, within 30 days, correct the inaccuracy or request a
5-18 hearing. If the insurer fails to correct the inaccuracy
5-19 or to request a hearing, the Commissioner may order a
5-20 hearing to determine the corrections that are necessary.
5-21 An RBC report adjusted in accordance with this subsection
5-22 is referred to as an adjusted RBC report.
5-23 33-56-3. (Index)
5-24 (a) As used in this Code section, a company action level
5-25 event means any of the following events:
5-26 (1) The filing of an RBC report by an insurer which
5-27 indicates that:
5-28 (A) The insurer's total adjusted capital is greater
5-29 than or equal to its regulatory action level RBC but
5-30 less than its company action level RBC; or
5-31 (B) If a life and health insurer, the insurer has
5-32 total adjusted capital which is greater than or equal
5-33 to its company action level RBC but less than the
5-34 product of its authorized control level RBC and 2.5
5-35 and has a negative trend;
5-36 (2) The notification by the Commissioner to the insurer
5-37 of an adjusted RBC report that indicates an event in
5-38 paragraph (1) of this subsection, provided the insurer
5-39 does not challenge the adjusted RBC report under Code
5-40 Section 33-56-7; or
5-41 (3) If, pursuant to Code Section 33-56-7, an insurer
5-42 challenges an adjusted RBC report that indicates the
H. B. No. 838
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6- 1 event in paragraph (1) of this subsection, the
6- 2 notification by the Commissioner to the insurer that the
6- 3 Commissioner has, after a hearing, rejected the
6- 4 insurer's challenge.
6- 5 (b) In the event of a company action level event, the
6- 6 insurer shall prepare and submit to the Commissioner an
6- 7 RBC plan which shall:
6- 8 (1) Identify the conditions which contribute to the
6- 9 company action level event;
6-10 (2) Contain proposals of corrective actions which the
6-11 insurer intends to take and would be expected to result
6-12 in the elimination of the company action level event;
6-13 (3) Provide projections of the insurer's financial
6-14 results in the current year and at least the four
6-15 succeeding years, both in the absence of proposed
6-16 corrective actions and giving effect to the proposed
6-17 corrective actions, including projections of statutory
6-18 operating income, net income, capital and surplus, or
6-19 surplus;
6-20 (4) Identify the key assumptions impacting the insurer's
6-21 projections and the sensitivity of the projections to
6-22 the assumptions; and
6-23 (5) Identify the quality of, and problems associated
6-24 with, the insurer's business, including but not limited
6-25 to its assets, anticipated business growth and
6-26 associated surplus strain, extraordinary exposure to
6-27 risk, mix of business, and use of reinsurance, if any,
6-28 in each case.
6-29 (c) An RBC plan shall be submitted:
6-30 (1) Within 45 days of the company action level event; or
6-31 (2) If the insurer challenges an adjusted RBC report
6-32 pursuant to Code Section 33-56-7, within 45 days after
6-33 notification to the insurer that the Commissioner has,
6-34 after a hearing, rejected the insurer's challenge.
6-35 (d) Within 60 days after the submission by an insurer of
6-36 an RBC plan to the Commissioner, the Commissioner shall
6-37 notify the insurer whether the RBC plan shall be
6-38 implemented or is, in the judgment of the Commissioner,
6-39 unsatisfactory. If the Commissioner determines the RBC
6-40 plan is unsatisfactory, the notification to the insurer
6-41 shall set forth the reasons for the determination and may
H. B. No. 838
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7- 1 set forth proposed revisions which will render the RBC
7- 2 plan satisfactory in the judgment of the Commissioner.
7- 3 Upon notification from the Commissioner, the insurer shall
7- 4 prepare a revised RBC plan, which may incorporate by
7- 5 reference any revisions proposed by the Commissioner, and
7- 6 shall submit the revised RBC plan to the Commissioner:
7- 7 (1) Within 45 days after the notification from the
7- 8 Commissioner; or
7- 9 (2) If the insurer challenges the notification from the
7-10 Commissioner under Code Section 33-56-7, within 45 days
7-11 after a notification to the insurer that the
7-12 Commissioner has, after a hearing, rejected the
7-13 insurer's challenge.
7-14 (e) In the event of a notification by the Commissioner to
7-15 an insurer that the insurer's RBC plan or revised RBC plan
7-16 is unsatisfactory, the Commissioner may at the
7-17 Commissioner's discretion, subject to the insurer's right
7-18 to a hearing under Code Section 33-56-7, specify in the
7-19 notification that the notification constitutes a
7-20 regulatory action level event.
7-21 (f) Every domestic insurer which files an RBC plan or
7-22 revised RBC plan with the Commissioner shall file a copy
7-23 of the RBC plan or revised RBC plan with the insurance
7-24 commissioner in any state in which the insurer is
7-25 authorized to do business if:
7-26 (1) Such state has an RBC provision substantially
7-27 similar to subsection (a) of Code Section 33-56-8; and
7-28 (2) The insurance commissioner of that state has
7-29 notified the insurer of its request for the filing in
7-30 writing, in which case the insurer shall file a copy of
7-31 the RBC plan or revised RBC plan in that state no later
7-32 than the later of:
7-33 (A) Fifteen days after the receipt of notice to file a
7-34 copy of its RBC plan or revised RBC plan with the
7-35 state; or
7-36 (B) The date on which the RBC plan or revised RBC plan
7-37 is filed under subsection (c) or (d) of this Code
7-38 section.
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8- 1 33-56-4. (Index)
8- 2 (a) For the purposes of this Code section, a regulatory
8- 3 action level event means, with respect to any insurer, any
8- 4 of the following events:
8- 5 (1) The filing of an RBC report by the insurer which
8- 6 indicates that the insurer's total adjusted capital is
8- 7 greater than or equal to its authorized control level
8- 8 RBC but less than its regulatory action level RBC;
8- 9 (2) The notification by the Commissioner to an insurer
8-10 of an adjusted RBC report that indicates the event in
8-11 paragraph (1) of this subsection, provided the insurer
8-12 does not challenge the adjusted RBC report under Code
8-13 Section 33-56-7;
8-14 (3) If, pursuant to Code Section 33-56-7, the insurer
8-15 challenges an adjusted RBC report that indicates the
8-16 event in paragraph (1) of this subsection, the
8-17 notification by the Commissioner to the insurer that the
8-18 Commissioner has, after a hearing, rejected the
8-19 insurer's challenge;
8-20 (4) The failure of the insurer to file an RBC report by
8-21 the filing date, unless the insurer has provided an
8-22 explanation for such failure which is satisfactory to
8-23 the Commissioner and has corrected the failure within
8-24 ten days after the filing date;
8-25 (5) The failure of the insurer to submit an RBC plan to
8-26 the Commissioner within the time period set forth in
8-27 subsection (c) of Code Section 33-56-3;
8-28 (6) Notification by the Commissioner to the insurer
8-29 that:
8-30 (A) The RBC plan or revised RBC plan submitted by the
8-31 insurer is, in the judgment of the Commissioner,
8-32 unsatisfactory; and
8-33 (B) Such notification constitutes a regulatory action
8-34 level event with respect to the insurer, provided the
8-35 insurer has not challenged the determination under
8-36 Code Section 33-56-7;
8-37 (7) If, pursuant to Code Section 33-56-7, the insurer
8-38 challenges a determination by the Commissioner under
8-39 paragraph (6) of this subsection, the notification by
8-40 the Commissioner to the insurer that the Commissioner
8-41 has, after a hearing, rejected such challenge;
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9- 1 (8) Notification by the Commissioner to the insurer that
9- 2 the insurer has failed to adhere to its RBC plan or
9- 3 revised RBC plan, but only if such failure has a
9- 4 substantial adverse effect on the ability of the insurer
9- 5 to eliminate the company action level event in
9- 6 accordance with its RBC plan or revised RBC plan and the
9- 7 Commissioner has so stated in the notification, provided
9- 8 the insurer has not challenged the determination under
9- 9 Code Section 33-56-7; or
9-10 (9) If, pursuant to Code Section 33-56-7, the insurer
9-11 challenges a determination by the Commissioner under
9-12 paragraph (8) of this subsection, the notification by
9-13 the Commissioner to the insurer that the Commissioner
9-14 has, after a hearing, rejected the challenge.
9-15 (b) In the event of a regulatory action level event, the
9-16 Commissioner shall:
9-17 (1) Require the insurer to prepare and submit an RBC
9-18 plan or, if applicable, a revised RBC plan;
9-19 (2) Perform such examination or analysis as the
9-20 Commissioner deems necessary of the assets, liabilities,
9-21 and operations of the insurer including a review of its
9-22 RBC plan or revised RBC plan; and
9-23 (3) Subsequent to the examination or analysis described
9-24 in paragraph (2) of this subsection, issue an order
9-25 specifying such corrective actions as the Commissioner
9-26 shall determine are required.
9-27 (c) In determining corrective actions, the Commissioner
9-28 may take into account such factors as are deemed relevant
9-29 with respect to the insurer based upon the Commissioner's
9-30 examination or analysis of the assets, liabilities, and
9-31 operations of the insurer, including, but not limited to,
9-32 the results of any sensitivity tests undertaken pursuant
9-33 to the RBC instructions. The RBC plan or revised RBC plan
9-34 shall be submitted:
9-35 (1) Within 45 days after the occurrence of the
9-36 regulatory action level event;
9-37 (2) If the insurer challenges an adjusted RBC report
9-38 pursuant to Code Section 33-56-7 and the challenge is
9-39 not frivolous in the judgment of the Commissioner within
9-40 45 days after the notification to the insurer that
9-41 Commissioner has, after a hearing, rejected the
9-42 insurer's challenge; or
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10- 1 (3) If the insurer challenges a revised RBC plan
10- 2 pursuant to Code Section 33-56-7 and the challenge is
10- 3 not frivolous in the judgment of the Commissioner,
10- 4 within 45 days after the notification to the insurer
10- 5 that the Commissioner has, after a hearing, rejected the
10- 6 insurer's challenge.
10- 7 33-56-5. (Index)
10- 8 (a) For the purposes of this Code section authorized
10- 9 control level event means any of the following events:
10-10 (1) The filing of an RBC report by the insurer which
10-11 indicates that the insurer's total adjusted capital is
10-12 greater than or equal to its mandatory control level RBC
10-13 but less than its authorized control level RBC;
10-14 (2) The notification by the Commissioner to the insurer
10-15 of an adjusted RBC report that indicates the event in
10-16 paragraph (1) of this subsection, provided the insurer
10-17 does not challenge the adjusted RBC report under Code
10-18 Section 33-56-7;
10-19 (3) If, pursuant to Code Section 33-56-7, the insurer
10-20 challenges an adjusted RBC report that indicates the
10-21 event in paragraph (1) of this subsection, notification
10-22 by the Commissioner to the insurer that the Commissioner
10-23 has, after a hearing, rejected the insurer's challenge;
10-24 (4) The failure of the insurer to respond, in a manner
10-25 satisfactory to the Commissioner, to a corrective order;
10-26 or
10-27 (5) If the insurer has challenged a corrective order
10-28 under Code Section 33-56-7 and the Commissioner has,
10-29 after a hearing, rejected the challenge or modified the
10-30 corrective order, the failure of the insurer to respond,
10-31 in a manner satisfactory to the Commissioner, to the
10-32 corrective order subsequent to rejection or modification
10-33 by the Commissioner.
10-34 (b) In the event of an authorized control level event with
10-35 respect to an insurer, the Commissioner shall:
10-36 (1) Take such actions as are required under Code Section
10-37 33-56-4 regarding an insurer with respect to which a
10-38 regulatory action level event has occurred; or
10-39 (2) If the Commissioner deems it to be in the best
10-40 interests of the policy holders and creditors of the
10-41 insurer and of the public, take such actions as are
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11- 1 necessary to cause the insurer to be placed under
11- 2 regulatory control under Chapter 37 of this title.
11- 3 In the event the Commissioner takes such actions, the
11- 4 authorized control level event shall be deemed sufficient
11- 5 grounds for the Commissioner to take action under Chapter
11- 6 37 of this title, and the Commissioner shall have the
11- 7 rights, powers, and duties with respect to the insurer as
11- 8 are set forth in Chapter 37 of this title. In the event
11- 9 the commissioner takes actions under this paragraph
11-10 pursuant to an adjusted RBC report, the insurer shall be
11-11 entitled to such protections as are afforded to insurers
11-12 under the provisions of Chapter 2 of this title pertaining
11-13 to summary proceedings.
11-14 33-56-6. (Index)
11-15 (a) For purposes of this Code section, 'mandatory control
11-16 level event' means any of the following events:
11-17 (1) The filing of an RBC report which indicates that the
11-18 insurer's total adjusted capital is less than its
11-19 mandatory control level RBC;
11-20 (2) Notification by the Commissioner to the insurer of
11-21 an adjusted RBC report that indicates the event in
11-22 paragraph (1) of this subsection, provided that the
11-23 insurer does not challenge the adjusted RBC report under
11-24 Code Section 33-56-7; or
11-25 (3) If, pursuant to Code Section 33-56-7, the insurer
11-26 challenges an adjusted RBC report that indicates the
11-27 event in paragraph (1) of this subsection, notification
11-28 by the Commissioner to the insurer that the Commissioner
11-29 has, after a hearing, rejected the insurer's challenge.
11-30 (b) In the event of a mandatory control level event:
11-31 (1) With respect to a life insurer, the Commissioner
11-32 shall take such actions as are necessary to place the
11-33 insurer under regulatory control under Chapter 37 of
11-34 this title. In that event, the mandatory control level
11-35 event shall be deemed sufficient grounds for the
11-36 Commissioner to take action under Chapter 37 of this
11-37 title, and the Commissioner shall have the rights,
11-38 powers, and duties with respect to the insurer as are
11-39 set forth in Chapter 37 of this title. If the
11-40 Commissioner takes actions pursuant to an adjusted RBC
11-41 report, the insurer shall be entitled to the protections
11-42 of Chapter 2 of this title pertaining to summary
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12- 1 proceedings. Notwithstanding any of the foregoing, the
12- 2 Commissioner may forego action for up to 90 days after
12- 3 the mandatory control level event if the Commissioner
12- 4 finds there is a reasonable expectation that the
12- 5 mandatory control level event may be eliminated within
12- 6 the 90 day period.
12- 7 (2) With respect to a property and casualty insurer, the
12- 8 Commissioner shall take such actions as are necessary to
12- 9 place the insurer under regulatory control under Chapter
12-10 37 of this title, or in the case of an insurer which is
12-11 writing no business and which is running-off its
12-12 existing business may allow the insurer to continue its
12-13 run-off under the supervision of the Commissioner. In
12-14 either event, the mandatory control level event shall be
12-15 deemed sufficient grounds for the Commissioner to take
12-16 action under Chapter 37 of this title and the
12-17 Commissioner shall have the rights, powers, and duties
12-18 with respect to the insurer as are set forth in Chapter
12-19 37 of this title. If the Commissioner takes actions
12-20 pursuant to an adjusted RBC report, the insurer shall be
12-21 entitled to the protections of Chapter 2 of this title
12-22 pertaining to summary proceedings. Notwithstanding any
12-23 of the foregoing, the Commissioner may forego action for
12-24 up to 90 days after the mandatory control level event if
12-25 the Commissioner finds there is a reasonable expectation
12-26 that the mandatory control level event may be eliminated
12-27 within the 90 day period.
12-28 33-56-7. (Index)
12-29 Upon notification:
12-30 (1) To an insurer by the Commissioner of an adjusted RBC
12-31 report;
12-32 (2) To an insurer by the Commissioner that:
12-33 (A) The insurer's RBC plan or revised RBC plan is
12-34 unsatisfactory; and
12-35 (B) Such notification constitutes a regulatory action
12-36 level event with respect to such insurer;
12-37 (3) To any insurer by the Commissioner that the insurer
12-38 has failed to adhere to its RBC plan or revised RBC plan
12-39 and that such failure has a substantial adverse effect
12-40 on the ability of the insurer to eliminate the company
12-41 action level event with respect to the insurer in
12-42 accordance with its RBC plan or revised RBC plan; or
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13- 1 (4) To an insurer by the Commissioner of a corrective
13- 2 order with respect to the insurer,
13- 3 the insurer shall have the right to a departmental
13- 4 hearing, on a record, at which the insurer may challenge
13- 5 any determination or action by the Commissioner. The
13- 6 insurer shall notify the Commissioner of its request for a
13- 7 hearing within five days after the notification by the
13- 8 Commissioner under this Code section. Upon receipt of the
13- 9 insurer's request for a hearing, the Commissioner shall
13-10 set a date for the hearing, which date shall be no less
13-11 than ten nor more than 30 days after the date of the
13-12 insurer's request.
13-13 33-56-8. (Index)
13-14 (a) Notwithstanding the provisions of Article 4 of Chapter
13-15 18 of Title 50, all RBC reports, to the extent the
13-16 information therein is not required to be set forth in a
13-17 publicly available annual statement schedule, and RBC
13-18 plans, including the results or report of any examination
13-19 or analysis of an insurer performed pursuant hereto, and
13-20 any corrective order issued by the Commissioner pursuant
13-21 to examination or analysis, with respect to any domestic
13-22 insurer or foreign insurer, which are filed with the
13-23 Commissioner, constitute information that might be
13-24 damaging to the insurer if made available to its
13-25 competitors and therefore shall be kept confidential by
13-26 the Commissioner. This information shall not be made
13-27 public or be subject to subpoena, other than by the
13-28 Commissioner, and then only for the purpose of enforcement
13-29 actions taken by the Commissioner pursuant to this chapter
13-30 or any other provision of the insurance laws of this
13-31 state.
13-32 (b) It is the judgment of the General Assembly that the
13-33 comparison of an insurer's total adjusted capital to any
13-34 of its RBC levels is a regulatory tool which may indicate
13-35 the need for possible corrective action with respect to
13-36 the insurer and is not intended as a means to rank
13-37 insurers generally. Therefore, except as otherwise
13-38 required under the provisions of this chapter, the making,
13-39 publishing, disseminating, circulating or placing before
13-40 the public, or causing, directly or indirectly to be made,
13-41 published, disseminated, circulated or placed before the
13-42 public, in a newspaper, magazine or other publication, or
13-43 in the form of a notice, circular, pamphlet, letter or
13-44 poster, or over any radio or television station, or in any
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14- 1 other way, an advertisement, announcement or statement
14- 2 containing an assertion, representation or statement with
14- 3 regard to the RBC levels of any insurer, or of any
14- 4 component derived in the calculation by any insurer,
14- 5 agent, broker, or other person engaged in any manner in
14- 6 the insurance business would be misleading and is
14- 7 therefore prohibited; provided, however, that if any
14- 8 materially false statement with respect to the comparison
14- 9 regarding an insurer's total adjusted capital to its RBC
14-10 levels or an inappropriate comparison of any other amount
14-11 to the insurer's RBC levels is published in any written
14-12 publication and the insurer is able to demonstrate to the
14-13 Commissioner with substantial proof the falsity of such
14-14 statement, or the inappropriateness, as the case may be,
14-15 of such statement, then the insurer may publish an
14-16 announcement in a written publication if the sole purpose
14-17 of the announcement is to rebut the materially false or
14-18 inappropriate statement.
14-19 (c) It is the further judgment of the General Assembly
14-20 that the RBC instructions, RBC reports, adjusted RBC
14-21 reports, RBC plans, and revised RBC plans are intended
14-22 solely for use by the Commissioner in monitoring the
14-23 solvency of insurers and the need for possible corrective
14-24 action with respect to insurers and shall not be used by
14-25 the Commissioner for rate-making purposes, considered or
14-26 introduced as evidence in any rate proceeding, or used by
14-27 the Commissioner to calculate or derive any elements of an
14-28 appropriate premium level or rate of return for any line
14-29 of insurance which an insurer or any affiliate is
14-30 authorized to write.
14-31 33-56-9. (Index)
14-32 (a) The provisions of this chapter are supplemental to any
14-33 other provisions of the laws of this state and shall not
14-34 preclude or limit any other powers or duties of the
14-35 Commissioner under such laws, including, but not limited
14-36 to, Chapters 2, 3, 13, and 37 of this title.
14-37 (b) The Commissioner may adopt reasonable rules necessary
14-38 for the implementation of this chapter.
14-39 (c) The Commissioner may exempt from the application of
14-40 this chapter any domestic property and casualty insurer
14-41 which:
14-42 (1) Writes direct business only in this state;
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15- 1 (2) Writes direct annual premiums of $2,000,000.00 or
15- 2 less; and
15- 3 (3) Assumes no reinsurance in excess of 5 percent of
15- 4 direct premium written.
15- 5 33-56-10. (Index)
15- 6 (a) Any foreign insurer shall, upon the written request of
15- 7 the Commissioner, submit to the Commissioner an RBC report
15- 8 as of the end of the previous calendar year the later of:
15- 9 (1) The date an RBC report would be required to be filed
15-10 by a domestic insurer under this chapter; or
15-11 (2) Fifteen days after the request is received by the
15-12 foreign insurer.
15-13 (b) Any foreign insurer shall, at the written request of
15-14 the Commissioner, promptly submit to the Commissioner a
15-15 copy of any RBC plan that is filed with the insurance
15-16 commissioner of any other state.
15-17 (c) In the event of a company action level event,
15-18 regulatory action level event, or authorized control level
15-19 event with respect to any foreign insurer as determined
15-20 under the RBC statute applicable in the state of domicile
15-21 of the insurer, or, if no RBC statute is in force in that
15-22 state, under the provisions of this chapter, if the
15-23 insurance commissioner of the state of domicile of the
15-24 foreign insurer fails to require the foreign insurer to
15-25 file an RBC plan in the manner specified under that
15-26 state's RBC statute, or, if no RBC statute is in force in
15-27 that state, under Code Section 33-56-2, the Commissioner
15-28 may require the foreign insurer to file an RBC plan with
15-29 the Commissioner. In such event, the failure of the
15-30 foreign insurer to file an RBC plan with the Commissioner
15-31 shall be grounds to order the insurer to cease and desist
15-32 from writing new insurance business in this state.
15-33 (d) In the event of a mandatory control level event with
15-34 respect to any foreign insurer, if no domiciliary receiver
15-35 has been appointed with respect to the foreign insurer
15-36 under the rehabilitation and liquidation statute
15-37 applicable in the state of domicile of the foreign
15-38 insurer, the Commissioner may make application to the
15-39 superior court permitted under Chapter 37 of this title
15-40 with respect to the liquidation of property of foreign
15-41 insurers found in this state, and the occurrence of the
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16- 1 mandatory control level event shall be considered adequate
16- 2 grounds for the application.
16- 3 33-56-11. (Index)
16- 4 There shall be no liability on the part of, and no cause
16- 5 of action shall arise against, the Commissioner or the
16- 6 insurance department or its employees or agents for any
16- 7 action taken by them in the performance of their powers
16- 8 and duties under this chapter.
16- 9 33-56-12. (Index)
16-10 In the event any section, subsection, sentence, clause, or
16-11 phrase of this chapter shall be declared or adjudged
16-12 invalid or unconstitutional, such adjudication shall in no
16-13 manner affect the other sections, subsections, sentences,
16-14 clauses, or phrases of this chapter, which shall remain of
16-15 full force and effect as if the section, subsection,
16-16 sentence, clause, or phrase so declared or adjudged
16-17 invalid or unconstitutional were not originally a part of
16-18 this chapter. The General Assembly declares that it would
16-19 have passed the remaining parts of this chapter if it had
16-20 known that such part or parts of this chapter would be
16-21 declared or adjudged invalid or unconstitutional.
16-22 33-56-13. (Index)
16-23 All notices by the Commissioner to an insurer which may
16-24 result in regulatory action hereunder shall be effective
16-25 upon dispatch if transmitted by registered or certified
16-26 mail or, in the case of any other transmission, shall be
16-27 effective upon the insurer's receipt of such notice."
SECTION 2.
16-28 Said title is further amended by adding immediately
16-29 following Code Section 33-37-8 a new Code section, to be
16-30 designated Code Section 33-37-8.1, to read as follows:
16-31 "33-37-8.1. (Index)
16-32 (a) For the purposes of this Code section, the persons
16-33 entitled to protection under this Code section are:
16-34 (1) All receivers responsible for the conduct of a
16-35 delinquency proceeding under this chapter, including
16-36 present and former receivers; and
16-37 (2) Their employees, meaning all present and former
16-38 special deputies and assistant special deputies
16-39 appointed by the Commissioner and all persons whom the
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17- 1 Commissioner, special deputies, or assistant special
17- 2 deputies have employed to assist in a delinquency
17- 3 proceeding under this chapter. Attorneys, accountants,
17- 4 auditors, and other professional persons or firms who
17- 5 are retained by the receiver as independent contractors
17- 6 and their employees shall not be considered employees of
17- 7 the receiver for purposes of this Code section.
17- 8 (b) The receiver and his or her employees shall have
17- 9 official immunity and shall be immune from suit and
17-10 liability, both personally and in their official
17-11 capacities, for any claim for damage to or loss of
17-12 property, personal injury, or other civil liability caused
17-13 by or resulting from any alleged act, error, or omission
17-14 of the receiver or any employee arising out of or by
17-15 reason of their duties or employment, provided that
17-16 nothing in this provision shall be construed to hold the
17-17 receiver or any employee immune from suit or liability for
17-18 any damage, loss, injury, or liability caused by the
17-19 intentional or willful and wanton misconduct of the
17-20 receiver or any employee.
17-21 (c) If any legal action is commenced against the receiver
17-22 or any employee, whether against him or her personally or
17-23 in his or her official capacity, alleging property damage,
17-24 property loss, personal injury, or other civil liability
17-25 caused by or resulting from any alleged act, error, or
17-26 omission of the receiver or any employee arising out of or
17-27 by reason of their duties or employment, the receiver and
17-28 any employee shall be indemnified from the assets of the
17-29 insurer for all expenses, attorneys' fees, judgments,
17-30 settlements, decrees, or amounts due and owing or paid in
17-31 satisfaction of or incurred in the defense of such legal
17-32 action unless it is determined upon a final adjudication
17-33 on the merits that the alleged act, error, or omission of
17-34 the receiver or employee giving rise to the claim did not
17-35 arise out of or by reason of his or her duties or
17-36 employment or was caused by intentional or willful and
17-37 wanton misconduct.
17-38 (d)(1) Attorneys' fees and any and all related expenses
17-39 incurred in defending a legal action for which immunity
17-40 or indemnity is available under this Code section shall
17-41 be paid from the assets of the insurer, as they are
17-42 incurred, in advance of the final disposition of such
17-43 action upon receipt of an undertaking by or on behalf of
17-44 the receiver or employee to repay the attorneys' fees
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18- 1 and expenses if it shall ultimately be determined upon a
18- 2 final adjudication on the merits that the receiver or
18- 3 employee is not entitled to immunity or indemnity under
18- 4 this Code section.
18- 5 (2) Any indemnification for expense payments, judgments,
18- 6 settlements, decrees, attorneys' fees, surety bond
18- 7 premiums, or other amounts paid or to be paid from the
18- 8 insurer's assets pursuant to this Code section shall be
18- 9 an administrative expense of the insurer.
18-10 (3) In the event of any actual or threatened litigation
18-11 against a receiver or any employee for which immunity or
18-12 indemnity may be available under this Code section, a
18-13 reasonable amount of funds which in the judgment of the
18-14 Commissioner may be needed to provide immunity or
18-15 indemnity shall be segregated and reserved from the
18-16 assets of the insurer as security for the payment of
18-17 indemnity until such time as all applicable statutes of
18-18 limitation shall have run, and all actual or threatened
18-19 actions against the receiver or any employee shall have
18-20 been completely and finally resolved, and all
18-21 obligations of the insurer and the Commissioner under
18-22 this Code section shall have been satisfied.
18-23 (4) In lieu of the segregation and reserving of funds,
18-24 the Commissioner may, in his or her discretion, obtain a
18-25 surety bond or make other arrangements which will enable
18-26 the Commissioner to fully secure the payment of all
18-27 obligations under this Code section.
18-28 (e) If any legal action against an employee for which
18-29 indemnity may be available under this Code section is
18-30 settled prior to final adjudication on the merits, the
18-31 insurer must pay the settlement amount on behalf of the
18-32 employee or indemnify the employee for the settlement
18-33 amount unless the Commissioner determines:
18-34 (1) That the claim did not arise out of or by reason of
18-35 the employee's duties or employment; or
18-36 (2) That the claim was caused by the intentional or
18-37 willful and wanton misconduct of the employee.
18-38 (f) In any legal action in which the receiver is a
18-39 defendant, that portion of any settlement relating to the
18-40 alleged act, error, or omission of the receiver shall be
18-41 subject to the approval of the court before which the
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19- 1 delinquency proceeding is pending. The court shall not
19- 2 approve that portion of the settlement if it determines:
19- 3 (1) That the claim did not arise out of or by reason of
19- 4 the receiver's duties or employment; or
19- 5 (2) That the claim was caused by the intentional or
19- 6 willful and wanton misconduct of the receiver.
19- 7 (g) Nothing contained or implied in this Code section
19- 8 shall operate or be construed or applied to deprive the
19- 9 receiver or any employee of any immunity, indemnity,
19-10 benefits of law, rights, or any defense otherwise
19-11 available.
19-12 (h)(1) Subsection (b) of this Code section shall apply
19-13 to any suit based in whole or in part on any alleged
19-14 act, error, or omission which takes place on or after
19-15 the effective date of this Code section.
19-16 (2) No legal action shall lie against the receiver or
19-17 any employee based in whole or in part on any alleged
19-18 act, error, or omission which took place prior to the
19-19 effective date of this Code section, unless a suit is
19-20 filed and valid service of process is obtained within 12
19-21 months after the effective date of this Code section.
19-22 (3) Subsections (c), (d), (e), and (f) of this Code
19-23 section shall apply to any suit which is pending on or
19-24 filed after the effective date of this Code section
19-25 without regard to when the alleged act, error, or
19-26 omission took place."
SECTION 3.
19-27 This Act shall become effective upon its approval by the
19-28 Governor or upon its becoming law without such approval,
19-29 except that Section 1 of this Act shall become effective
19-30 July 1, 1996.
SECTION 4.
19-31 All laws and parts of laws in conflict with this Act are
19-32 repealed.
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Office of the Clerk of the House
Robert E. Rivers, Jr., Clerk of the House
Last Updated on 01/02/97