Chapter 026
2011 -- S 0508 SUBSTITUTE A
Enacted 05/27/11
A N A C T
RELATING TO
INSURANCE -- INSURANCE HOLDING COMPANY SYSTEMS
Introduced By: Senators Bates, and Miller
Date Introduced: March 10, 2011
It is enacted by the General
Assembly as follows:
SECTION 1. Chapter 27-35 of the General Laws entitled
"Insurance Holding Company
Systems" is hereby
amended by adding thereto the following section:
27-35-5.5.
Supervisory colleges. – (a) Power of the Commissioner.
With respect to any
insurer registered under section 27-35-3, and in accordance
with subsection (c) below, the
commissioner shall also have the power to participate in a
supervisory college for any domestic
insurer that is part of an insurance holding company system
with international operations in order
to determine compliance by the insurer with this
chapter. The powers of the commissioner with
respect to supervisory colleges include, but are not limited
to, the following:
(1) Initiating the establishment
of a supervisory college;
(2) Clarifying the
membership and participation of other supervisors in the supervisory
college;
(3) Clarifying the
functions of the supervisory college and the role of other regulators,
including the establishment of a group-wide supervisor;
(4) Coordinating the
ongoing activities of the supervisory college, including planning
meetings, supervisory activities, and processes for
information sharing; and
(5) Establishing a crisis
management plan.
(b) Expenses. Each
registered insurer subject to this section shall be liable for and shall
pay the reasonable expenses of the commissioner’s
participation in a supervisory college in
accordance with subsection (c) below, including reasonable
travel expenses. For purposes of this
section, a supervisory college may be convened as either a
temporary or permanent forum for
communication and cooperation between the regulators charged with
the supervision of the
insurer or its affiliates, and the commissioner may establish
a regular assessment to the insurer for
the payment of these expenses.
(c) Supervisory
College. In order to assess the business strategy, financial position, legal
and regulatory position, risk exposure, risk management
and governance processes, and as part of
the examination of individual insurers in accordance with
section 27-35-5, the commissioner may
participate in a supervisory college with other regulators
charged with supervision of the insurer
or its affiliates, including other state, federal and
international regulatory agencies. The
commissioner may enter into agreements in accordance with
subsection 27-35-6(c) providing the
basis for cooperation between the commissioner and the
other regulatory agencies, and the
activities of the supervisory college. Nothing in this section
shall delegate to the supervisory
college the authority of the commissioner to regulate or
supervise the insurer or its affiliates
within its jurisdiction.
SECTION 2. Sections 27-35-1, 27-35-2, 27-35-2.5, 27-35-3,
27-35-4, 27-35-5, 27-35-6,
27-35-9 and 27-35-10 of the
General Laws in Chapter 27-35 entitled "Insurance Holding
Company Systems" are
hereby amended to read as follows:
27-35-1.
Definitions. -- (a) "Affiliate." An "affiliate"
of, or person "affiliated" with, a
specific person, is a person that directly, or indirectly
through one or more intermediaries
controls, or is controlled by, or is under common control
with, the person specified. An "affiliate"
does not include a protected cell of a protected cell
company organized under the Protected Cell
Companies Act, chapter 64 of this
title.
(b) "Commissioner."
The term "commissioner" means the director of the department of
business regulation and any assistant to the director
designated and authorized by him or her
while acting under that designation.
(c) "Control."
The term "control" (including the terms "controlling,"
"controlled by" and
"under common control
with"), means the possession, direct or indirect, of the power to direct
or
cause the direction of the management and policies of a
person, whether through the ownership of
voting securities, by contract other than a commercial
contract for goods or management services,
or otherwise, unless the power is the result of an
official position with or corporate office held by
the person. Control shall be presumed to exist if any
person, directly or indirectly, owns, controls,
holds with the power to vote, or holds proxies
representing, ten percent (10%) or more of the
voting securities of any other person. This presumption may
be rebutted by a showing made in
the manner provided by section 27-35-3(i) 27-35-3(k) that control does not exist in
fact. The
commissioner may determine, after furnishing all persons in
interest notice and opportunity to be
heard and making specific findings of fact to support the
determination, that control exists in fact,
notwithstanding the absence of a presumption to that effect.
(d) "Insurance
holding company system." An "insurance holding company
system"
consists of two (2) or more affiliated persons, one or more of
which is an insurer.
(e) "Insurer."
The term "insurer" means any person or persons or corporation, partnership
or company authorized by the laws of this state to
transact the business of insurance in this state,
including entities organized or authorized to transact business
in this state pursuant to chapters
19, 20, 20.1, 20.2, 20.3, and 41 of this title, except
that it shall not include: (1) agencies,
authorities, or instrumentalities of the
state. ; or
(2) Fraternal
benefit societies.
(f) "NAIC"
means the National Association of Insurance Commissioners. “
Risk.” “
one or more affiliates of an insurer that, if not
remedied promptly, is likely to have a material
adverse effect upon the financial condition or liquidity of
the insurer or its insurance holding
company system as a whole, including, but not limited to,
anything that would cause the insurer’s
risk-based capital to fall into company action level as set
forth in chapters 27-4.6 and 27-4.7 or
would cause the insurer to be in a hazardous financial
condition as set forth in chapter 27-14.2
(g) “NAIC” means the
national association of insurance commissioners.
(g)(h)
"Person." A "person" is an individual, a
corporation, a limited liability company, a
partnership, an association, a joint stock company, a trust, an
unincorporated organization, or any
similar entity or any combination of the foregoing acting in
concert, but shall not include any
joint venture partnership exclusively engaged in owning,
managing, leasing or developing real or
tangible personal property.
(h)(i) "Securityholder."
A "securityholder" of a specified person is
one who owns any
security of such person, including common stock, preferred
stock, debt obligations, and any other
security convertible into or evidencing the right to acquire
any of the foregoing.
(i)(j) "Subsidiary." A
"subsidiary" of a specified person is an affiliate controlled by such
person directly, or indirectly through one or more
intermediaries.
(j)(k)
"Voting security." The term "voting security" shall
include any security convertible
into or evidencing a right to acquire a voting security.
27-35-2.
Acquisition of control of or merger with domestic insurer.
-- (a) Filing
Requirements. - (1) No person other than the issuer shall make a
tender offer for or a request or
invitation for tenders of, or enter into any agreement to
exchange securities for, seek to acquire,
or acquire, in the open market or otherwise, any voting
security of a domestic insurer if, after the
consummation thereof, such person would, directly or indirectly
(or by conversion or by exercise
of any right to acquire) be in control of the insurer,
and no person shall enter into an agreement to
merge with or otherwise to acquire control of a domestic
insurer or any person controlling a
domestic insurer unless, at the time the offer, request or
invitation is made or the agreement is
entered into, or prior to the acquisition of the securities
if no offer or agreement is involved, such
person has filed with the commissioner and has sent to the
insurer, a statement containing the
information required by this section and the offer, request,
invitation, agreement or acquisition
has been approved by the commissioner in the manner
prescribed in this chapter;
(2) For purposes of
this section, any controlling person of a domestic insurer seeking to
divest its controlling interest in the domestic insurer, in
any manner, shall file with the
commissioner, with a copy to the insurer, confidential notice of
its proposed divestiture at least
thirty (30) days prior to the cessation of control. The
commissioner shall determine those
instances in which the party(ies)
seeking to divest or to acquire a controlling interest in an insurer
will be required to file for and obtain approval of the
transaction. The information shall remain
confidential until the conclusion of the transaction unless the
commissioner, in his or her
discretion, determines that confidential treatment will
interfere with enforcement of this section.
If the statement referred to in subdivision (a)(1) of this section is otherwise filed, this paragraph
shall not apply.
(3) With respect to a
transaction subject to this section, the acquiring person must also
file a pre-acquisition notification with the commissioner,
which shall contain the information set
forth in subdivision 27-35-2.5(c)(1). A failure to file the
notification may be subject to penalties
specified in subdivision 27-35-2.5(e)(3).
(2)(4)
For the purposes of this section, a domestic insurer shall include any person
controlling a domestic insurer unless the person, as determined
by the commissioner, is either
directly or through its affiliates primarily engaged in
business other than the business of
insurance. However, the person shall file a pre-acquisition
notification with the commissioner
containing the information set forth in subdivision
27-35-2.5(c)(1) sixty (60) days prior to the
proposed effective date of the acquisition. Failure to file is
subject to subdivision 27-35-2.5(e)(3).
For the purposes of this section, "person"
shall not include any securities broker holding, in the
usual and customary broker's function, less than twenty
percent (20%) of the voting securities of
an insurance company or of any person which controls an
insurance company.
(b) Content of
Statement. - (1) The statement to be filed with the
commissioner under
this section shall be made under oath or affirmation and
shall contain the following information:
(i)
The name and address of each person by whom or on whose behalf the merger or
other acquisition of control referred to in subsection (a)
of this section is to be effected,
(hereinafter called the
"acquiring party"), and:
(A) If the person is an
individual, his or her principal occupation and all offices and
positions held during the past five (5) years, and any
conviction for crimes other than minor
traffic violations during the past ten (10) years;
(B) If the person is
not an individual, a report of the nature of its business operations
during the past five (5) years or for the lesser period as
the person and any predecessors shall
have been in existence; an informative description of the
business intended to be done by the
person and the person's subsidiaries, and a list of all
individuals who are or who have been
selected to become directors or executive officers of the
person, or who perform or will perform
functions appropriate to such positions. The list shall include
for each individual the information
required by subparagraph (A) of this subdivision;
(ii) The source, nature
and amount of the consideration used or to be used in effecting
the merger or other acquisition of control, a description
of any transaction where funds were or
are to be obtained for any such purpose, (including any
pledge of the insurer's stock, or stock of
any of its subsidiaries or controlling affiliates), and
the identity of persons furnishing the
consideration; provided, however, that where a source of the
consideration is a loan made in the
lender's ordinary course of business, the identity of the
lender shall remain confidential, if the
person filing the statement so requests;
(iii) Fully audited
financial information as to the earnings and financial condition of each
acquiring party for the preceding five (5) fiscal years of each
acquiring party (or for such lesser
period as the acquiring party and any predecessors shall
have been in existence) and similar
unaudited information as of a date not earlier than ninety (90)
days prior to the filing of the
statement;
(iv)
Any plans or proposals which each acquiring party may have to liquidate
the insurer,
to sell its assets or merge or consolidate it with any
person, or to make any other material change
in its business or corporate structure or management;
(v) The number of
shares of any security referred to in subsection (a) of this section
which each acquiring party proposes to acquire, and the
terms of the offer, request, invitation,
agreement, or acquisition referred to in subsection (a) of this
section, and a statement as to the
method by which the fairness of the proposal was arrived at;
(vi)
The amount of each class of any security referred to in subsection (a)
of this section
which is beneficially owned or concerning which there is a
right to acquire beneficial ownership
by each acquiring party;
(vii) A full
description of any contracts, arrangements, or understanding with respect to
any security referred to in subsection (a) of this
section in which any acquiring party is involved,
including, but not limited to transfer of any of the
securities, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees
against loss or guarantees of profits,
division of losses or profits, or the giving or withholding of
proxies. The description shall identify
the persons with whom the contracts, arrangements, or
understandings have been entered into;
(viii) A description of
the purchase of any security referred to in subsection (a) of this
section during the twelve (12) calendar months preceding the
filing of the statement by any
acquiring party, including the dates of purchase, names of the
purchasers, and consideration paid
or agreed to be paid;
(ix) A description of
any recommendations to purchase any security referred to in
subsection (a) of this section made during the twelve (12)
calendar months preceding the filing of
the statement by any acquiring party, or by anyone based
upon interviews or at the suggestion of
the acquiring party;
(x) Copies of all
tender offers for, requests or invitations for tenders of, exchange offers
for, and agreements to acquire or exchange any securities
referred to in subsection (a) of this
section, and (if distributed) of additional soliciting
material relating to them;
(xi) The terms of any
agreement, contract, or understanding made with or proposed to be
made with any broker-dealer as to solicitation of
securities referred to in subsection (a) of this
section for tender, and the amount of any fees, commissions,
or other compensation to be paid to
broker-dealers with regard thereto; and
(xii) An agreement by
the person required to file the statement referred to in subsection
(a) of this section that it
will provide the annual report, specified in subsection 27-35-3(l), for so
long as control exists;
(xiii) An
acknowledgement by the person required to file the statement referred to in
subsection (a) of this section that the person and all
subsidiaries within its control in the insurance
holding company system will provide information to the
commissioner upon request as necessary
to evaluate enterprise risk to the insurer; and
(xii)(xiv)
Such additional information that the commissioner may by rule or regulation
prescribe as necessary or appropriate for the protection of
policyholders and securityholders of
the insurer or in the public interest;
(2) If the person
required to file the statement referred to in
subsection (a) of this section
is a partnership, limited partnership, syndicate, or
other group, the commissioner may require that
the information called for by paragraphs (1)(i) -- (1)(xii) (1)(xiv) of this subsection
shall be given
with respect to each partner of the partnership or limited
partnership, each member of the
syndicate or group, and each person who controls the partner or
member. If any partner, member,
or person is a corporation, or the person required to
file the statement referred to in subsection (a)
of this section is a corporation, the commissioner may
require that the information called for by
paragraphs (1)(i) -- (1)(xii) (1)(xiv)
of this subsection shall be given with respect to the
corporation, each officer and director of the corporation, and
each person who is directly or
indirectly the beneficial owner of more than ten percent (10%)
of the outstanding voting
securities of the corporation;
(3) If any material
change occurs in the facts set forth in the statement filed with the
commissioner and sent to the insurer pursuant to this section, an
amendment setting forth the
change, together with copies of all documents and other material
relevant to the change, shall be
filed with the commissioner and sent to the insurer within
two (2) business days after the person
learns of the change.
(c) Alternative filing
materials. - If any offer, request, invitation, agreement or
acquisition referred to in subsection (a) of this section is
proposed to be made by means of a
registration statement under the Securities Act of 1933 or in
circumstances requiring the
disclosure of similar information under the Securities Exchange
Act of 1934 or under a state law
requiring similar registration or disclosure, the person
required to file the statement referred to in
subsection (a) of this section may utilize the documents in
furnishing the information called for
by that statement.
(d) Approval by
commissioner: Hearings. - (1) The commissioner shall
approve any
merger or other acquisition of control referred to in
subsection (a) of this section unless, after a
public hearing held on the merger or acquisition, at the
discretion of the commissioner or upon
the request of the acquiring party, the insurer or any
other interested party, he or she finds that
any of the following conditions exist:
(i)
After the change of control the domestic insurer referred to in subsection (a)
of this
section would not be able to satisfy the requirements for the
issuance of a license to write the line
or lines of insurance for which it is presently
licensed;
(ii) The effect of the
merger or other acquisition of control would be substantially to
lessen competition in insurance in this state or tend to
create a monopoly. In applying the
competitive standard in this subparagraph:
(A) The informational
requirements of subdivision 27-35-2.5(c)(1) and the
standards of
subdivision 27-35-2.5(d)(2) shall apply;
(B) The merger or other
acquisition shall not be disapproved if the commissioner finds
that any of the situations meeting the criteria provided
by subdivision 27-35-2.5(d)(3) exist; and
(C) The commissioner
may condition the approval of the merger or other acquisition on
the removal of the basis of disapproval within a
specified period of time;
(iii) The financial
condition of any acquiring party is such as might jeopardize the
financial stability of the insurer, or prejudice the interest
of its policyholders;
(iv)
The plans or proposals which the acquiring party has to liquidate the
insurer, sell its
assets or consolidate or merge it with any person, or to
make any other material change in its
business or corporate structure or management, are unfair and
unreasonable to policyholders of
the insurer and not in the public interest;
(v) The competence,
experience, and integrity of those persons who would control the
operation of the insurer are such that it would not be in the
interest of policyholders of the insurer
and of the public to permit the merger or other
acquisition of control; or
(vi)
The acquisition is likely to be hazardous or prejudicial to the
insurance-buying
public.
(2) The public hearing
referred to in subdivision (1) of this subsection, if required, shall
be held within thirty (30) days after the statement
required by subsection (a) of this section is
filed, and at least twenty (20) days notice of the public
hearing shall be given by the
commissioner to the person filing the statement. Not less than
seven (7) days notice of the public
hearing shall be given by the person filing the statement to
the insurer and to such other persons
as may be designated by the commissioner. The
commissioner shall make a determination within
a the sixty (60) day period preceding the
effective date of the proposed transaction. At the
hearing, the person filing the statement, the insurer, any
person to whom notice of hearing was
sent, and any other person whose interest may be affected
shall have the right to present evidence,
examine and cross examine witnesses, and offer oral and
written arguments and in connection
therewith shall be entitled to conduct discovery proceedings in
the same manner as is presently
allowed in the superior court of this state. All discovery
proceedings shall be concluded not later
than three (3) days prior to the commencement of the
public hearing. ;
(3) If the proposed acquisition
of control will require the approval of more than one
commissioner, the public hearing referred to in subdivision (2) of
this subsection may be held on
a consolidated basis upon request of the person filing
the statement referred to in subsection (a) of
this section. Such person shall file the statement
referred to in subsection (a) of this section with
the national association of insurance commissioners
(NAIC) within five (5) days of making the
request for a public hearing. A commissioner may opt out of a
consolidated hearing, and shall
provide notice to the applicant of the opt-out within ten
(10) days of the receipt of the statement
referred to in subsection (a) of this section. A hearing
conducted on a consolidated basis shall be
public and shall be held within the
the insurers are domiciled. Such commissioners shall hear
and receive evidence. A commissioner
may attend such hearing, in person or by
telecommunication.
(3)(4) In
connection with a change of control of a domestic insurer, any determination by
the commissioner that the person acquiring control of the
insurer shall be required to maintain or
restore the capital of the insurer to the level required by
the laws and regulations of this state shall
be made not later than sixty (60) days after the date of
notification of the change in control
submitted pursuant to section 27-35-2(a).
(4)(5)
The commissioner may retain at the acquiring person's expense any attorneys,
actuaries, accountants and other experts not otherwise a part
of the commissioner's staff as may
be reasonably necessary to assist the commissioner in
reviewing the proposed acquisition of
control.
(e) Exemptions. - The provisions
of this section shall not apply to any offer, request,
invitation, agreement or acquisition which the commissioner by
order shall exempt from this
section as not having been made or entered into for the
purpose and not having the effect of
changing or influencing the control of a domestic insurer, or
as otherwise not comprehended
within the purposes of this section.
(f) Violations. - The
following shall be violations of this section:
(1) The failure to file
any statement, amendment, or other material required to be filed
pursuant to subsection (a) or (b) of this section; or
(2) The effectuation or
any attempt to effectuate an acquisition of control of, divestiture
of, or merger
with, a domestic insurer unless the commissioner has given his or her approval.
(g) Jurisdiction;
consent to service of process. - The courts of this state are hereby vested
with jurisdiction over every person not resident,
domiciled, or authorized to do business in this
state who files a statement with the commissioner under
this section, and over all actions
involving such person arising out of violations of this
section, and each such person shall be
deemed to have performed acts equivalent to and constituting
an appointment by the person of the
commissioner to be his true and lawful attorney upon whom may be
served all lawful process in
any action, suit, or proceeding arising out of violations
of this section. Copies of all lawful
process shall be served on the commissioner and transmitted
by registered or certified mail by the
commissioner to the person at his or her last known address.
27-35-2.5.
Acquisitions involving insurers not otherwise covered. -- (a)
Definitions. -
The following definitions shall apply for the purposes
of this section only:
(1)
"Acquisition" means any agreement, arrangement or activity the
consummation of
which results in a person acquiring directly or indirectly
the control of another person, and
includes but is not limited to, the acquisition of voting
securities, the acquisition of assets, bulk
reinsurance and mergers.
(2) An "involved
insurer" includes an insurer which either acquires or is acquired, is
affiliated with an acquirer or acquired, or is the result of a
merger.
(b) Scope. - (1) Except
as exempted in paragraph (2) of this subsection, this section
applies to any acquisition in which there is a change in
control of an insurer authorized to do
business in this state.
(2) This section shall
not apply to the following:
(a) An acquisition
subject to approval or disapproval by the commissioner pursuant to
section 27-35-2;
(b)(a) A
purchase of securities solely for investment purposes so long as the securities
are not used by voting or otherwise to cause or attempt
to cause the substantial lessening of
competition in any insurance market in this state. If a purchase
of securities results in a
presumption of control under subsection 27-35-1(c), it is not
solely for investment purposes
unless the commissioner of the insurer's state of domicile
accepts a disclaimer of control or
affirmatively finds that control does not exist and the disclaimer
action or affirmative finding is
communicated by the domiciliary commissioner to the commissioner
of this state;
(c)(b)
The acquisition of a person by another person when both persons are neither
directly nor through affiliates primarily engaged in the
business of insurance, if pre-acquisition
notification is filed with the commissioner in accordance with subsection
27-35-2.5(c)
subdivision 27-35-2.5(c)(1) thirty (30) days prior to the proposed effective date of the
acquisition.
However, such pre-acquisition notification is not
required for exclusion from this section if the
acquisition would otherwise be excluded from this section by any
other subparagraph of
subdivision 27-35-2.5(b)(2);
(d)(c)
The acquisition of already affiliated persons;
(e)(d) An
acquisition if, as an immediate result of the acquisition,
(i)
In no market would the combined market share of the involved insurers exceed
five
percent (5%) of the total market,
(ii) There would be no
increase in any market share, or
(iii) In no market
would
(I) The
combined market share of the involved insurers exceed twelve percent (12%) of
the total market, and
(II) The market share
increase by more than two percent (2%) of the total market.
For the purpose of
section (2)(e) (d), a market
means direct written insurance premium in
this state for a line of business as contained in the
annual statement required to be filed by
insurers licensed to do business in this state;
(f)(e) An
acquisition for which a pre-acquisition notification would be required pursuant
to this section due solely to the resulting effect on
the ocean marine insurance line of business;
(g)(f) An
acquisition of an insurer whose domiciliary commissioner affirmatively finds
that the insurer is in failing condition; there is a lack
of feasible alternative to improving such
condition; the public benefits of improving the insurer's
condition through the acquisition exceed
the public benefits that would arise from not lessening
competition; and the findings are
communicated by the domiciliary commissioner to the commissioner
of this state.
(c) Pre-acquisition
Notification; Waiting Period. - An acquisition covered by subsection
27-35-2.5(b) may be subject to an order pursuant to
subsection 27-35-2.5(e) unless the acquiring
person files a pre-acquisition notification and the waiting
period has expired. The acquired person
may file a pre-acquisition notification. The commissioner
shall give confidential treatment to
information submitted under this subsection in the same manner as
provided in section 27-35-6.
(1) The pre-acquisition
notification shall be in such form and contain such information as
prescribed by the NAIC relating to those markets which, under
subdivision 27-35-2.5(b)(2)(e) 27-
35-2.5(b)(2)(d), cause the acquisition not to be exempted from the
provisions of this section. The
commissioner may require such additional material and information
as deemed necessary to
determine whether the proposed acquisition, if consummated,
would violate the competitive
standard of subsection 27-35-2.5(d). The required information
may include an opinion of an
economist as to the competitive impact of the acquisition in
this state accompanied by a summary
of the education and experience of such person
indicating his or her ability to render an informed
opinion.
(2) The waiting period
required shall begin on the date of receipt of the commissioner of
a pre-acquisition notification and shall end on the
earlier of the thirtieth day after the date of
receipt, or termination of the waiting period by the
commissioner. Prior to the end of the waiting
period, the commissioner on a one-time basis may require the
submission of additional needed
information relevant to the proposed acquisition, in which event
the waiting period shall end on
the earlier of the thirtieth day after receipt of the
additional information by the commissioner or
termination of the waiting period by the commissioner.
(d) Competitive
Standard.
(1) The commissioner
may enter an order under subdivision 27-35-2.5(e)(1)
with respect
to an acquisition if there is substantial evidence that
the effect of the acquisition may be
substantially to lessen competition in any line of insurance in
this state or tend to create a
monopoly or if the insurer fails to file adequate information
in compliance with subsection 27-35-
2.5(c).
(2) In determining
whether a proposed acquisition would violate the competitive
standard of paragraph (1) of this subsection, the commissioner
shall consider the following:
(a) Any acquisition
covered under subsection 27-35-2.5(b) involving two (2) or more
insurers competing in the same market is prima facie evidence
of violation of the competitive
standards.
(i)
If the market is highly concentrated and the involved insurers possess the
following
shares of the market:
Insurer A Insurer B
4% 4% or more
10% 2% or more
15% 1% or more
(ii) Or, if the market
is not highly concentrated and the involved insurers possess the
following shares of the market:
Insurer A Insurer B
5% 5% or more
10% 4% or more
15% 3% or more
19% 1% or more
A highly concentrated
market is one in which the share of the four (4) largest insurers is
seventy-five percent (75%) or more of the market. Percentages
not shown in the tables are
interpolated proportionately to the percentages that are shown. If
more than two (2) insurers are
involved, exceeding the total of the two columns in the table
is prima facie evidence of violation
of the competitive standard in paragraph (1) of this
subsection. For the purpose of this item, the
insurer with the largest share of the market shall be deemed
to be Insurer A.
(b) There is a
significant trend toward increased concentration when the aggregate
market share of any grouping of the largest insurers in the
market, from the two (2) largest to the
eight (8) largest, has increased by seven percent (7%) or
more of the market over a period of time
extending from any base year five (5) to ten (10) years prior
to the acquisition up to the time of
the acquisition. Any acquisition or merger covered under
subsection 27-35-2.5(b) involving two
(2) or more insurers
competing in the same market is prima facie evidence of violation of the
competitive standard in paragraph (1) of this subsection if:
(i)
There is a significant trend toward increased concentration in the market;
(ii) One of the
insurers involved is one of the insurers in a grouping of large insurers
showing the requisite increase in the market share; and
(iii) Another involved
insurer's market is two percent (2%) or more.
(c) For the purposes of
subdivision 27-35-2.5(d)(2):
(i)
The term "insurer" includes any company or group of companies under
common
management, ownership or control;
(ii) The term
"market" means the relevant product and geographical markets. In
determining the relevant product and geographical markets, the
commissioner shall give due
consideration to, among other things, the definitions or
guidelines, if any, promulgated by the
NAIC and to information, if any, submitted by parties
to the acquisition. In the absence of
sufficient information to the contrary, the relevant product market
is assumed to be the direct
written insurance premium for a line of business, such line
being that used in the annual statement
required to be filed by insurers doing business in this state,
and the relevant geographical market
is assumed to be this state;
(iii) The burden of
showing prima facie evidence of violation of the competitive standard
rests upon the commissioner.
(d)
Even though an acquisition is not prima facie violative
of the competitive standard
under paragraphs (2)(a) and (2)(b) of this subsection, the
commissioner may establish the
requisite anticompetitive effect based upon other substantial
evidence. Even though an acquisition
is prima facie violative of
the competitive standard under sections (2)(a) and (2)(b) of this
subsection, a party may establish the absence of the requisite
anticompetitive effect based upon
other substantial evidence. Relevant factors in making a
determination under this subparagraph
include, but are not limited to, the following: market
shares, volatility of ranking of market
leaders, number of competitors, concentration, trend of
concentration in the industry, and ease of
entry and exit into the market.
(3) An order may not be
entered under subdivision 27-35-2.5(e)(1) if:
(a) The acquisition
will yield substantial economies of scale or economies in resource
utilization that cannot be feasibly achieved in any other way,
and the public benefits which would
arise from such economies exceed the public benefits which
would arise from not lessening
competition; or
(b) The acquisition
will substantially increase the availability of insurance, and the
public benefits of the increase exceed the public benefits
which would arise from not lessening
competition.
(e) Orders and
Penalties.
(1) (a)
If an acquisition violates the standards of this section, the commissioner may
enter an order:
(i)
Requiring an involved insurer to cease and desist from doing business in this
state
with respect to the line or lines of insurance involved in
the violation; or
(ii) Denying the
application of an acquired or acquiring insurer for a license to do
business in this state.
(b) Such an order shall
not be entered unless:
(i)
There is a hearing;
(ii) Notice of the
hearing is issued prior to the end of the waiting period and not less than
fifteen (15) days prior to the hearing; and
(iii) The hearing is
concluded and the order is issued no later than sixty (60) days after
the date of the filing of the pre-acquisition
notification with the commissioner.
Every order shall be
accompanied by a written decision of the commissioner setting forth
findings of fact and conclusions of law.
(c) An order pursuant to
this paragraph shall not apply if the acquisition is not
consummated.
(2) Any person who
violates a cease and desist order of the commissioner
under
paragraph (1) and while the order is in effect may, after
notice and hearing and upon order of the
commissioner, be subject to one or more of the penalties set forth
in section 42-14-16:
(3) Any insurer or
other person who fails to make any filing required by this section, and
who also fails to demonstrate a good faith effort to
comply with any filing requirement, shall be
subject to one or more penalties set forth in section
42-14-16.
(f) Inapplicable
Provisions. - Subsections 27-35-8(b), 27-35-8(c), and 27-35-10 do not
apply to acquisitions covered under subsection
27-35-2.5(b).
27-35-3.
Registration of insurers. -- (a)
Registration. - Every insurer which is
authorized to do business in this state and which is a member of
an insurance holding company
system shall register with the commissioner, except a
foreign insurer subject to registration
requirements and standards adopted by statute or regulation in the
jurisdiction of its domicile
which are substantially similar to those contained in:
(1) this
section;
(2) section
27-35-4(a)(1), (b) and (d) and
(3) Either subdivision
27-35-4(a)(2) or a provision such as the following:
Each registered
insurer shall keep current the information required to be
disclosed in its registration statement by
reporting all material changes or additions within fifteen (15)
days after the end of the month in
which it learns of each change or addition.
Any insurer which is
subject to registration under this section shall register fifteen (15)
days after it becomes subject to registration, and
annually thereafter by March 1 of each year for
the previous calendar year, unless the commissioner for
good cause shown extends the time for
registration, and then within the extended time. The commissioner
may require any insurer
authorized to do business in the state which is a member of a
an insurance holding company
system and which is not subject to registration under this
section to furnish a copy of the
registration statement, the summary specified in subsection (c) of
this section or other information
filed by the insurance company with the insurance
regulatory authority of domiciliary
jurisdiction.
(b) Information and
form required. - Every insurer subject to registration shall file a
registration statement with the commissioner on a form and
in a format prescribed by the NAIC,
which shall contain the following current information:
(1) The capital
structure, general financial condition, ownership, and management of the
insurer and any person controlling the insurer;
(2) The identity and
relationship of every member of the insurance holding company
system;
(3) The following
agreements in force and transactions currently outstanding or which
have occurred during the last calendar year between the
insurer and its affiliates:
(i)
Loans, other investments or purchases, sales or exchanges of securities of the
affiliates by the insurer or of the insurer by its affiliates;
(ii) Purchases, sales,
or exchanges of assets;
(iii) Transactions not
in the ordinary course of business;
(iv)
Guarantees or undertakings for the benefit of an affiliate which result
in an actual
contingent exposure of the insurer's assets to liability, other
than insurance contracts entered into
in the ordinary course of the insurer's business;
(v) All management
service contracts, service contracts and all cost sharing
arrangements;
(vi)
Reinsurance agreements;
(vii) Dividends and
other distributions to shareholders; and
(viii) Consolidated tax
allocation agreements;
(4) Any pledge of the
insurer's stock, including stock of any subsidiary or controlling
affiliate, for a loan made to any member of the insurance
holding company system; and
(5) If requested by the
commissioner, the insurer shall include financial statements of or
within an insurance holding company system, including all
affiliates. Financial statements may
include, but are not limited to, annual audited financial
statements filed with the
and Exchange Commission (SEC) pursuant to the Securities
Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended. An
insurer required to file financial statements
pursuant to this paragraph may satisfy the request by providing
the commissioner with the most
recently filed parent corporation financial statements that
have been filed with the SEC;
(5)(6)
Other matters concerning transactions between registered insurers and any
affiliates as may be included from time to time in any
registration forms adopted or approved by
the commissioner. ;
(7) Statements that
the insurer’s board of directors oversees corporate governance and
internal controls and that the insurer’s officers or senior
management have approved,
implemented, and continue to maintain and monitor corporate
governance and internal control
procedures; and
(8) Any other
information required by the commissioner by rule or regulation.
(c) Summary of Changes
to Registration Statement. - All registration statements shall
contain a summary outlining all items in the current
registration statement representing changes
from the prior registration statement.
(d) Materiality. - No
information need be disclosed on the registration statement filed
pursuant to subsection (b) of this section if that information
is not material for the purposes of this
section. Unless the commissioner by rule, regulation, or
order provides otherwise, sales,
purchases, exchanges, loans, or extensions of credit,
investments or guarantees involving one-half
of one percent (.5%) or less of an insurer's admitted
assets as of the thirty-first 31st day of
December next preceding shall not be deemed material
for purposes of this section.
(e) Reporting of Dividends
to Shareholders. - Subject to subsection 27-35-4(b), each
registered insurer shall report to the commissioner all
dividends and other distributions to
shareholders within fifteen (15) business days following the
declaration thereof.
(f) Information of
Insurers. - Any person within an insurance holding company system
subject to registration shall be required to provide complete
and accurate information to an
insurer, where the information is reasonably necessary to
enable the insurer to comply with the
provisions of this act.
(g) Termination of
registration. - The commissioner shall terminate the registration of
any insurer that demonstrates that it no longer is a
member of an insurance holding company
system.
(h) Consolidated filing.
- The commissioner may require or allow two (2) or more
affiliated insurers subject to registration to file a
consolidated registration statement.
(i)
Alternative registration. - The commissioner may allow an insurer that is
authorized
to do business in this state and which is part of an
insurance holding company system to register
on behalf of any affiliated insurer which is required to
register under subsection (a) and to file all
information and material required to be filed under this section.
(j) Exemptions. - The
provisions of this section shall not apply to any insurer,
information, or transaction if and to the extent that the
commissioner by rule, regulation, or order
shall exempt from the provisions of this section.
(k) Disclaimer. - Any
person may file with commissioner a disclaimer of affiliation with
any authorized insurer or a disclaimer may be filed by
the insurer or any member of an insurance
holding company system. The disclaimer shall fully disclose
all material relationships and bases
for affiliation between the person and the insurer as
well as the basis for disclaiming the
affiliation. After a disclaimer has been filed, the insurer
shall be relieved of any duty to register or
report under this section which may arise out of the
insurer's relationship with the person unless
and until the commissioner disallows the disclaimer. The
commissioner shall disallow a
disclaimer only after furnishing all parties in interest with
notice and opportunity to be heard and
after making specific findings of fact to support the
disallowance.
A disclaimer of
affiliation shall be deemed to have been granted unless the commissioner,
within thirty (30) days following receipt of a complete
disclaimer, notifies the filing party that the
disclaimer is disallowed. In the event of disallowance, the
disclaiming party may request an
administrative hearing, which shall be granted. The disclaiming
party shall be relieved of its duty
to register under this section if approval of the
disclaimer has been granted by the commissioner,
or if the disclaimer is deemed to have been approved.
(l)
registration shall also file an annual enterprise risk report. The
report shall, to the best of the
ultimate controlling person’s knowledge and belief, identify
the material risks within the
insurance holding company system that could pose enterprise
risk to the insurer. The report shall
be filed with the lead state commissioner of the
insurance holding company system as determined
by the procedures within the financial analysis handbook
adopted by the national association of
insurance commissioners.
(l)(m)
Violations. - The failure to file a registration statement or any summary of
the
registration statement or enterprise risk filing required
by this section within the time specified for
the filing shall be a violation of this section.
27-35-4. Standards
and management of an insurer within a holding company
system. -- (a)
Transactions within a an Insurance
Holding Company System. - (1) Transactions
within a an insurance holding company system
to which an insurer subject to registration is a
party shall be subject to the following standards:
(i)
The terms shall be fair and reasonable;
(ii) Agreements for
cost sharing and management services shall include such provisions
as required by rule and regulation issued by the
commissioner;
(ii)(iii)
Charges or fees for services performed shall be reasonable;
(iii)(iv) Expenses incurred and payment received shall be
allocated to the insurer in
conformity with customary insurance accounting practices
consistently applied;
(iv)(v)
The books, accounts, and records of each party to all such transactions shall
be so
maintained as to clearly and accurately disclose the nature and
details of the transactions
including such accounting information as is necessary to
support the reasonableness of the
charges or fees to the respective parties; and
(v)(vi) The insurer's surplus as regards policyholders
following any dividends or
distributions to shareholder affiliates shall be reasonable in
relation to the insurer's outstanding
liabilities and adequate to its financial needs;
(vi)(vii)
The charges or fees for services performed shall be reasonable; and
(2) The following
transactions involving a domestic insurer and any person in its
insurance holding company system, including amendments or
modifications of affiliate
agreements previously filed pursuant to this section, which are
subject to any materiality
standards contained in subparagraphs (A) through (G) of this
subsection, may not be entered into
unless the insurer has notified the commissioner in writing
of its intention to enter into the
transaction at least thirty (30) days prior, or such shorter
period as the commissioner may permit,
and the commissioner has not disapproved it within that
period. The notice for amendments or
modifications shall include the reasons for the change and the
financial impact on the domestic
insurer. Informal notice shall be reported, within thirty
(30) days after a termination of a
previously filed agreement, to the commissioner for
determination of the type of filing required, if
any.
(A) Sales, purchases,
exchanges, loans, extensions of credit, or investments, provided the
transactions are equal to or exceed:
(i)
With respect to nonlife insurers, the lesser of three percent (3%) of the
insurer's
admitted assets or twenty-five percent (25%) of surplus as
regards policyholders as of the 31st
day of December next preceding; or
(ii) With respect to
life insurers, three percent (3%) of the insurer's admitted assets; as of
the 31st day of December next preceding;
(B) Loans or extensions
of credit to any person who is not an affiliate, where the insurer
makes the loans or extensions of credit with the agreement
or understanding that the proceeds of
the transactions, in whole or in substantial part, are to
be used to make loans or extensions of
credit to, to purchase assets of, or to make investments in,
any affiliate of the insurer making the
loans of extensions of credit, provided the transactions
are equal to or exceed:
(i)
With respect to nonlife insurers, the lesser of three percent (3%) of the
insurer's
admitted assets or twenty-five percent (25%) of surplus as
regards policyholders as of the 31st
day of December next preceding;
(ii) With respect to
life insurers, three percent (3%) of the insurer's admitted assets; as of
the 31st day of December next preceding;
(C) Reinsurance
agreements or modifications thereto, including:
(I) All reinsurance
pooling agreements;
(II) Agreements
in which the reinsurance premium or a change in the insurer's liabilities,
or the projected reinsurance premiums or a change in the
insurer’s liabilities in any of the next
three (3) years, equals
or exceeds five percent (5%) of the insurer's surplus as regards
policyholders as of the 31st day of December next preceding,
including those agreements which
may require as consideration the transfer of assets from
an insurer to a nonaffiliate, if an
agreement or understanding exists between the insurer and nonaffiliate that any portion of those
assets will be transferred to one or more affiliates of the
insurer;
(D) All management
agreements, service contracts, tax allocation agreements,
guarantees and all cost sharing arrangements;
(E) Guarantees when
made by a domestic insurer; provided, however, that a guarantee
which is quantifiable as to amount is not subject to the
notice requirements of this subsection
unless it exceeds the lesser of one-half of one percent
(.5%) of the insurer’s admitted assets or ten
percent (10%) of surplus as regards policyholders as of the
31st day of December next preceding.
Further, all guarantees which are
not quantifiable as to amount are subject to the notice
requirements of this subsection;
(E)(F)
Direct or indirect acquisitions or investments in a person that controls the
insurer
or in an affiliate of the insurer in an amount which,
together with its present holdings in such
investments, exceeds two and one-half percent (2.5%) of the
insurer's surplus to policyholders.
Direct or indirect acquisitions or investments in
subsidiaries acquired pursuant to section 2
section 27-35-1.5
of this act chapter (or authorized under any other section of
this chapter), or in
non-subsidiary insurance affiliates that are subject to the
provisions of this act, are exempt from
this requirements; and
(G) Any material
transactions, specified by regulation, which the commissioner
determines may adversely affect the interests of the insurer's
policyholders;
Nothing contained in
this paragraph shall be deemed to authorize or permit any
transactions which, in the case of an insurer not a member of the
same insurance holding
company system, would be otherwise contrary to law.
(3) A domestic insurer
may not enter into transactions which are part of a plan or series
of like transactions with persons within the insurance
holding company system if the purpose of
those separate transactions is to avoid the statutory
threshold amount and thus avoid the review
that would occur otherwise. If the commissioner determines
that the separate transactions were
entered into over any twelve (12) month period for that
purpose, he or she may exercise his or her
authority under section 27-35-9.
(4) The commissioner,
in reviewing transactions pursuant to subsection (b) subdivision
(a)(2) of this section shall consider whether the transactions
comply with the standards set forth in
subsection (a) subdivision
(a)(1) of this section and whether they may adversely affect the
interests of policyholders.
(5) The commissioner
shall be notified within thirty (30) days of any investment of the
domestic insurer in any one corporation if the total
investment in the corporation by the insurance
holding company system exceeds ten percent (10%) of the
corporation's voting securities.
(b) Adequacy of
surplus. - For the purposes of this chapter, in determining whether an
insurer's surplus as regards policyholders is reasonable in
relation to the insurer's outstanding
liabilities and adequate to its financial needs, the following
factors, among others, shall be
considered:
(1) The size of the
insurer as measured by its assets, capital and surplus, reserves,
premium writings, insurance in force, and other appropriate
criteria;
(2) The extent to which
the insurer's business is diversified among the several lines of
insurance;
(3) The number and size
of risks insured in each line of business;
(4) The extent of the
geographical dispersion of the insurer's insured risks;
(5) The nature and
extent of the insurer's reinsurance program;
(6) The quality,
diversification, and liquidity of the insurer's investment portfolio;
(7) The recent past and
projected future trend in the size of the insurer's investment
portfolio;
(8) The surplus as
regards policyholders maintained by other comparable insurers;
(9) The adequacy of the
insurer's reserves; and
(10) The quality and
liquidity of investment in affiliates. The commissioner may treat
this investment as a disallowed asset for the purposes of
determining the adequacy of surplus as
regards policyholders whenever in his or her judgment the
investment warrants.
(c) Dividends and other
distributions. - (1) No domestic insurer shall pay any
extraordinary dividend or make any other extraordinary distribution
to its shareholders until thirty
(30) days after the
commissioner has received notice of the declaration thereof and has not within
that period disapproved the payment, or until the
commissioner has approved the payment within
the thirty (30) day period;
(2) For purposes of
this section, an "extraordinary dividend or distribution" includes
any
dividend or distribution of cash or other property, whose fair
market value together with that of
other dividends or distributions made within the preceding
twelve (12) months exceeds the lesser
of:
(i)
ten percent (10%) of the insurer's surplus as regards policyholders as of the thirty-first
31st day of
December next preceding, ; or
(ii) the
net gain from operations of the insurer, if the insurer is a life insurer, or
the net
income, if the insurer is not a life insurer, not including
realized capital gains, for the twelve (12)
month period ending the 31st day of December next
preceding, but shall not include pro rata
distributions of any class of the insurer's own securities.
In determining whether
a dividend or distribution is extraordinary, an insurer other than
a life insurer may carry forward net income from the
previous two (2) calendar years that has not
already been paid out as dividends. This carry forward shall
be computed by taking the net
income from the second and third preceding calendar years,
not including realized capital gains,
less dividends paid in the second and immediate preceding
calendar years;
(3) Notwithstanding any
other provision of law, an insurer may declare an extraordinary
dividend or distribution which is conditional upon the
commissioner's approval, and the
declaration shall confer no rights upon shareholders until: (i) the commissioner has approved the
payment of the dividend or distribution or (ii) the
commissioner has not disapproved the payment
within the thirty (30) day period referred to in subdivision
(1) of this subsection.
(d) Management of
Domestic Insurers Subject to Registration. - All domestic insurers
shall become in compliance and maintain compliance with the
provisions of this title addressing
good corporate governance standards section 27-1-2.1,
unless otherwise exempted in section 27-
1-2.1.
27-35-5.
Examination. -- (a) Power of commissioner.
- Subject to the limitation
contained in this section and in addition to the powers which
the commissioner has under other
sections of this title relating to the examination of
insurers, the commissioner shall also have the
power to examine order any insurer registered
under 27-35-3 to produce such records, books, or
other information papers in the possession of the insurer
or its affiliates as are reasonably
necessary to ascertain the financial condition of the insurer
or to determine compliance with this
chapter. In the event the insurer fails to comply with the
order, the commissioner shall have the
power to examine the affiliates to obtain the information. and its affiliates
to ascertain the
financial condition of the insurer, including the enterprise
risk to the insurer by the ultimate
controlling party, or by any entity or combination of entities
within the insurance holding
company system, or by the insurance holding company system on
a consolidated basis.
(b) Access to books
and records.
(1) The commissioner
may order any insurer registered under section 27-35-3 to produce
such records, books, or other information papers in the
possession of the insurer or its affiliates as
are reasonably necessary to determine compliance with
this chapter.
(2) To determine
compliance with this chapter, the commissioner may order any insurer
registered under section 27-35-3 to produce information not in
the possession of the insurer if the
insurer can obtain access to such information pursuant to
contractual relationships, statutory
obligations, or other method. In the event the insurer cannot
obtain the information requested by
the commissioner, the insurer shall provide the
commissioner a detailed explanation of the reason
that the insurer cannot obtain the information and the
identity of the holder of information.
Whenever it appears to the commissioner that the
detailed explanation is without merit, the
commissioner may require, after notice and hearing, the insurer to
pay a penalty for each day’s
delay, or may suspend or revoke the insurer’s license.
(b)(c)
Use of consultants. - The commissioner may retain at the registered insurer's
expense such attorneys, actuaries, accountants, and other
experts not otherwise a part of the
commissioner's staff as shall be reasonably necessary to assist in
the conduct of the examination
under subsection (a) of this section. Any persons so
retained shall be under the direction and
control of the commissioner and shall act in a purely
advisory capacity.
(c)(d)
Expenses. - Each registered insurer producing for examination records, books
and
papers pursuant to subsection (a) of this section shall be
liable for and shall pay the expense of the
examination in accordance with applicable laws of this state.
(e) Compelling
Production. In the event the insurer fails to comply with an order, the
commissioner shall have the power to examine the affiliates to
obtain the information. The
commissioner shall also have the power to issue subpoenas, to
administer oaths, and to examine
under oath any person for purposes of determining
compliance with this section. Upon the failure
or refusal of any person to obey a subpoena, the commissioner
may petition a court of competent
jurisdiction, and upon proper showing, the court may enter an
order compelling the witness to
appear and testify or produce documentary evidence. Failure
to obey the court order shall be
punishable as contempt of court. Every person shall be obliged
to attend as a witness at the place
specified in the subpoena, when subpoenaed, anywhere within the
state. He or she shall be
entitled to the same fees and mileage, if claimed, as a
witness in superior court of this state, which
fees, mileage, and actual expense, if any, necessarily
incurred in securing the attendance of
witnesses, and their testimony, shall be itemized and charged
against, and be paid by, the
company being examined.
27-35-6. Confidential treatment. -- (a) Documents, materials
or other information in the
possession or control of the department of business regulation
that are obtained by or disclosed to
the commissioner or any other person in the course of an
examination or investigation made
pursuant to section 27-35-5, and all information reported
pursuant to sections 27-35-2(b)(xii), 27-
35-2(b)(viii), 27-35-3, and 27-35-5 27-35-4, shall be
confidential by law and privileged, shall not
be subject to the access of public records act, shall
not be subject to subpoena and shall not be
subject to discovery or admissible in evidence in any private
civil action. However, the
commissioner is authorized to use the documents, materials or
other information in the
furtherance of any regulatory or legal action brought as part of
the commissioner's official duties.
The commissioner shall not otherwise make the
documents, materials or other information public,
without the prior written consent of the insurer to which it
pertains unless the commissioner, after
giving the insurer and its affiliates who would be affected
thereby notice and opportunity to be
heard, determines that the interests of policyholders,
shareholders, or the public will be served by
the publication thereof, in which event the commissioner
may publish all or any part of it in a
manner that he or she may deem appropriate.
(b) Neither the
commissioner nor any person who received documents, materials or other
information while acting under the authority of the commissioner or
with whom such documents,
materials, or other information are shared pursuant to this
chapter shall be permitted or
required
to testify in any private civil action concerning any
confidential documents, materials, or
information subject to subsection (a) of this section.
(c) In order to assist
in the performance of the commissioner's duties, the commissioner:
(1) May share
documents, materials or other information, including the confidential and
privileged documents, materials or information subject to
subsection (a), with other state, federal
and international regulatory agencies, with the NAIC and
its affiliates and subsidiaries, and with
state, federal, and international law enforcement
authorities, including members of any
supervisory college described in section 27-35-5.5, provided that the recipient agrees in writing
to
maintain the confidentiality and privileged status of the
document, material or other information;
and has verified in writing the legal authority to
maintain confidentiality.
(2) Notwithstanding
subparagraph (c)(1) above, the commissioner may only
share
confidential and privileged documents, material, or information
reported pursuant to subsection
27-35-3(l) with commissioners of states having
statutes or regulations substantially similar to
subsection (a) of this section and who have agreed in writing
not to disclose such information.
(2)(3)
May receive documents, materials or information, including otherwise
confidential and privileged documents, materials or information
from the NAIC and its affiliates
and subsidiaries and from regulatory and law enforcement
officials of other foreign or domestic
jurisdictions, and shall maintain as confidential or privileged any
document, material or
information received with notice or the understanding that it is
confidential or privileged under
the laws of the jurisdiction that is the source of the
document, material or information. ; and
(3)(4) May
Shall enter into written agreements with
the NAIC governing sharing and use
of information provided pursuant to this chapter
consistent with this subsection. that
shall:
(i)
Specify procedures and protocols regarding the confidentiality and security of
information shared with the NAIC and its affiliates and
subsidiaries pursuant to this chapter,
including procedures and protocols for sharing by the NAIC with
other state, federal or
international regulators;
(ii) Specify that
ownership of information shared with the NAIC and its affiliates and
subsidiaries pursuant to this chapter remains with the
commissioner and the NAIC’s use of the
information is subject to the direction of the commissioner;
(iii) Require prompt
notice to be given to an insurer whose confidential information in the
possession of the NAIC pursuant to this chapter is subject to a
request or subpoena to the NAIC
for disclosure or production; and
(iv)
Require the NAIC and its affiliates and subsidiaries to consent
to intervention by an
insurer in any judicial or administrative action in which the
NAIC and its affiliates and
subsidiaries may be required to disclose confidential information
about the insurer shared with
the NAIC and its affiliates and subsidiaries pursuant to
this chapter.
(d) The sharing of
information by the commissioner pursuant to this chapter shall not
constitute a delegation of regulatory authority or rulemaking,
and the commissioner is solely
responsible for the administration, execution and enforcement of
the provisions of this chapter.
(d)(e)
No waiver of any applicable privilege or claim of confidentiality in the
documents,
materials or information shall occur as a result of disclosure
to the commissioner under this
section or as a result of sharing as authorized in subsection
(c).
(f) Documents,
materials or other information in the possession or control of the NAIC
pursuant to this chapter shall be confidential by law and
privileged, shall not be subject to section
38-2-3, shall not be subject to subpoena, and shall
not be subject to discovery or admissible in
evidence in any private civil action.
27-35-9.
Sanctions. -- (a) Any
insurer failing, without just cause, to file any registration
statement as required in this chapter shall be required, after
notice and hearing, to pay a penalty of
five hundred dollars ($500) for each day's delay, to be
recovered by the commissioner, and the
penalty so recovered shall be paid into the general revenue
fund of this state. The maximum
penalty under this section is that determined pursuant to
section 42-14-16. The commissioner may
reduce the penalty if the insurer demonstrates to the
commissioner that the imposition of the
penalty would constitute a financial hardship to the insurer;
.
(b) Every director or
officer of an insurance holding company system who knowingly
violates, participates in, or assents to, or who knowingly
shall permit any of the officers or agents
of the insurer to engage in transactions or make
investments which have not been properly
reported or submitted as required by this chapter or which
violate this chapter shall pay, in their
individual capacity, a civil forfeiture determined pursuant to section
42-14-16, of not more than
one thousand dollars ($1,000) per violation, after notice and hearing. In determining the amount
of the civil forfeiture, the commissioner shall take
into account the appropriateness of the
forfeiture with respect to the gravity of the violation, the
history of previous violations, and such
other matters as justice may require; .
(c) Whenever it appears
to the commissioner that any insurer subject to this act or any
director, officer, employee, or agent of the insurer has
engaged in any transaction or entered into
a contract which is subject to section 27-35-4 of this
chapter and which would not have been
approved had approval been requested, the commissioner may
order the insurer to immediately
cease and desist any further activity under the transaction
or contract. After notice and hearing the
commissioner may also order the insurer to void any contracts and
restore the status quo if that
action is in the best interest of the policyholders,
creditors, or the public.
(d) Whenever it appears
to the commissioner that any insurer or any director, officer,
employee or agent thereof has committed a willful violation of
this chapter, that any insurer or
any director, officer, employee or agent thereof
shall be in violation of chapter 54 of title 27.
(e) Whenever it
appears to the commissioner that any person has committed a violation of
section 27-35-2 of this chapter and which prevents the full
understanding of the enterprise risk to
the insurer by affiliates or by the insurance holding
company system, the violation may serve as
an independent basis for disapproving dividends or
distributions and for placing the insurer under
an order of supervision in accordance with section
27-14.1.
27-35-10.
Receivership. -- Whenever it appears to the
commissioner that any person has
committed a violation of this chapter which impairs the
financial condition of a domestic insurer
as to threaten insolvency or make the further transaction
of business by it hazardous to its
policyholders, creditors, shareholders, or the public, then the
commissioner may proceed as
provided in chapter 14.3 of this title to take possession of
the property of the domestic insurer and
to conduct the its business of the
insurer.
SECTION 3. This act shall take effect upon passage, except
for the requirement to file an
Enterprise Risk Report
included in subdivision 27-35-3(1) which shall take effect upon July 1,
2013.
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LC01326/SUB A
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