Bill Summary for H 163 (2015-2016)

Summary date: 

Mar 5 2015

Bill Information:

View NCGA Bill Details2015-2016 Session
House Bill 163 (Public) Filed Thursday, March 5, 2015
AN ACT TO MAKE VARIOUS CLARIFYING AND TECHNICAL CHANGES TO THE NORTH CAROLINA CAPTIVE INSURANCE ACT.
Intro. by Johnson, Collins, Tine.

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Bill summary

Makes various changes to Part 9 of Article 10 of GS Chapter 58.

Amends certain definitions as they apply in Part 9. Replaces the definition for affiliated companywith a definition for affiliate or affiliated company. Defines an affiliate or affiliated company as any person (was, any company) in the same corporate system as a parent, an industrial insured, a member organization, or a participant by virtue of common ownership, control, operation, or management. Deletes incorporated cell captive insurance company as defining a type of "captive insurance company." Provides that a controlled unaffiliated business is a person who is (1) not an affiliate and (2) has a contractual relationship with an affiliate, and whose risks are managed by a captive insurance company, an affiliate of such a company, a participant, or an affiliate of a participant in accordance with GS 58-10-470.

Amends the definition for participantto mean any person and any affilate meeting the specified qualifications, (was, a person or an entity). Also amends the definition for sponsorto mean any person meeting the specified qualifications (was, any person or entity). Adds definitions for the terms coreand impairment. Deletes the definition for incorporated cell captive insurance company. Makes additional technical and clarifying changes to the definitions as they apply in this Part.

Makes technical and clarifying changes to GS 58-10-345 (licensing, authority, and confidentiality); GS 58-10-355 (organizational examination); and GS 58-10-360 (designation of captive manager).

Amends GS 58-10-370(a)(6) to authorize the Commissioner of Insurance (Commissioner) to determine the capital and surplus requirements for a special purpose captive insurance company in an amount other than the $250,000 designated under this statute.

Amends GS 58-10-380, adding (b1) to provide criteria for the formation of a special purpose captive insurance company. Provides that a special purpose captive insurance company may be organized and operated in any form of business organization that is authorized by the Commissioner. Adds subsection (m) to provide for the governing of a captive insurance company engaging in establishing one or more separate accounts. Also designates rules for the sale, exchange, or transfer of assets made by a captive insurance company between any of its separate accounts, or between any other investment account and one or more of its separate accounts. Requires that the Commissioner approve such transfers.

Amends GS 58-10-385 to make an exception to the prohibition against the acceptance of any type of compensation for specified activities on behalf of a captive insurance company by a director, officer, or employee of that company, provided that the compensation is approved in advance by the Commissioner.

Amends GS 58-10-390 to permit the annual filing of any disclosure of conflict of interest by an officer, director, or key employee to be with the board of directors or other governing body of the captive insurance company.

Amends GS 58-10-405 to provide that each captive insurance company, pure or industrial, is to submit an annual report to the Commissioner prior to March 15 of its financial condition as of December 31 of the preceding year. Authorizes the Commissioner to require more frequent filing of financial condition reports at the Commissioner's discretion. Authorizes the Commissioner to waive the filing of the annual report required under this statute subject to the filing of the annual audit required under GS 58-10-415. Requires that a captive insurance company make a written exemption request at least 30 days before the annual report due date. Prohibits the Commissioner from simultaneously exempting a captive insurance company from both the annual report and the annual audit requirements.

Amends GS 58-10-415 to provide for an annual audit and statement of actuarial opinion (was, annual audit and actuarial certification). Deletes provision requiring certification of loss reserves and loss expense reserves. Instead directs every captive insurance company, unless exempted by the Commissioner, to submit annually, with the annual audited financial report, the opinion of an appointed actuary entitled, "Statement of Actuarial Opinion," which evaluates the captive insurance company's loss reserve and loss expense reserves. Specifies the necessary qualifications of the individual who prepares the statement.

Enacts new GS 58-10-490 to define an inactive captive insurance companyas one meeting both of the following criteria: (1) the company has ended its transactions in the insurance business and (2) there are no remaining liabilities associated with the policies written or assumed by the company. Provides additional criteria regarding the designation of a captive insurance company as inactive. Allows an inactive captive insurance company to be exempted from filing and reporting requirements.

Amends GS 58-10-510 regarding the requirements for establishing a protected cell captive insurance company under Subpart 2 of Article 10 of GS Chapter 58. Enacts a new subsection (q) providing for the transfer or conversion of a protected cell of a protected cell captive insurance company with the approval of the transfer or conversion plan by the Commissioner. Enacts new subsection (r) to govern the enforceability of contracts involving a protected cell of a protected cell captive insurance company.

Enacts new GS 58-10-512 to provide governing criteria for the formation of an incorporated protected cell. Permits an incorporated cell to be organized and operated in any form of business organization that is authorized by the Commissioner.

Enacts new GS 58-10-513, regarding cell shares and cell dividends.

Amends GS 58-10-515 to provide that any person (was, association, corporations, limited liability companies, partnerships, trusts, and other business entities) may be a participant in a protected cell captive insurance company formed or licensed under this Part .

Enacts new GS 58-10-517 to require a protected cell captive insurance company to inform any person with whom it engages in business transactions that it is a protected cell captive insurance company.

Deletes GS 58-10-540, which required an alien captive insurance company seeking to become licensed as a branch captive insurance company to petition the Commissioner for a certificate of authority.

Makes additional clarifying, technical, and conforming changes to Part 9 of Article 10 of GS Chapter 58.

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