Bill Summary for H 288 (2015-2016)

Summary date: 

Mar 18 2015

Bill Information:

View NCGA Bill Details2015-2016 Session
House Bill 288 (Public) Filed Wednesday, March 18, 2015
Intro. by Setzer, Bumgardner.

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Bill summary

Part I.

Amends GS 58-19-1 to make a clarifying change.

Recodifies specified subdivision of GS 59-19-5. Amends GS 58-19-5 to make technical and clarifying changes. Also adds and defines the terms enterprise risk, executive officer, forms A through F, and ultimate controlling person

Recodifies specified subsections and subdivisions of GS 58-19-5. Amends GS 58-19-5 to add that an agreement to merge with or acquire control of a domestic insurer must be submitted on Form A and expands on the information that must be included. Provides that for the purpose of the statute, domestic insurer includes any person controlling a domestic insurer, unless the Commissioner of Insurance (Commissioner) determines that the person is primarily engaged in business other than insurance. Specifies information that must be filed with the Commissioner by a controlling person of the domestic insurer seeking to divest its controlling interest in the insurer. Requires the acquiring person, for transactions subject to the statute, to file a pre-acquisition notification with the Commissioner and allows the Commissioner to require an expert opinion on the competitive impact of the acquisition at the acquiring person's expense. Adds requirements for the public hearing provisions if the proposed acquisition of control will require approval of the insurance commissioners of more than one state. Clarifies that the effectuation or attempt to effectuate an acquisition of control of, divestiture of, or merger with a domestic insurer is a violation of the statute unless the Commissioner has given approval of the acquisition, divestiture, or merger. Makes conforming changes.

Amends GS 58-19-25, concerning the registration of insurers, to specify the names of forms that must be used. Specifies that the registration statement is Form B and adds to the information that must be included. Specifies conditions under which a prior notification of an ordinary dividend or other ordinary distribution is deemed incomplete. Specifies the factors that the Commissioner must consider in reviewing dividends or other shareholder distributions.  Sets out further requirements for the termination of a registration. Allows an authorized insurer to file a registration statement on behalf of any affiliated insurer or insurers who are required to register; specifies items that may be included in the statement; specifies conditions under which specified items may be submitted in lieu of filing Form B. Amends and expands on the requirements for disclaimers of affiliation. Adds that failure to file an enterprise risk filing within the specified time is a violation of the statute. Requires, effective January 1, 2016, the ultimate controlling person of every insurer that must register to also file an annual enterprise risk report. Specifies the items that must be included in the report and how the report is to be filed. Makes clarifying changes. 

Recodifies portions of GS 58-19-30. Amends GS 58-19-30 to add to the standards governing transactions within an insurance holding company system to which an insurer subject to registration is a party to also require agreements for cost sharing services and management include provisions that are required by the Article or rules and regulations issued by the Commissioner. Specifies that amendments or modifications of affiliated agreements may not be entered into without notifying the Commissioner and specifies items that must be included in the notice. Specifies the timing of notice for all of the described transactions. Adds to the items that are considered reinsurance agreements or modifications. Specifies provisions governing management agreements, service contracts, and cost-sharing arrangements, including minimum content. Expands on the provisions governing whether an insurer's surplus is reasonable. Adds requirements for the content of requests for approval of extraordinary dividends or any other extraordinary distribution to shareholders and prior notice of an ordinary dividend or any other ordinary distribution.

Amends GS 58-19-35 to provide that the Commissioner has the power to examine any registered insurer, its affiliates, or any acquiring party to ascertain the entity's financial condition, including the enterprise risk to the insurer by the ultimate controlling person, by any entity or combination of entities within the insurance holding company system, or by the insurance holding company system on a consolidated basis. Allows the Commissioner to order a registered insurer to produce information that is not in the insurer's possession and require payment of a penalty for failure to comply without a good reason. Also sets out the Commissioner's power to examine the affiliates, issue subpoenas, administer oaths, and conduct examinations. 

Enacts new GS 58-19-37 to give the Commissioner power to participate in any supervisory college for any domestic insurer that is part of an insurance holding company system with international operations in order to determine insurer compliance. Sets out powers with respect to supervisory colleges. Includes provisions for payment of participation and for agreements of cooperation with other regulatory agencies.

Amends GS 58-19-40 to expand upon the information considered confidential and to expand upon the ways in which that information is to be protected. Sets out provisions governing testifying in private civil actions concerning protected information and sets out instances in which the Commissioner may share information. Sets out additional regulations concerning confidential information.

Amends GS 58-19-50 to provide that when it appears that a person has violated GS 58‑19‑15, preventing the full understanding of the enterprise risk to the insurer by the 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. 

Makes clarifying changes to GS 58-19-60.

Enacts new GS 58-19-75 setting guidance for using Forms A through F and for submitting the required information. Enacts new GS 58-19-80, stating that information required by the forms may be incorporated by reference to another item and sets out provisions governing filing exhibits. Enacts new GS 58-19-85 setting out the required content of documents to be filed when it is impractical to furnish required information at the time that it is required to be filed. Enacts new GS 58-19-90 allowing the Commissioner to request information beyond information required by the forms.

Amends GS 58-10-12(e) to make clarifying and conforming changes. 

Part II.

Amends GS 58-12-11(a) by amending the definition of the term company action level event to include filing of a risk-based capital report by a health or life insurer indicating that the insurer has total adjusted capital that (1) is greater than or equal to its company action level risk-based capital but less than three times its authorized control level risk-based capital (was, less than the product of its authorized control level risk-based capital and 2.5), and (2) has a negative trend. Makes technical changes. Effective January 1, 2017.

Part III. 

Amends GS 58-22-15 to add the requirement that risk-retention groups comply with the specified governance standards. Includes standards concerning the board of directors, service provider contracts, the required written policy in the plan of operation, adoption and disclosure of governance standards, business conduct and ethics, and the reporting of noncompliance. 

Part IV.

Unless otherwise indicated, effective July 1, 2015. 


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