Senate committee substitute makes the following changes to the 1st edition.

Changes the act's long and short titles, and adds the following new provisions.

Section 2

Amends GS 58-7-21 (Credit allowed a domestic ceding insurer). Makes organizational and clarifying changes to subsection (b), pertaining to credit for reinsurance allowed to a domestic ceding insurer that meets the requirements of the subsection's subdivisions. Adds descriptors to existing subdivisions. Modifies subdivision (2), clarifying that an accredited insurer is one accredited by the Commissioner of Insurance (Commissioner). Makes further clarifying changes. Removes language explicitly prohibiting credit from being allowed a domestic ceding insurer if the assuming insurer's accreditation has been revoked by the Commissioner after notice and opportunity for hearing. Modifies and adds to subdivision (4), setting forth the requirements for credit for reinsurance for reinsurers maintaining trust funds, as specified. Adds new subdivision (4a), authorizing credit for reinsurance when the reinsurance is ceded to an assuming insurer that has been certified by the Commissioner as a reinsurer in the State and secures its obligations in accordance with the requirements set out in new subdivision (4a), as described. Makes conforming changes to include the requirements of new subdivision (4a) in the general provisions of subsection (b). Modifies subdivision (6) to also apply its provisions to insurers not certified to transact insurance or reinsurance in the State. Changes the language of subsubdivision (6)b to refer to the ceding insurer instead of the ceding company. Makes the conditions of subdivision (7) applicable to credit permitted by new subdivision (4a).

Adds new subdivision (b)(8), authorizing the Commissioner to suspend or revoke a reinsurer's accreditation or certification if the accredited or certified reinsurer ceases to meet the requirements for accreditation or certification. Provides for notice and opportunity to be heard before the suspension or revocation can take effect, unless one of the three exceptions as specified apply. Provides for the effect on resinsurance contracts issued or renewed after the effective date of a suspension or revocation. Adds new subdivision (b)(9), requiring a ceding insurer to take steps to (1) manage its reinsurace recoverables proportionate to its own book of business and (2) diversify its reinsurance program, notifying the Commissioner as specified concerning the risk exposure.

Effective January 1, 2019.

Section 3

Amends GS 58-7-26 (Asset or reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of GS 58-7-21). Modifies the permitted forms of security set out in subsection (a), clarifying that the securities that are listed by the Securities Valuation Office of the NAIC that are acceptable forms of security under subdivision (a)(2) include those deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office. Amends subdivision (a)(3) to refer to the ceding insurer rather than the ceding company. Effective January 1, 2019.

Section 4

Directs the Department of Insurance to adopt rules substantially similar to the most recent model regulation on suitability in annuity transactions issued by the National Association of Insurance Commissioners. Adds that rules adopted pursuant to this provision are not subject to Part 3 of Article 2A of GS Chapter 150B.

Section 5

Repeals Part 4 of Article 60 of GS Chapter 58 (Suitability in Annuity Transactions Act). Effective on the date that rules adopted pursuant to Section 4 of the act become effective. Directs the Codifier of Rules to notify the Revisor of Statutes of the effective date of rules adopted as required by this act.

Section 6

Makes technical changes to the effective date provisions pertaining to Section 1 of the act.