Bill Summary for H 267 (2013-2014)

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Summary date: 

Jun 25 2014

Bill Information:

View NCGA Bill Details2013-2014 Session
House Bill 267 (Public) Filed Thursday, March 7, 2013
Intro. by Collins, Torbett, Floyd, Wray.

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Bill summary

The Senate committee substitute to the 3rd edition deletes the provisions of the previous edition and replaces it with the following.

Amends GS 58-10-340 to add special purpose captive insurance company to the definition of captive insurance company and adds and defines the term special purpose captive insurance company.

Amends GS 58-10-345 to allow a special purpose captive insurance company to provide insurance or reinsurance for risks, as approved by the Commissioner of Insurance (Commissioner). Amends the requirements for licensure to issue insurance policies as a captive insurance company to remove the ability to provide an irrevocable letter of credit instead of the amount required to be paid into the applicant business.

Amends GS 58-10-345, GS 58-10-360, GS 58-10-365, GS 58-10-370, and GS 58-10-395 to make technical changes, replace letters with certificates, and change references to applicant business entity with company.

Amends GS 58-10-370 to to require a special purpose captive insurance company to possess and maintain unimpaired paid-in capital and surplus in the amount of no less than $250,000 in order to be licensed. Also allows capital and surplus to be in the form of securities, or other form, approved by the Commission, in addition to cash or a clean irrevocable letter of credit. 

Amends GS 58-10-400 to no longer require authorization to act as an insurance manager or intermediaries to be on a form prescribed by the Commissioner.

Amends GS 58-10-405 to allow a special purpose captive insurance company to apply to the Commissioner for filing the required report on an alternative date. Deletes the provision requiring, when an alternative reporting date is allowed, filing before March 15 specified verified pages of the Captive Annual Statement; Pure or Industrial Insured. 

Amends GS 58-10-415 to require risk-retention groups to comply with Parts 6 and 7 of Article 10 of GS Chapter 58 instead of this statute. Allows extension of the due dates for filings required by the statute (annual audit and actuarial certification) to be granted by the Commissioner for 30-day periods upon a showing by the captive insurance company and its independent certified public accountant of the reason for the extension and determination by the Commissioner of good cause. Requires the extension request to be received no less than 10 days before the due date. Deletes the current provisions concerning what must be included in the annual audit and adds new language requiring the annual audit to consist of (1) financial statements, notes to financial statements, and related required auditor communications and (2) certified public accountant's affirmation, all as detailed in the statute.

Amends GS 58-10-420 to require a captive insurance company receiving a notice from its independent certified pubic accountant that the accountant has determined that the company has materially misstated its financial condition in its report to the Commissioner to forward a copy of the notification to the Commissioner within five business days after receipt of the notification and provide the accountant with proof of having done so. If the independent certified public accountant does not receive that proof within the five-day period, the accountant must within the next five business days submit a copy of the notification to the Commissioner. Requires risk-retention groups to comply with Part 7 of Article 10 of GS Chapter 58 instead of this statute.

Deletes current GS 58-10-425(a) and instead allows the Commissioner to require a captive insurance company to maintain a deposit with the Commissioner in a form and amount as the Commissioner may specify.

Amends GS 58-10-430 to add that risk-retention groups are not subject to the statute and are to be examined in accordance with the Examination Law. 

Amends GS 58-10-440 to prohibit a special purpose captive insurance company from being subject to any restrictions on allowable investments, but allows the Commissioner to prohibit or limit any investment threatening the solvency or liquidity of the company. 

Makes clarifying changes to GS 58-10-445.

Amends GS 58-10-465 to allow the Commission to exempt special purpose captive insurance companies, on a case-by-case basis, from the provisions of GS Chapter 58 and related rules that the Commission determines are inappropriate based on the nature of the risks to be insured.

Amends GS 58-10-510(o) to make a clarifying change.

Amends GS 58-10-520 to delete the requirement that protected cell captive insurance companies comply with the investment requirements contained in specified statutes, provided that the compliance will be waived to the extent that credit for reinsurance ceded to reinsurers was allowed or to the extent otherwise deemed reasonable and appropriate by the Commissioner. Also deletes the provision allowing the Commissioner to approve the use of alternative reliable methods of valuation and rating.

Amends GS 58-10-565(c) to make a clarifying change.

Amends GS 58-10-625 to remove the requirement that a special purpose financial captive (SPFC) report using statutory accounting principles, unless the Commissioner decides that the SPFC can comply with generally accepted accounting principles instead.

Amends GS 58-3-165 to provide that captive insurer does not include a risk-retention group licensed under Part 9 of Article 10 of GS Chapter 58. Amends the term insurer to provide that it includes a risk-retention group licensed under Part 9 of Article 10 of GS Chapter 58 (was, does not mean a risk-retention group under Article 22 of GS Chapter 58). 

Amends GS 58-12-2 to provide that the term domestic insurer includes any risk-retention group organized in the state under part 9 of Article 10 of GS Chapter 58.

Amends GS 58-22-15 to allow the Commissioner to limit the net amount of risk retained by a risk-retention group for any individual risk.

Effective July 1, 2014.

Changes the act's titles.