Alabama Senate Bill SB166

Alabama 2022 Regular Session

• Introduced: 2/2/22
• Refer: 2/2/22

Caption

Insurance Dept., life and annuity policies, standard nonforfeiture law for individual deferred annuities, group capital calculation and stress test, providing for holding companies, duties to Commission and lead state commissioner, small company alternative valuation provision, exemptions, exemption premium based on valuation manual of NAIC, Commissioner of Insurance may regulate by rule, Secs. 27-15-28.2, 27-29-1, 27-29-3, 27-29-4, 27-29-7, 27-36A-20 am'd.

Impact

The bill also introduces significant regulatory changes for insurance holding companies, including the implementation of group capital calculations and liquidity stress tests. These provisions aim to enhance the solvency and financial soundness of insurance companies by establishing stringent reporting requirements to the Commissioner of Insurance, alongside confidentiality measures. By ensuring proper liquidity and capital adequacy, the bill seeks to bolster consumer confidence in the insurance sector while providing regulators with enhanced tools to oversee insurance holding company systems.

Summary

SB166 aims to amend existing laws concerning insurance policies in Alabama, particularly focusing on the standard nonforfeiture law for individual deferred annuities. The bill proposes to lower the minimum interest rate on individual deferred annuities to 15 basis points (0.15%) and exempts contingent deferred annuities from the standard nonforfeiture law, allowing the Commissioner of Insurance to determine nonforfeiture benefits applicable to these annuities. This shift potentially benefits insurers by reducing the financial burdens associated with higher interest obligations, but may raise concerns regarding policyholders’ protections.

Contention

Notably, there were concerns highlighted regarding the exemption conditions for small insurance companies and the potential implications on consumer benefits. Critics argue that while the amendments aim to incentivize insurers to operate within the state, they may inadvertently lower the safety nets available to policyholders through reduced nonforfeiture guarantees. The balance between promoting business efficiencies and safeguarding consumer interests could lead to ongoing discussions in legislative forums as this bill progresses.