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June 24, 2024 HB 24-1321
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Final Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 24-0711
Rep. Brown; Taggart
Sen. Roberts; Hinrichsen
Date:
Bill Status:
Fiscal Analyst:
June 24, 2024
Signed into Law
Brendan Fung | 303-866-4781
brendan.fung@coleg.gov
Bill Topic: INSURANCE HOLDING COMPANY MODEL REGULATION
Summary of
Fiscal Impact:
☐ State Revenue
☒ State Expenditure
☐ State Transfer
☐ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill modifies insurance company holding system requirements to align with
national standards. It minimally increases state expenditures starting in FY 2024-25.
Appropriation
Summary:
No appropriation is required.
Fiscal Note
Status:
This final fiscal note reflects the enacted bill.
Summary of Legislation
The bill aligns Colorado law regarding insurance company holding systems with the National
Association of Insurance Commissioners’ (NAIC) Model Act.
Registration. When registering with the Division of Insurance in the Department of Regulatory
Agencies (DORA), the ultimate controlling person of each insurer must file an annual group
capital calculation, except for insurance holding companies of varying sizes, scopes, and
regulatory structures. Additionally, for insurers scoped into the NAIC stress test framework, the
bill requires the ultimate controlling person to file the results of a specific year liquidity stress
test. On at least an annual basis, the Financial Stability Task Force must review the NAIC liquidity
stress test scope criteria and work in consultation with the commissioner to exempt certain
insurers from this requirement.
Transactions. The bill authorizes the Commissioner of Insurance to determine an insurer’s
hazardous financial condition and in turn, require the insurer to secure and maintain a deposit
for the duration of the contract or agreement. The commissioner may decide the amount of the
deposit, and whether a deposit is required for a single contract, multiple contracts, or a contract
with a specific person. The bill also stipulates that an insurer’s records, data, and premiums held
by an affiliate are the property of, and under the control of, the insurer.
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June 24, 2024 HB 24-1321
Affiliates in contract with a domestic insurer are subject to the jurisdiction of any supervision,
seizure, conservatorship, or receivership proceedings against the insurer and are under the
authority to perform services that maintain the insurer’s operations and fulfill the insurer’s
obligations.
Confidentiality. The bill requires the commissioner to maintain confidentiality of proprietary
documents containing trade secrets, an insurer’s group capital calculation information, and an
insurer’s liquidity stress test results. Third-party consultants designated by the commissioner are
exempt from disclosure of these documents; however, the NAIC and third-party consultants are
prohibited from storing certain confidential documents and information in a permanent
database after an initial analysis is complete.
The commissioner may use group capital calculation, group capital ratio, and liquidity stress test
results as a regulatory tool for assessing group risks, capital adequacy, and group liquidity risks,
but not as a tool to rank insurers. Additionally, insurers are prohibited from advertising or
announcing the group capital calculation, group capital ratio, or liquidity stress test results of
any insurer or insurance holding company system unless in rebuttal of a materially false
statement.
The bill authorizes the commissioner to make rules, establish frameworks, and authorize
exemptions for these provisions. The commissioner may also adopt rules applicable to
reinsurance arrangements for certain life insurance, long-term care insurance, and health
insurance policies.
State Expenditures
The bill minimally increases workload in DORA in FY 2024-25 to perform rulemaking and align
current procedures with NAIC standards. Workload in the department may decrease on an
ongoing basis from access to comprehensive tools and streamlined processes. The department
may require legal counsel, provided by the Department of Law, related to rulemaking,
implementation, and ongoing administration of the provisions. Any increase in expenditures can
be accomplished within existing appropriations.
Effective Date
The bill was signed into law by the Governor on May 24, 2024, and takes effect on
January 1, 2025, assuming no referendum petition is filed.
State and Local Government Contacts
Information Technology Law Regulatory Agencies
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit the General Assembly website.