General Assembly Raised Bill No. 196
February Session, 2014 LCO No. 519
*_____SB00196INS___032014____*
Referred to Committee on INSURANCE AND REAL ESTATE
Introduced by:
(INS)
General Assembly
Raised Bill No. 196
February Session, 2014
LCO No. 519
*_____SB00196INS___032014____*
Referred to Committee on INSURANCE AND REAL ESTATE
Introduced by:
(INS)
AN ACT CONCERNING GROUP-WIDE SUPERVISION FOR INTERNATIONALLY ACTIVE INSURANCE GROUPS.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. (NEW) (Effective October 1, 2014) (a) As used in this section: (1) "Group-wide supervisor" means the chief insurance regulatory official (A) authorized by such official's jurisdiction to conduct and coordinate group-wide supervisory activities, and (B) whose jurisdiction has been determined or acknowledged by the Insurance Commissioner pursuant to subdivisions (2) and (3) of subsection (b) of this section to have sufficient significant contacts with an internationally active insurance group; and (2) "internationally active insurance group" means any insurance holding company system that includes an insurance company registered pursuant to section 38a-135 of the general statutes.
(b) (1) The Insurance Commissioner may act as a group-wide supervisor for any internationally active insurance group.
(2) (A) The commissioner may determine, in cooperation with other group-wide supervisors, that the commissioner is the appropriate group-wide supervisor for an internationally active insurance group that conducts substantial insurance business operations in this state or has subsidiaries that conduct substantial insurance business operations in this state.
(B) The commissioner may acknowledge that the chief insurance regulatory official of another jurisdiction is an appropriate group-wide supervisor for an internationally active insurance group that (i) does not conduct substantial insurance business operations in the United States, (ii) conducts substantial insurance business operations in the United States but not in this state, or (iii) conducts substantial insurance business operations in the United States and in this state but the commissioner has determined, pursuant to the factors set forth in subdivision (3) of this subsection that the chief insurance regulatory official of another jurisdiction is the appropriate group-wide supervisor.
(3) The commissioner shall consider the following relevant factors and the relative scale of each in making a determination or acknowledgment under subdivision (2) of this subsection:
(A) The location of the home office of the internationally active insurance group or the place of domicile of the ultimate controlling person of the internationally active insurance group;
(B) The locations of executive offices of the internationally active insurance group;
(C) The locations of origin of the insurance business of the internationally active insurance group;
(D) The locations of the assets and liabilities of the internationally active insurance group;
(E) The locations of the business operations and activities of the internationally active insurance group; and
(F) Whether (i) the chief insurance regulatory official of another jurisdiction is acting or seeking to act as the group-wide supervisor under a regulatory system the commissioner determines to be substantially equivalent to that provided under the laws of this state or is otherwise sufficient in terms of group-wide supervision, enterprise risk analysis and cooperation with other chief insurance regulatory officials, and (ii) such chief insurance regulatory official acting or seeking to act as the group-wide supervisor provides the Insurance Department with reasonably reciprocal recognition and cooperation.
(c) (1) The commissioner may collect, pursuant to section 38a-14a of the general statutes, as amended by this act, from any insurance company registered pursuant to section 38a-135 of the general statutes any information necessary for the department to determine whether the commissioner may act as the group-wide supervisor of an internationally active insurance group or to acknowledge that another chief insurance regulatory official of another jurisdiction should act as the group-wide supervisor of such insurance group.
(2) Prior to issuing any determination or acknowledgment under this section, the commissioner shall notify the member insurance company registered pursuant to section 38a-135 of the general statutes and the ultimate controlling person, of an internationally active insurance group, of such pending determination or acknowledgment. The commissioner shall provide the internationally active insurance group at least thirty calendar days to submit any additional information pertinent to such determination or acknowledgment that is requested by the commissioner or that such insurance group chooses to submit. The department shall notify such insurance company and ultimate controlling person of its determination or acknowledgment and shall post on the Insurance Department's Internet web site a current list of internationally active insurance groups the commissioner has determined are subject to group-wide supervision by the commissioner.
(d) The commissioner may conduct and coordinate the following activities for an internationally active insurance group for which the commissioner is the group-wide supervisor:
(1) Assess, pursuant to section 38a-14a of the general statutes, as amended by this act, the enterprise risks within the internationally active insurance group to ensure that material financial conditions of and liquidity risks to the members of such insurance group that are engaged in the business of insurance are identified by management and that reasonable and effective mitigation measures are in place;
(2) Request from any member of the internationally active insurance group information necessary and appropriate to assess enterprise risk, including, but not limited to, information about governance, risk assessment and management, capital adequacy and material intercompany transactions;
(3) Compel development and implementation of reasonable measures designed to ensure the internationally active insurance group is able to timely recognize and mitigate material risks to the members of such insurance group that are engaged in the business of insurance;
(4) Communicate with insurance regulatory officials of the members of the internationally active insurance group and share relevant information, subject to the confidentiality provisions of section 38a-137 of the general statutes, as amended by this act, through a supervisory college, as set forth in subsection (n) of section 38a-135 of the general statutes;
(5) Enter into agreements with or obtain documentation from any member insurance company registered pursuant to section 38a-135 of the general statutes, any other member of the internationally active insurance group and any chief insurance regulatory official of another jurisdiction, to establish or clarify the commissioner's role as group-wide supervisor and that may include provisions for resolving disputes with other relevant supervisory authorities. No such agreement or documentation shall serve as evidence that an insurance company or person within an insurance company holding system that is not incorporated in this state is doing business in this state or is otherwise subject to the jurisdiction of this state; and
(6) Other activities deemed appropriate by the commissioner to effectuate the purposes of this section and sections 38a-129 to 38a-140, inclusive, of the general statutes, as amended by this act.
(e) If the commissioner acknowledges that a regulatory official of a jurisdiction not accredited by NAIC is the group-wide supervisor of an internationally active insurance group, the commissioner shall reasonably cooperate through a supervisory college or otherwise with group supervision undertaken by such group-wide supervisor, provided such cooperation is in compliance with the laws of this state and such group-wide supervisor recognizes and cooperates with the commissioner's activities as a group-wide supervisor for other internationally active insurance groups, where applicable. The commissioner may refuse to cooperate if the commissioner determines such recognition and cooperation are not reasonably reciprocated. The commissioner may enter into agreements with or obtain documentation from any member insurance company registered pursuant to section 38a-135 of the general statutes, any affiliate of such insurance company and any regulatory official of another jurisdiction serving as the group-wide supervisor of an internationally active insurance group, to establish or clarify such official's role as group-wide supervisor.
(f) The commissioner may adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, to carry out the provisions of this section.
(g) An insurance company registered pursuant to section 38a-135 of the general statutes and subject to this section shall be liable for and shall pay the reasonable expenses of the commissioner's administration of this section, including the engagement of the services of attorneys, actuaries and other professionals and all reasonable travel expenses.
Sec. 2. Subsection (a) of section 38a-14a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):
(a) With regard to any insurance company registered under section 38a-135, subject to the limitation contained in this section and in addition to the powers that the Insurance Commissioner has under sections 38a-14 and 38a-15 relating to the examination of insurance companies, the commissioner shall have the power to:
(1) Examine such company or its affiliates to ascertain the financial condition of the company, including the enterprise risk of such company by (A) the company's ultimate controlling person, (B) any member or combination of members within its insurance holding company system, or (C) its insurance holding company system on a consolidated basis; and
(2) (A) Order such company to produce such records, books or other information in the possession of the insurance company or its affiliates as are reasonably necessary to determine compliance with sections 38a-129 to 38a-140, inclusive, as amended by this act, and section 1 of this act. In the event such insurance company fails to comply with such order, the commissioner shall have the power to examine any such affiliate to obtain such information.
(B) The commissioner may order the registered insurance company to produce records, books or other information not in its possession if the company can obtain access to such records, books or other information pursuant to a contractual agreement, a statutory obligation or other method. If the insurance company cannot obtain access to such records, books or other information, the company shall provide to the commissioner a detailed explanation of the reason the company cannot obtain the requested records, books or other information, and the identity of the holder of such records, books or other information. If the commissioner deems the explanation to be without merit, the delay in producing the requested records, books or other information under this subparagraph shall be grounds for administrative action in accordance with subsection (c) of section 38a-41.
Sec. 3. Subsection (a) of section 38a-137 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):
(a) All information, documents, materials and copies thereof obtained by or disclosed to the commissioner or any other person in the course of an examination or investigation made pursuant to section 38a-14a and all information reported, furnished or filed pursuant to sections 38a-135 and 38a-136 and section 1 of this act shall (1) be confidential by law and privileged, (2) not be subject to disclosure under section 1-210, (3) not be subject to subpoena, and (4) not be subject to discovery or admissible in evidence in any civil action. The commissioner shall not make such information, documents, materials or copies public without the prior written consent of the insurance company to which it pertains unless the commissioner, after giving the insurance company and its affiliates who would be affected thereby notice and opportunity to be heard, determines that the interests of policyholders, securityholders or the public will be served by the publication thereof, in which event the commissioner may publish all or any part thereof in such manner as the commissioner may deem appropriate. The commissioner may use such information, documents, materials or copies in the furtherance of any regulatory or legal action brought as part of the commissioner's official duties.
Sec. 4. Subsection (b) of section 38a-129 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):
(b) As used in sections 38a-129 to 38a-140, inclusive, and section 1 of this act, the following terms shall have the respective meanings hereinafter set forth, unless the context shall otherwise require:
(1) "Affiliate" or "affiliated" has the same meaning as provided in section 38a-1;
(2) "Commissioner" means the Insurance Commissioner and any assistant to the Insurance Commissioner designated and authorized by the commissioner while acting under such designation;
(3) "Control", "controlled by" or "under common control with" has the same meaning as provided in section 38a-1. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, ten per cent or more of the voting securities of any other person. This presumption may be rebutted by a showing that control does not exist in fact. The commissioner may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support the determination, that control exists in fact, notwithstanding the absence of a presumption to that effect;
(4) "Enterprise risk" means any activity, circumstance, event or series of events involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect upon the financial condition or liquidity of the insurer or the insurer's insurance holding company system as a whole, including, but not limited to, any activity, circumstance, event or series of events that would cause an insurer's risk-based capital to fall below minimum threshold levels, as described in subsection (d) of section 38a-72 or, for a health care center, in subdivision (2) of subsection (a) of section 38a-193, or would cause the insurer to be in a hazardous financial condition;
(5) "Insurance holding company system" means two or more affiliated persons, one or more of which is an insurance company;
(6) "Insurance company" or "insurer" has the same meaning as provided in section 38a-1, except that it does not include agencies, authorities or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state;
(7) "NAIC" means the National Association of Insurance Commissioners;
(8) "Person" has the same meaning as provided in section 38a-1, or any combination of persons so defined acting in concert;
(9) A "securityholder" of a specified person means one who owns any security of such person, including common stock, preferred stock, debt obligations and any other security convertible into or evidencing the right to acquire any of the foregoing;
(10) "Subsidiary" has the same meaning as provided in section 38a-1;
(11) "Voting security" includes any security convertible into or evidencing a right to acquire a voting security.
This act shall take effect as follows and shall amend the following sections:
Section 1 October 1, 2014 New section
Sec. 2 October 1, 2014 38a-14a(a)
Sec. 3 October 1, 2014 38a-137(a)
Sec. 4 October 1, 2014 38a-129(b)
This act shall take effect as follows and shall amend the following sections:
Section 1
October 1, 2014
New section
Sec. 2
October 1, 2014
38a-14a(a)
Sec. 3
October 1, 2014
38a-137(a)
Sec. 4
October 1, 2014
38a-129(b)
INS Joint Favorable
INS
Joint Favorable