| 19 | 9 | | provide for additional value-added products or services that are excluded from being unfair2 |
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| 20 | 10 | | trade practices and unlawful inducements in insurance; to allow an insurer or insurance3 |
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| 21 | 11 | | producer to offer or provide a value-added product or service that enhances the health or4 |
|---|
| 22 | 12 | | financial wellness of a customer, incentivizes behavioral changes of a customer, or assists5 |
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| 23 | 13 | | in the administration of employee or retiree benefit insurance coverage; to provide for the6 |
|---|
| 24 | 14 | | administration of contracts reinsuring life, disability income, health, or long-term care7 |
|---|
| 25 | 15 | | policies or annuities issued by a ceding insurer that has been placed into liquidation; to8 |
|---|
| 26 | 16 | | provide for a guaranty association to elect to assume the rights and obligations of a ceding9 |
|---|
| 27 | 17 | | insurer; to provide for duties, rights, and obligations of such association, the reinsurer, and10 |
|---|
| 28 | 18 | | the receiver; to provide for time restrictions for certain actions; to provide for mandatory11 |
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| 29 | 19 | | negotiation; to provide for arbitration; to provide for construction; to provide for related12 |
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| 30 | 20 | | matters; to provide for an effective date; to repeal conflicting laws; and for other purposes.13 |
|---|
| 36 | 25 | | (a) For purposes of this Code section, the term 'customer' means a policyholder, potential17 |
|---|
| 37 | 26 | | policyholder, certificate holder, potential certificate holder, insured, potential insured, or18 |
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| 38 | 27 | | applicant.19 |
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| 39 | 28 | | (b) The following shall not be construed as an unfair trade practice under subsection (b)20 |
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| 40 | 29 | | of Code Section 33-6-4 or an unlawful inducement under subsection (c) of Code21 |
|---|
| 41 | 30 | | Section 33-9-36:22 |
|---|
| 42 | 31 | | (1) An insurer or insurance producer, by or through employees, affiliates, or third-party23 |
|---|
| 43 | 32 | | representatives, may offer or provide a value-added product or service to a customer at24 |
|---|
| 44 | 33 | | no or reduced cost when such product or service is not specified in the policy of insurance25 |
|---|
| 45 | 34 | | when:26 |
|---|
| 46 | 35 | | (A) The value-added product or service relates to the insurance coverage;27 |
|---|
| 47 | 36 | | (B) The value-added product or service is offered in a manner that is not unfairly28 |
|---|
| 48 | 37 | | discriminatory, and the availability of the value-added product or service is based on29 |
|---|
| 49 | 38 | | documented objective criteria that is maintained by the insurer or insurance producer30 |
|---|
| 50 | 39 | | and produced upon request by the Commissioner;31 |
|---|
| 51 | 40 | | (C) The cost to the insurer or insurance producer for offering or providing the32 |
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| 52 | 41 | | value-added product or service is reasonable in comparison to the premiums or33 |
|---|
| 53 | 42 | | insurance coverage for the policy class; and34 |
|---|
| 54 | 43 | | (D) The value-added product or service is primarily designed to:35 |
|---|
| 55 | 44 | | (i) Provide loss mitigation or loss control;36 |
|---|
| 56 | 45 | | (ii) Reduce claim costs or claim settlement costs;37 |
|---|
| 57 | 46 | | (iii) Provide education about liability risks or risk of loss to persons or property;38 |
|---|
| 58 | 47 | | (iv) Monitor or assess risk, identify sources of risk, or develop strategies for39 |
|---|
| 59 | 48 | | eliminating or reducing risk;40 |
|---|
| 65 | 53 | | (v)(vii) Provide post-loss services; or44 |
|---|
| 66 | 54 | | (vi)(viii) Incentivize Encourage behavioral changes to improve the health or reduce45 |
|---|
| 67 | 55 | | the risk of death or disability of a customer or potential customer that is a46 |
|---|
| 68 | 56 | | policyholder, potential policyholder, certificate holder, potential certificate holder,47 |
|---|
| 69 | 57 | | insured, potential insured or applicant; or48 |
|---|
| 70 | 58 | | (ix) Assist in the administration of employee or retiree benefit insurance coverage;49 |
|---|
| 71 | 59 | | and50 |
|---|
| 72 | 60 | | (2) When an insurer or insurance producer does not have sufficient evidence but has a51 |
|---|
| 73 | 61 | | good-faith belief that the value-added product or service meets the criteria in52 |
|---|
| 74 | 62 | | subparagraph (D) of paragraph (1) of this Code section, the insurer or insurance producer53 |
|---|
| 75 | 63 | | may offer or provide a value-added product or service in a manner that is not unfairly54 |
|---|
| 76 | 64 | | discriminatory as part of a pilot program for no more than a one year. An insurer or55 |
|---|
| 77 | 65 | | insurance producer must notify the Commissioner prior to implementing the pilot56 |
|---|
| 78 | 66 | | program and may proceed with such program unless the Commissioner objects in writing57 |
|---|
| 79 | 67 | | within 21 days of notice."58 |
|---|
| 80 | 68 | | SECTION 2.59 |
|---|
| 81 | 69 | | Title 33 of the Official Code of Georgia Annotated, relating to insurance, is amended by60 |
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| 82 | 70 | | adding a new Code section to read as follows:61 |
|---|
| 83 | 71 | | "33-37-31.1.62 |
|---|
| 84 | 72 | | (a)(1) For purposes of this Code section, 'guaranty association' means the Georgia Life63 |
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| 85 | 73 | | and Health Insurance Guaranty Association created by Chapter 38 of this title or any64 |
|---|
| 86 | 74 | | foreign guaranty association as defined in paragraph (10) of Code Section 33-37-3, unless65 |
|---|
| 92 | 79 | | pursuant to this chapter shall be continued, subject to the provisions of this Code section;69 |
|---|
| 93 | 80 | | provided, however, that, contracts terminated pursuant to contractual terms prior to the70 |
|---|
| 94 | 81 | | date of the order of liquidation or terminated pursuant to the order of liquidation shall be71 |
|---|
| 95 | 82 | | subject to the provisions of subsection (i) of this Code section.72 |
|---|
| 96 | 83 | | (b)(1) At any time within 180 days of the date of the order of liquidation, a guaranty73 |
|---|
| 97 | 84 | | association covering life, disability income, health, or long-term care insurance policies74 |
|---|
| 98 | 85 | | or annuities, in whole or in part, may elect to assume the rights and obligations of the75 |
|---|
| 99 | 86 | | ceding insurer related to such policies under any one or more reinsurance contracts76 |
|---|
| 100 | 87 | | between the ceding insurer and its reinsurers. Any such assumption shall be effective as77 |
|---|
| 101 | 88 | | of the date of the order of liquidation. The election shall be made by a guaranty78 |
|---|
| 102 | 89 | | association or the National Organization of Life and Health Insurance Guaranty79 |
|---|
| 103 | 90 | | Associations on its behalf by sending written notice, return receipt requested, to the80 |
|---|
| 104 | 91 | | affected reinsurers.81 |
|---|
| 105 | 92 | | (2) To facilitate the decision, the receiver and each affected reinsurer shall make82 |
|---|
| 106 | 93 | | available upon request to any affected guaranty association or to the National83 |
|---|
| 107 | 94 | | Organization of Life and Health Insurance Guaranty Associations on their behalf copies84 |
|---|
| 108 | 95 | | of in-force reinsurance contracts and all related files and records relevant to the85 |
|---|
| 109 | 96 | | determination of whether such contracts should be assumed, and notices of any defaults86 |
|---|
| 110 | 97 | | under the reinsurance contracts or any known event or condition which with the passage87 |
|---|
| 111 | 98 | | of time may become a default under the reinsurance contracts.88 |
|---|
| 112 | 99 | | (3) For reinsurance contracts assumed by a guaranty association, the following89 |
|---|
| 113 | 100 | | provisions shall apply:90 |
|---|
| 114 | 101 | | (A) The guaranty association shall be responsible for all unpaid premiums due under91 |
|---|
| 120 | 106 | | (B) The guaranty association shall be entitled to any amounts payable by the reinsurer95 |
|---|
| 121 | 107 | | under the reinsurance contracts with respect to losses or events that occur in periods on96 |
|---|
| 122 | 108 | | or after the date of the order of liquidation;97 |
|---|
| 123 | 109 | | (C) The guaranty association and the reinsurer shall, within 30 days following the date98 |
|---|
| 124 | 110 | | of such guaranty association's election to assume a reinsurance contract, calculate the99 |
|---|
| 125 | 111 | | balance due to or from such association under each reinsurance contract as of the date100 |
|---|
| 126 | 112 | | of such election, and such association or reinsurer shall pay any remaining balance due101 |
|---|
| 127 | 113 | | the other within 35 days of the date of such election. Any disputes over the amounts102 |
|---|
| 128 | 114 | | due to such association or reinsurer shall be resolved by arbitration pursuant to the103 |
|---|
| 129 | 115 | | terms of the affected reinsurance contract, or, if the contract contains no arbitration104 |
|---|
| 130 | 116 | | clause, pursuant to the provisions of paragraph (3) of subsection (i) of this Code105 |
|---|
| 131 | 117 | | section; and106 |
|---|
| 132 | 118 | | (D) If the guaranty association or receiver on behalf of such association, within 60 days107 |
|---|
| 133 | 119 | | of the date such association's election to assume a reinsurance contract, pays the unpaid108 |
|---|
| 134 | 120 | | premiums due for periods both before and after the date of such election that are due109 |
|---|
| 135 | 121 | | pursuant to the reinsurance contract, the reinsurer shall not be entitled to terminate the110 |
|---|
| 136 | 122 | | reinsurance contract for failure to pay premiums and shall not be entitled to set off any111 |
|---|
| 137 | 123 | | unpaid amounts due under other contracts, or unpaid amounts due from parties other112 |
|---|
| 138 | 124 | | than such association, against amounts due the such association.113 |
|---|
| 139 | 125 | | (c) When, pursuant to court approval provided for in Code Section 33-37-17, a receiver114 |
|---|
| 140 | 126 | | continues insurance policies or annuities following an order of liquidation, and the policies115 |
|---|
| 141 | 127 | | or annuities are not covered in whole or in part by one or more guaranty associations, the116 |
|---|
| 142 | 128 | | receiver may, within 180 days of the date of the order of liquidation, elect to assume the117 |
|---|
| 143 | 129 | | rights and obligations of the ceding insurer under any one or more of the reinsurance118 |
|---|
| 149 | 134 | | After such notification to affected reinsurers has been made, payment of premiums on the122 |
|---|
| 150 | 135 | | reinsurance contracts for the policies and annuities, for periods both before and after the123 |
|---|
| 151 | 136 | | date of the order of liquidation, shall be chargeable against the estate as a Class 1124 |
|---|
| 152 | 137 | | administrative expense. Amounts paid by the reinsurer on account of losses on the policies125 |
|---|
| 153 | 138 | | and annuities shall be to the estate of the ceding insurer.126 |
|---|
| 154 | 139 | | (d) During the period from the date of the order of liquidation until the date a guaranty127 |
|---|
| 155 | 140 | | association or the receiver elects to assume the rights and obligations of the ceding insurer128 |
|---|
| 156 | 141 | | under any one or more of the reinsurance contracts that relate to the policies or annuities129 |
|---|
| 157 | 142 | | as provided for in subsection (b) or (c) of this Code section, the guaranty association, the130 |
|---|
| 158 | 143 | | receiver, and the reinsurer shall not have any rights or obligations under any reinsurance131 |
|---|
| 159 | 144 | | contract that is eligible for assumption by such association or the receiver.132 |
|---|
| 160 | 145 | | (e) When a guaranty association or the receiver timely elected to assume a reinsurance133 |
|---|
| 161 | 146 | | contract as provided for in subsection (b) or (c) of this Code section, the parties' rights and134 |
|---|
| 162 | 147 | | obligations shall be governed by subsection (b) or (c) of this Code section as applicable.135 |
|---|
| 163 | 148 | | (f) When a guaranty association or the receiver does not timely elect to assume a136 |
|---|
| 164 | 149 | | reinsurance contract pursuant to subsection (b) or (c) of this Code section, the reinsurance137 |
|---|
| 165 | 150 | | contract shall be terminated retroactively effective on the date of the order of liquidation138 |
|---|
| 166 | 151 | | and subsection (i) of this Code section shall apply.139 |
|---|
| 167 | 152 | | (g) When policies of life, disability income, health, or long-term care insurance or140 |
|---|
| 168 | 153 | | annuities, or the guaranty association's obligations with respect thereto, are transferred to141 |
|---|
| 169 | 154 | | an assuming insurer, reinsurance on the policies or annuities may also be transferred by142 |
|---|
| 170 | 155 | | such association for contracts assumed as provided for in subsection (b) of this Code143 |
|---|
| 171 | 156 | | section, or by the receiver for contracts assumed as provided for in subsection (c) of this144 |
|---|
| 178 | 162 | | (2) The obligations described in subsections (b) and (c) of this Code section shall no149 |
|---|
| 179 | 163 | | longer apply with respect to matters arising after the effective date of the transfer; and150 |
|---|
| 180 | 164 | | (3) Notice shall be given in writing, return receipt requested, by the transferring party to151 |
|---|
| 181 | 165 | | the affected reinsurer not less than 30 days prior to the effective date of the transfer.152 |
|---|
| 182 | 166 | | (h) The provisions of this Code section shall, to the extent provided in this Code section,153 |
|---|
| 183 | 167 | | supersede the provisions of law or of any affected reinsurance contract that provides for or154 |
|---|
| 184 | 168 | | requires any payment of reinsurance proceeds, on account of losses or events that occur in155 |
|---|
| 185 | 169 | | periods after the date of the order of liquidation, to the receiver of the ceding insurer or any156 |
|---|
| 186 | 170 | | other person. The receiver shall remain entitled to any amounts payable by the reinsurer157 |
|---|
| 187 | 171 | | under the reinsurance contracts with respect to losses or events that occur in periods prior158 |
|---|
| 188 | 172 | | to the date of the order of liquidation, subject to provisions of this chapter including159 |
|---|
| 189 | 173 | | applicable setoff provisions.160 |
|---|
| 190 | 174 | | (i) When a reinsurance contract is terminated pursuant to this Code section, the reinsurer161 |
|---|
| 191 | 175 | | and the receiver shall commence a mandatory negotiation procedure in accordance with the162 |
|---|
| 192 | 176 | | following procedures:163 |
|---|
| 193 | 177 | | (1) No later than 30 days after the date of termination, each party shall appoint an actuary164 |
|---|
| 194 | 178 | | to determine an estimated sum due as a result of the termination of the reinsurance165 |
|---|
| 195 | 179 | | contract calculated in a way expected to make the parties economically indifferent as to166 |
|---|
| 196 | 180 | | whether the reinsurance contract continues or terminates, giving due regard to the167 |
|---|
| 197 | 181 | | economic effects of the insolvency. The sum shall take into account the present value of168 |
|---|
| 198 | 182 | | future cash flows expected under the reinsurance contract and be based on a gross169 |
|---|
| 199 | 183 | | premium valuation of net liability using current assumptions that reflect post-insolvency170 |
|---|
| 207 | 190 | | together with all relevant documents and other information supporting the estimate. The176 |
|---|
| 208 | 191 | | parties shall make a good faith effort to reach an agreement on the sum due;177 |
|---|
| 209 | 192 | | (3) If the parties are unable to reach agreement within 90 days following the submission178 |
|---|
| 210 | 193 | | of materials as provided for in paragraph (2) of this subsection, either party may initiate179 |
|---|
| 211 | 194 | | arbitration proceedings as provided in the reinsurance contract. When the reinsurance180 |
|---|
| 212 | 195 | | contract does not contain an arbitration clause, either party may initiate arbitration181 |
|---|
| 213 | 196 | | pursuant to this paragraph by providing the other party with a written demand for182 |
|---|
| 214 | 197 | | arbitration. Such arbitration shall be conducted pursuant to the following procedures: 183 |
|---|
| 215 | 198 | | (A) Venue for the arbitration shall be within the county of the court's jurisdiction or184 |
|---|
| 216 | 199 | | another location agreed to by the parties;185 |
|---|
| 217 | 200 | | (B) Within 30 days of the responding party's receipt of the arbitration demand, each186 |
|---|
| 218 | 201 | | party shall appoint an arbitrator who is a disinterested active or retired officer or187 |
|---|
| 219 | 202 | | executive of a life or health insurance or reinsurance company, or other professional188 |
|---|
| 220 | 203 | | with no less than ten years' experience in or relating to the field of life or health189 |
|---|
| 221 | 204 | | insurance or reinsurance. The two arbitrators shall appoint an independent, impartial,190 |
|---|
| 222 | 205 | | disinterested umpire who is an active or retired officer or executive of a life or health191 |
|---|
| 223 | 206 | | insurance or reinsurance company, or other professional with no less than ten years'192 |
|---|
| 224 | 207 | | experience in the field of life or health insurance or reinsurance. If the arbitrators are193 |
|---|
| 225 | 208 | | unable to agree on an umpire, each arbitrator shall provide the other with the names of194 |
|---|
| 226 | 209 | | three qualified individuals, each arbitrator shall strike two names for the other's list, and195 |
|---|
| 227 | 210 | | the umpire shall be chosen by drawing lots from the remaining individuals;196 |
|---|
| 228 | 211 | | (C) Within 60 days following the appointment of the umpire, the parties shall submit197 |
|---|
| 236 | 218 | | (E) The panel shall have all powers necessary to conduct the arbitration proceedings203 |
|---|
| 237 | 219 | | in a fair and appropriate manner, including the power to request additional information204 |
|---|
| 238 | 220 | | from the parties, authorize discovery, hold hearings and hear testimony. The panel also205 |
|---|
| 239 | 221 | | may appoint independent actuarial experts, the expense of which shall be shared equally206 |
|---|
| 240 | 222 | | between the parties;207 |
|---|
| 241 | 223 | | (4) An arbitration panel considering the matters set forth in this subsection shall apply208 |
|---|
| 242 | 224 | | the standards set forth in this subsection and shall issue a written award specifying a net209 |
|---|
| 243 | 225 | | settlement amount due from one party or the other as a result of the termination of the210 |
|---|
| 244 | 226 | | reinsurance contract. The receivership court shall confirm that award absent proof of211 |
|---|
| 245 | 227 | | statutory grounds for vacating or modifying arbitration awards under the Federal212 |
|---|
| 246 | 228 | | Arbitration Act, P.L. 68-401; and213 |
|---|
| 247 | 229 | | (5) If the net settlement amount agreed or awarded as provided for in this subsection is214 |
|---|
| 248 | 230 | | payable by the reinsurer, the reinsurer shall pay the amount due to the estate, subject to215 |
|---|
| 249 | 231 | | any applicable setoff as provided for in Code Section 33-37-29. If the net settlement216 |
|---|
| 250 | 232 | | amount agreed or awarded pursuant to this subsection is payable by the ceding insurer,217 |
|---|
| 251 | 233 | | the reinsurer shall be deemed to have a timely filed claim against the estate for that218 |
|---|
| 252 | 234 | | amount, which claim shall be paid pursuant to the priority provided for in Code219 |
|---|
| 253 | 235 | | Section 33-37-41. The guaranty associations shall not be entitled to receive the net220 |
|---|
| 254 | 236 | | settlement amount, except to the extent they are entitled to share in the estate assets as221 |
|---|
| 255 | 237 | | creditors of the estate, and shall have no responsibility for the net settlement amount.222 |
|---|
| 256 | 238 | | (j) Except as otherwise provided in this Code section, nothing in this Code section shall223 |
|---|
| 257 | 239 | | alter or modify the terms and conditions of any reinsurance contract. Nothing in this Code224 |
|---|
| 264 | 245 | | association's rights as a creditor of the estate against the assets of the estate. Nothing in this229 |
|---|
| 265 | 246 | | Code section shall apply to reinsurance contracts covering property or casualty risks.230 |
|---|
| 266 | 247 | | (k) This Code section and paragraph (20) of Code Section 33-38-7 shall be construed231 |
|---|
| 267 | 248 | | together in a manner that is consistent with each other and with the purpose provided for232 |
|---|
| 268 | 249 | | in Code Section 33-38-1."233 |
|---|
| 269 | 250 | | SECTION 3.234 |
|---|
| 270 | 251 | | This Act shall become effective upon its approval by the Governor or upon its becoming law235 |
|---|
| 271 | 252 | | without such approval.236 |
|---|
| 272 | 253 | | SECTION 4.237 |
|---|
| 273 | 254 | | All laws and parts of laws in conflict with this Act are repealed. 238 |
|---|