23 HB 294/AP
H. B. 294
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House Bill 294 (AS PASSED HOUSE AND SENATE)
By: Representatives DeLoach of the 167
th
, Lumsden of the 12
th
, Williams of the 148
th
, and
Taylor of the 173
rd
A BILL TO BE ENTITLED
AN ACT
To amend Title 33 of the Official Code of Georgia Annotated, relating to insurance, so as to
1
provide for additional value-added products or services that are excluded from being unfair2
trade practices and unlawful inducements in insurance; to allow an insurer or insurance3
producer to offer or provide a value-added product or service that enhances the health or4
financial wellness of a customer, incentivizes behavioral changes of a customer, or assists5
in the administration of employee or retiree benefit insurance coverage; to provide for the6
administration of contracts reinsuring life, disability income, health, or long-term care7
policies or annuities issued by a ceding insurer that has been placed into liquidation; to8
provide for a guaranty association to elect to assume the rights and obligations of a ceding9
insurer; to provide for duties, rights, and obligations of such association, the reinsurer, and10
the receiver; to provide for time restrictions for certain actions; to provide for mandatory11
negotiation; to provide for arbitration; to provide for construction; to provide for related12
matters; to provide for an effective date; to repeal conflicting laws; and for other purposes.13
BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:14
SECTION 1.15
"33-24-59.31.16 23 HB 294/AP
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(a) For purposes of this Code section, the term 'customer' means a policyholder, potential17
policyholder, certificate holder, potential certificate holder, insured, potential insured, or18
applicant.19
(b) The following shall not be construed as an unfair trade practice under subsection (b)20
of Code Section 33-6-4 or an unlawful inducement under subsection (c) of Code21
Section 33-9-36:22
(1) An insurer or insurance producer, by or through employees, affiliates, or third-party23
representatives, may offer or provide a value-added product or service to a customer at24
no or reduced cost when such product or service is not specified in the policy of insurance25
when:26
(A) The value-added product or service relates to the insurance coverage;27
(B) The value-added product or service is offered in a manner that is not unfairly28
discriminatory, and the availability of the value-added product or service is based on29
documented objective criteria that is maintained by the insurer or insurance producer30
and produced upon request by the Commissioner;31
(C) The cost to the insurer or insurance producer for offering or providing the32
value-added product or service is reasonable in comparison to the premiums or33
insurance coverage for the policy class; and34
(D) The value-added product or service is primarily designed to:35
(i) Provide loss mitigation or loss control;36
(ii) Reduce claim costs or claim settlement costs;37
(iii) Provide education about liability risks or risk of loss to persons or property;38
(iv) Monitor or assess risk, identify sources of risk, or develop strategies for39
eliminating or reducing risk;40
(v) Enhance the health of a customer;41
(vi) Enhance the financial wellness of a customer through items such as education or42
financial planning services;43 23 HB 294/AP
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(v)(vii) Provide post-loss services; or44
(vi)(viii) Incentivize Encourage behavioral changes to improve the health or reduce45
the risk of death or disability of a customer or potential customer that is a46
policyholder, potential policyholder, certificate holder, potential certificate holder,47
insured, potential insured or applicant; or48
(ix) Assist in the administration of employee or retiree benefit insurance coverage;49
and50
(2) When an insurer or insurance producer does not have sufficient evidence but has a51
good-faith belief that the value-added product or service meets the criteria in52
subparagraph (D) of paragraph (1) of this Code section, the insurer or insurance producer53
may offer or provide a value-added product or service in a manner that is not unfairly54
discriminatory as part of a pilot program for no more than a one year. An insurer or55
insurance producer must notify the Commissioner prior to implementing the pilot56
program and may proceed with such program unless the Commissioner objects in writing57
within 21 days of notice."58
SECTION 2.59
Title 33 of the Official Code of Georgia Annotated, relating to insurance, is amended by60
adding a new Code section to read as follows:61
"33-37-31.1.62
(a)(1) For purposes of this Code section, 'guaranty association' means the Georgia Life63
and Health Insurance Guaranty Association created by Chapter 38 of this title or any64
foreign guaranty association as defined in paragraph (10) of Code Section 33-37-3, unless65
context clearly requires a different construction.66
(2) Contracts reinsuring life, disability income, health, or long-term care insurance67
policies or annuities issued by a ceding insurer that has been placed into liquidation68 23 HB 294/AP
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pursuant to this chapter shall be continued, subject to the provisions of this Code section;69
provided, however, that, contracts terminated pursuant to contractual terms prior to the70
date of the order of liquidation or terminated pursuant to the order of liquidation shall be71
subject to the provisions of subsection (i) of this Code section.72
(b)(1) At any time within 180 days of the date of the order of liquidation, a guaranty73
association covering life, disability income, health, or long-term care insurance policies74
or annuities, in whole or in part, may elect to assume the rights and obligations of the75
ceding insurer related to such policies under any one or more reinsurance contracts76
between the ceding insurer and its reinsurers. Any such assumption shall be effective as77
of the date of the order of liquidation. The election shall be made by a guaranty78
association or the National Organization of Life and Health Insurance Guaranty79
Associations on its behalf by sending written notice, return receipt requested, to the80
affected reinsurers.81
(2) To facilitate the decision, the receiver and each affected reinsurer shall make82
available upon request to any affected guaranty association or to the National83
Organization of Life and Health Insurance Guaranty Associations on their behalf copies84
of in-force reinsurance contracts and all related files and records relevant to the85
determination of whether such contracts should be assumed, and notices of any defaults86
under the reinsurance contracts or any known event or condition which with the passage87
of time may become a default under the reinsurance contracts.88
(3) For reinsurance contracts assumed by a guaranty association, the following89
provisions shall apply:90
(A) The guaranty association shall be responsible for all unpaid premiums due under91
the reinsurance contracts, for periods both before and after the date of the order of92
liquidation and shall be responsible for the performance of all other obligations to be93
performed after the date of the order of liquidation;94 23 HB 294/AP
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(B) The guaranty association shall be entitled to any amounts payable by the reinsurer95
under the reinsurance contracts with respect to losses or events that occur in periods on96
or after the date of the order of liquidation;97
(C) The guaranty association and the reinsurer shall, within 30 days following the date98
of such guaranty association's election to assume a reinsurance contract, calculate the99
balance due to or from such association under each reinsurance contract as of the date100
of such election, and such association or reinsurer shall pay any remaining balance due101
the other within 35 days of the date of such election. Any disputes over the amounts102
due to such association or reinsurer shall be resolved by arbitration pursuant to the103
terms of the affected reinsurance contract, or, if the contract contains no arbitration104
clause, pursuant to the provisions of paragraph (3) of subsection (i) of this Code105
section; and106
(D) If the guaranty association or receiver on behalf of such association, within 60 days107
of the date such association's election to assume a reinsurance contract, pays the unpaid108
premiums due for periods both before and after the date of such election that are due109
pursuant to the reinsurance contract, the reinsurer shall not be entitled to terminate the110
reinsurance contract for failure to pay premiums and shall not be entitled to set off any111
unpaid amounts due under other contracts, or unpaid amounts due from parties other112
than such association, against amounts due the such association.113
(c) When, pursuant to court approval provided for in Code Section 33-37-17, a receiver114
continues insurance policies or annuities following an order of liquidation, and the policies115
or annuities are not covered in whole or in part by one or more guaranty associations, the116
receiver may, within 180 days of the date of the order of liquidation, elect to assume the117
rights and obligations of the ceding insurer under any one or more of the reinsurance118
contracts that relate to the policies or annuities; provided, however, that the contracts have119
not been terminated as provided for in subsection (a) of this Code section. Such election120
shall be made by sending written notice, return receipt requested, to the affected reinsurers.121 23 HB 294/AP
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After such notification to affected reinsurers has been made, payment of premiums on the122
reinsurance contracts for the policies and annuities, for periods both before and after the123
date of the order of liquidation, shall be chargeable against the estate as a Class 1124
administrative expense. Amounts paid by the reinsurer on account of losses on the policies125
and annuities shall be to the estate of the ceding insurer.126
(d) During the period from the date of the order of liquidation until the date a guaranty127
association or the receiver elects to assume the rights and obligations of the ceding insurer128
under any one or more of the reinsurance contracts that relate to the policies or annuities129
as provided for in subsection (b) or (c) of this Code section, the guaranty association, the130
receiver, and the reinsurer shall not have any rights or obligations under any reinsurance131
contract that is eligible for assumption by such association or the receiver.132
(e) When a guaranty association or the receiver timely elected to assume a reinsurance133
contract as provided for in subsection (b) or (c) of this Code section, the parties' rights and134
obligations shall be governed by subsection (b) or (c) of this Code section as applicable.135
(f) When a guaranty association or the receiver does not timely elect to assume a136
reinsurance contract pursuant to subsection (b) or (c) of this Code section, the reinsurance137
contract shall be terminated retroactively effective on the date of the order of liquidation138
and subsection (i) of this Code section shall apply.139
(g) When policies of life, disability income, health, or long-term care insurance or140
annuities, or the guaranty association's obligations with respect thereto, are transferred to141
an assuming insurer, reinsurance on the policies or annuities may also be transferred by142
such association for contracts assumed as provided for in subsection (b) of this Code143
section, or by the receiver for contracts assumed as provided for in subsection (c) of this144
Code section; provided, however, that all of the following conditions are met:145
(1) Unless the reinsurer and the assuming insurer agree otherwise, the reinsurance146
contract transferred shall not cover any new policies or annuities in addition to those147
transferred;148 23 HB 294/AP
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(2) The obligations described in subsections (b) and (c) of this Code section shall no149
longer apply with respect to matters arising after the effective date of the transfer; and150
(3) Notice shall be given in writing, return receipt requested, by the transferring party to151
the affected reinsurer not less than 30 days prior to the effective date of the transfer.152
(h) The provisions of this Code section shall, to the extent provided in this Code section,153
supersede the provisions of law or of any affected reinsurance contract that provides for or154
requires any payment of reinsurance proceeds, on account of losses or events that occur in155
periods after the date of the order of liquidation, to the receiver of the ceding insurer or any156
other person. The receiver shall remain entitled to any amounts payable by the reinsurer157
under the reinsurance contracts with respect to losses or events that occur in periods prior158
to the date of the order of liquidation, subject to provisions of this chapter including159
applicable setoff provisions.160
(i) When a reinsurance contract is terminated pursuant to this Code section, the reinsurer161
and the receiver shall commence a mandatory negotiation procedure in accordance with the162
following procedures:163
(1) No later than 30 days after the date of termination, each party shall appoint an actuary164
to determine an estimated sum due as a result of the termination of the reinsurance165
contract calculated in a way expected to make the parties economically indifferent as to166
whether the reinsurance contract continues or terminates, giving due regard to the167
economic effects of the insolvency. The sum shall take into account the present value of168
future cash flows expected under the reinsurance contract and be based on a gross169
premium valuation of net liability using current assumptions that reflect post-insolvency170
experience expectations, with no additional margins, net of any amounts payable and171
receivable, with a market value adjustment to reflect premature sale of assets to fund the172
settlement;173
(2) Within 90 days of the date of termination, each party shall provide the other party174
with its estimate of the sum due as a result of the termination of the reinsurance contract,175 23 HB 294/AP
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together with all relevant documents and other information supporting the estimate. The176
parties shall make a good faith effort to reach an agreement on the sum due;177
(3) If the parties are unable to reach agreement within 90 days following the submission178
of materials as provided for in paragraph (2) of this subsection, either party may initiate179
arbitration proceedings as provided in the reinsurance contract. When the reinsurance180
contract does not contain an arbitration clause, either party may initiate arbitration181
pursuant to this paragraph by providing the other party with a written demand for182
arbitration. Such arbitration shall be conducted pursuant to the following procedures: 183
(A) Venue for the arbitration shall be within the county of the court's jurisdiction or184
another location agreed to by the parties;185
(B) Within 30 days of the responding party's receipt of the arbitration demand, each186
party shall appoint an arbitrator who is a disinterested active or retired officer or187
executive of a life or health insurance or reinsurance company, or other professional188
with no less than ten years' experience in or relating to the field of life or health189
insurance or reinsurance. The two arbitrators shall appoint an independent, impartial,190
disinterested umpire who is an active or retired officer or executive of a life or health191
insurance or reinsurance company, or other professional with no less than ten years'192
experience in the field of life or health insurance or reinsurance. If the arbitrators are193
unable to agree on an umpire, each arbitrator shall provide the other with the names of194
three qualified individuals, each arbitrator shall strike two names for the other's list, and195
the umpire shall be chosen by drawing lots from the remaining individuals;196
(C) Within 60 days following the appointment of the umpire, the parties shall submit197
to the arbitration panel, unless otherwise order by the panel, their estimates of the sum198
due as a result of the termination of the reinsurance contract, together with all relevant199
documents and other information supporting the estimate;200
(D) The time periods set forth in these subsections may be extended upon mutual201
agreement of the parties; and202 23 HB 294/AP
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(E) The panel shall have all powers necessary to conduct the arbitration proceedings203
in a fair and appropriate manner, including the power to request additional information204
from the parties, authorize discovery, hold hearings and hear testimony. The panel also205
may appoint independent actuarial experts, the expense of which shall be shared equally206
between the parties;207
(4) An arbitration panel considering the matters set forth in this subsection shall apply208
the standards set forth in this subsection and shall issue a written award specifying a net209
settlement amount due from one party or the other as a result of the termination of the210
reinsurance contract. The receivership court shall confirm that award absent proof of211
statutory grounds for vacating or modifying arbitration awards under the Federal212
Arbitration Act, P.L. 68-401; and213
(5) If the net settlement amount agreed or awarded as provided for in this subsection is214
payable by the reinsurer, the reinsurer shall pay the amount due to the estate, subject to215
any applicable setoff as provided for in Code Section 33-37-29. If the net settlement216
amount agreed or awarded pursuant to this subsection is payable by the ceding insurer,217
the reinsurer shall be deemed to have a timely filed claim against the estate for that218
amount, which claim shall be paid pursuant to the priority provided for in Code219
Section 33-37-41. The guaranty associations shall not be entitled to receive the net220
settlement amount, except to the extent they are entitled to share in the estate assets as221
creditors of the estate, and shall have no responsibility for the net settlement amount.222
(j) Except as otherwise provided in this Code section, nothing in this Code section shall223
alter or modify the terms and conditions of any reinsurance contract. Nothing in this Code224
section shall abrogate or limit any rights of any reinsurer to claim that it is entitled to225
rescind a reinsurance contract. Nothing in this Code section shall give a policyholder or226
beneficiary an independent cause of action against a reinsurer that is not otherwise set forth227
in the reinsurance contract. Nothing in this Code section shall limit or affect any guaranty228 23 HB 294/AP
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association's rights as a creditor of the estate against the assets of the estate. Nothing in this229
Code section shall apply to reinsurance contracts covering property or casualty risks.230
(k) This Code section and paragraph (20) of Code Section 33-38-7 shall be construed231
together in a manner that is consistent with each other and with the purpose provided for232
in Code Section 33-38-1."233
SECTION 3.234
This Act shall become effective upon its approval by the Governor or upon its becoming law235
without such approval.236
SECTION 4.237
All laws and parts of laws in conflict with this Act are repealed. 238