ENROLLED
ACT No. 713
2022 Regular Session
HOUSE BILL NO. 715
BY REPRESENTATIVE GREEN
1 AN ACT
2 To amend and reenact R.S. 22:691.2(introductory paragraph), 691.6(D), (M), and (N), and
3 691.10(A), (C)(1), (3), (4), and (F) and to enact R.S. 22:691.2(13) through (15),
4 691.6(O) and (P), 691.7(A)(1)(g) through (i) and (6), and 691.10(G), relative to the
5 Insurance Holding Company System Regulatory Law; to provide for definitions; to
6 provide for a group capital calculation; to provide for a liquidity stress test; to
7 provide for the continuity of essential services and functions provided by affiliates;
8 to provide for jurisdiction of the rehabilitation court; to provide for a bond or deposit
9 requirement; to provide for the ownership of the records of an insurer; to provide for
10 confidentiality; and to provide for related matters.
11 Be it enacted by the Legislature of Louisiana:
12 Section 1. R.S. 22:691.2(introductory paragraph), 691.6(D), (M), and (N), and
13 691.10(A), (C)(1), (3), (4), and (F) are hereby amended and reenacted and R.S. 22:691.2(13)
14 through (15), 691.6(O) and (P), 691.7(A)(1)(g) through (i) and (6), and 691.10(G) are hereby
15 enacted to read as follows:
16 §691.2. Definitions
17 As used in this Subpart, the following terms shall have these meanings unless
18 the context shall otherwise require: the meaning ascribed in this Section unless the
19 context clearly requires otherwise:
20 * * *
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1 (13) "Group capital calculation instructions" means the group capital
2 calculation instructions as adopted by the NAIC and as amended by the NAIC in
3 accordance with the procedures adopted by the NAIC.
4 (14) "NAIC liquidity stress test framework" means the separate NAIC
5 publication which includes a history of the NAIC's development of regulatory
6 liquidity stress testing, the scope criteria applicable for a specific data year, and the
7 liquidity stress test instructions and reporting templates for a specific data year, such
8 scope criteria, instructions and reporting template being as adopted by the NAIC and
9 amended by the NAIC in accordance with the procedures adopted by the NAIC.
10 (15) "Scope criteria" as detailed in the NAIC liquidity stress test framework
11 means the designated exposure bases along with minimum magnitudes thereof for
12 the specific data year, used to establish a preliminary list of insurers considered
13 scoped into the NAIC liquidity stress test framework for that data year.
14 (16) "Federal reserve" means the Board of Governors of the Federal Reserve
15 System, as provided in 12 U.S.C. 241.
16 (17) "NAIC" means the National Association of Insurance Commissioners.
17 * * *
18 §691.6. Registration of insurers
19 * * *
20 D. Materiality. No information need be disclosed on the registration
21 statement filed pursuant to Subsection B of this Section if the information is not
22 material for the purposes of this Section. Unless the commissioner by rule,
23 regulation, or order provides otherwise: sales, purchases, exchanges, loans, or
24 extensions of credit, investments, or guarantees involving one-half of one percent or
25 less of an insurer's admitted assets as of the thirty-first day of December next
26 preceding shall not be deemed material for purposes of this Section. The definition
27 of materiality provided in this Subsection shall not apply for the purposes of the
28 group capital calculation or the liquidity stress test framework.
29 * * *
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1 M.(1) Group capital calculation. Except as provided in Paragraph (2) of this
2 Subsection, the ultimate controlling person of every insurer subject to registration
3 shall concurrently file, with the registration, an annual group capital calculation as
4 directed by the lead state commissioner. The report shall be completed in
5 accordance with the NAIC group capital calculation instructions, which may permit
6 the lead state commissioner to allow a controlling person that is not the ultimate
7 controlling person to file the group capital calculation. The report shall be filed with
8 the lead state commissioner of the insurance holding company system as determined
9 by the commissioner in accordance with the procedures within the Financial
10 Analysis Handbook adopted by the NAIC.
11 (2) The following insurance holding company systems are exempt from
12 filing the group capital calculation:
13 (a) An insurance holding company system that has only one insurer within
14 its holding company structure, that only writes business and is only authorized in its
15 domestic state, and assumes no business from any other insurer.
16 (b) An insurance holding company system that is required to perform a
17 group capital calculation specified by the federal reserve. The lead state
18 commissioner shall request the calculation from the federal reserve under the terms
19 of information sharing agreements in effect. If the federal reserve cannot share the
20 calculation with the lead state commissioner, the insurance holding company system
21 is not exempt from the group capital calculation filing.
22 (c) An insurance holding company system with a supervisor whose group-
23 wide supervisor is not based in the United States and is located within a reciprocal
24 jurisdiction as described in R.S. 22:651(F) that recognizes the U.S. state regulatory
25 approach to group supervision and group capital.
26 (d) An insurance holding company system that meets all of the following
27 criteria:
28 (i) It provides information to the lead state that meets the requirements for
29 accreditation under the NAIC financial standards and accreditation program, either
30 directly or indirectly through the group-wide supervisor, who has determined such
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1 information is satisfactory to allow the lead state to comply with the NAIC group
2 supervision approach, as detailed in the NAIC Financial Analysis Handbook.
3 (ii) The group-wide supervisor not based in the United States, that is not in
4 a reciprocal jurisdiction, recognizes and accepts, as specified by the commissioner
5 in regulation, the group capital calculation as the world-wide group capital
6 assessment for United States insurance groups who operate in that jurisdiction.
7 (3) Notwithstanding the provisions of Subparagraphs (2)(c) and (d) of this
8 Subsection, a lead state commissioner shall require the group capital calculation for
9 United States operations of any insurance holding company system not based in the
10 United States if, after any necessary consultation with other supervisors or officials,
11 it is deemed appropriate by the lead state commissioner for prudential oversight and
12 solvency monitoring purposes or for ensuring the competitiveness of the insurance
13 marketplace.
14 (4) Notwithstanding the exemptions from filing the group capital calculation
15 in Subparagraphs (2)(c) and (d) of this Subsection, the lead state commissioner has
16 the discretion to exempt the ultimate controlling person from filing the annual group
17 capital calculation or to accept a limited group capital filing or report in accordance
18 with the criteria as specified by the commissioner through rules and regulations.
19 (5) If the commissioner determines that an insurance holding company
20 system no longer meets one or more of the requirements for an exemption from
21 filing the group capital calculation pursuant to this Section, the insurance holding
22 company system shall file the group capital calculation at the next annual filing date,
23 unless given an extension by the commissioner based on reasonable grounds shown.
24 N.(1) Liquidity stress test. The ultimate controlling person of every insurer
25 subject to registration and scoped into the NAIC liquidity stress test framework shall
26 file the results of its liquidity stress test. The filing shall be made to the lead state
27 insurance commissioner of the insurance holding company system as determined by
28 the procedures within the Financial Analysis Handbook adopted by the NAIC.
29 (2) The NAIC liquidity stress test framework includes scope criteria
30 applicable to a specific data year. These scope criteria are reviewed at least annually
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1 by the financial stability task force or its successor. Any change to the NAIC
2 liquidity stress test framework or to the data year for which the scope criteria are to
3 be measured shall be effective on the first of January of the year following the
4 calendar year such changes are adopted. Insurers meeting at least one threshold of
5 the scope criteria are considered scoped into the NAIC liquidity stress test
6 framework for the specified data year, unless the lead state insurance commissioner,
7 in consultation with the NAIC Financial Stability Task Force or its successor,
8 determines the insurer should not be scoped into the framework for that data year.
9 Similarly, insurers that do not meet at least one threshold of the scope criteria are
10 considered scoped out of the NAIC liquidity stress test framework for the specified
11 data year, unless the lead state insurance commissioner, in consultation with the
12 NAIC Financial Stability Task Force or its successor, determines the insurer should
13 be scoped into the framework for that data year.
14 (3) The lead state commissioner, in consultation with the NAIC Financial
15 Stability Task Force or its successor, shall address concerns regarding regulators
16 wishing to avoid being scoped in and out of the NAIC liquidity stress test framework
17 on a frequent basis.
18 (4) The performance of, and filing of the results from, a specific year's
19 liquidity stress test shall comply with the NAIC liquidity stress test framework
20 instructions and reporting templates for that year and any lead state insurance
21 commissioner determinations, in conjunction with the NAIC Financial Stability Task
22 Force or its successor, provided within the framework.
23 O. Violations. The failure to file a registration statement or any summary
24 of the registration statement or enterprise risk filing required by this Section within
25 the time specified for filing shall be a violation of this Section.
26 N. P.(1) Incorporation by reference. Any information contained in any
27 financial statement, annual report, proxy statement, statement filed with a
28 governmental authority, or any other document may be incorporated by reference,
29 provided the document is filed as an exhibit to the registration statement. Any
30 excerpt of a document may be filed as an exhibit if the document is extensive. Any
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1 documents currently on file with the commissioner which were filed within three
2 years need not be attached as exhibits, but shall be referred to if not so attached. All
3 references to information contained in exhibits or in documents duly filed shall
4 clearly identify the material and specifically indicate that the material is to be
5 incorporated by reference to the item. No materials shall be incorporated by
6 reference in any instance that the incorporation would render the statement
7 incomplete, unclear, or confusing.
8 (2) If a filing requires a summary or outline of the provisions of any
9 document, only a brief statement shall be made as to the pertinent provisions of the
10 document. In addition to the brief statement, the summary or outline may
11 incorporate, by reference, particular parts of any exhibit or document currently on
12 file with the commissioner which was filed within three years and may be included
13 in its entirety by the reference. In any case where If two or more documents required
14 to be filed as exhibits are substantially identical in all material respects except as to
15 the parties, the dates of execution, or other details, a copy of one of the documents
16 shall be filed with a schedule identifying the omitted documents and setting forth the
17 material details in which such documents differ from the documents filed.
18 §691.7. Standards and management of an insurer within an insurance holding
19 company system
20 A.
21 * * *
22 (1) Transactions within an insurance holding company system to which an
23 insurer subject to registration is a party shall be subject to the following standards:
24 * * *
25 (g)(i) If an insurer is deemed by the commissioner to be in a hazardous
26 financial condition, as defined in regulations promulgated by the commissioner, or
27 a condition that would be grounds for supervision, conservation, or a delinquency
28 proceeding, the commissioner may require the insurer to secure and maintain either
29 a deposit, held by the commissioner, or a bond, as determined by the insurer at the
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1 insurer's discretion, for the duration of the contract or agreement or the existence of
2 the condition for which the commissioner required the deposit or the bond.
3 (ii) In determining whether a deposit or a bond is required, the commissioner
4 may consider whether concerns exist with respect to the affiliated person’s ability
5 to fulfill the contract or agreement, if the insurer were to be put into liquidation.
6 (iii) Once the insurer is deemed to be in a hazardous financial condition or
7 a condition that would be grounds for supervision, conservation, or a delinquency
8 proceeding, such that a deposit or bond is necessary, the commissioner may
9 determine the amount of the deposit or bond, not to exceed the value of the contract
10 or agreement in any one year, and whether such deposit or bond should be required
11 for a single contract, multiple contracts, or a contract with a specific person.
12 (h) All records and data of the insurer held by an affiliate are the property of
13 the insurer, are subject to control of the insurer, are identifiable, and are segregated
14 or readily capable of segregation, at no additional cost to the insurer, from all other
15 persons’ records and data. This includes all records and data that are otherwise the
16 property of the insurer in whatever form maintained, including but not limited to
17 claims and claim files, policyholder lists, application files, litigation files, premium
18 records, rate books, underwriting manuals, personnel records, and financial records
19 or similar records within the possession, custody, or control of the affiliate. At the
20 request of the insurer, the affiliate shall provide that the receiver can obtain a
21 complete set of all records of any type that pertain to the insurer's business, obtain
22 access to the operating systems on which the data is maintained, obtain the software
23 that runs those systems either through assumption of licensing agreements or
24 otherwise, and restrict the use of the data by the affiliate if it is not operating the
25 insurer's business. The affiliate shall provide a waiver of any landlord lien or other
26 encumbrance to give the insurer access to all records and data, if the affiliate defaults
27 under a lease or other agreement.
28 (i) Premiums or other funds belonging to the insurer that are collected by or
29 held by an affiliate are the exclusive property of the insurer and are subject to the
30 control of the insurer. Any right of offset in the event an insurer is placed into
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1 rehabilitation shall be subject to the provisions of Chapter 9 of this Title, R.S.
2 22:2001 et seq.
3 * * *
4 (6)(a) Any affiliate that is party to an agreement or contract with a domestic
5 insurer that is subject to Subparagraph (2)(d) of this Subsection shall be subject to
6 the jurisdiction of any supervision, seizure, conservatorship, or receivership
7 proceedings against the insurer and shall be subject to the authority of any
8 supervisor, conservator, rehabilitator, or liquidator for the insurer appointed
9 pursuant to Subpart H of Part III of Chapter 2 of this Title, R.S. 22:731 et seq., and
10 Chapter 9 of this Title, R.S. 22:2001 et seq., for the purpose of interpreting,
11 enforcing, and overseeing the affiliate’s obligations under the agreement or contract
12 to perform services for the insurer that are any of the following:
13 (i) An integral part of the insurer's operations, including but not limited to
14 management, administrative, accounting, data processing, marketing, underwriting,
15 claims handling, investment, or any other similar functions.
16 (ii) Essential to the insurer's ability to fulfill its obligations under insurance
17 policies.
18 (b) The commissioner may require that an agreement or contract, pursuant
19 to Subparagraph (2)(d) of this Subsection, for the provision of any services described
20 in Items (a)(i) and (ii) of this Paragraph specify that the affiliate consents to the
21 jurisdiction as set forth in this Paragraph.
22 * * *
23 §691.10. Confidential treatment
24 A.(1) Documents, materials, or other information in the possession or control
25 of the Department of Insurance department that are obtained by or disclosed to the
26 commissioner or any other person in the course of an examination or investigation
27 made pursuant to R.S. 22:691.8 and all information reported or provided to the
28 commissioner pursuant to R.S. 22:691.4(B)(12) and (13), 691.6, 691.7, and 691.9.1
29 shall be recognized as proprietary information containing trade secrets, shall be
30 confidential by law and privileged, shall not be subject to subpoena, and shall not be
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1 subject to discovery or admissible in evidence in any private civil action. However,
2 the commissioner is authorized to use the documents, materials, or other information
3 in the furtherance of any regulatory or legal action brought as a part of the
4 commissioner's his official duties. The commissioner shall not otherwise make the
5 documents, materials, or other information public without the prior written consent
6 of the insurer to which it pertains unless the commissioner, after giving the insurer
7 and its affiliates who would be affected thereby notice and opportunity to be heard,
8 determines that the interest of policyholders, shareholders, or the public will be
9 served by the publication thereof, in which event the commissioner may publish all
10 or any part in such manner as may be deemed appropriate.
11 (2) For purposes of the information reported and provided to the department
12 pursuant to R.S. 22:691.6(M), the commissioner shall maintain the confidentiality
13 of the group capital calculation and group capital ratio produced within the
14 calculation and any group capital information received from an insurance holding
15 company supervised by the United States Federal Reserve Board or any U.S. group-
16 wide supervisor.
17 (3) For purposes of the information reported and provided to the department
18 pursuant to R.S. 22:691.6(N), the commissioner shall maintain the confidentiality of
19 the liquidity stress test results, supporting disclosures, and any liquidity stress test
20 information received from an insurance holding company supervised by the United
21 States Federal Reserve Board and group-wide supervisors not based in the United
22 States.
23 * * *
24 C. In order to assist in the performance of the commissioner's duties, the
25 commissioner:
26 (1) May share documents, materials, or other information, including the
27 confidential and privileged documents, materials, or information subject to
28 Subsection A of this Section, including proprietary information and trade secret
29 documents and materials, with other state, federal, and international regulatory
30 agencies with the NAIC and its affiliates and subsidiaries and with state, federal, and
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1 international law enforcement authorities, including members of any supervisory
2 college described in R.S. 22:691.9, provided that the recipient agrees in writing to
3 maintain the confidentiality and privileged status of the document, material, or other
4 information, and has verified in writing the legal authority to maintain
5 confidentiality.
6 * * *
7 (3) May receive documents, materials, or information, including otherwise
8 confidential and privileged documents, materials, or information, including
9 proprietary and trade secret information, from the NAIC and its affiliates and
10 subsidiaries and from regulatory and law enforcement officials of other foreign or
11 domestic jurisdictions, and shall maintain as confidential or privileged any
12 document, material, or information received with notice or the understanding that it
13 is confidential or privileged under the laws of the jurisdiction that is the source of the
14 document, material, or information.
15 (4) Shall enter into written agreements with the NAIC and any third-party
16 consultant designated by the commissioner governing the sharing and use of
17 information provided pursuant to this Subpart consistent with this Subsection that
18 shall:
19 (a) Specify procedures and protocols regarding the confidentiality and
20 security of information shared with the NAIC and its affiliates and subsidiaries or a
21 third-party consultant designated by the commissioner pursuant to this Subpart,
22 including procedures and protocols for sharing by the NAIC with other state, federal,
23 or international regulators. The agreement shall provide that the recipient agrees in
24 writing to maintain the confidentiality and privileged status of the documents,
25 materials, and other information and has verified, in writing, the legal authority to
26 maintain such confidentiality.
27 (b) Specify that ownership of information shared with the NAIC and its
28 affiliates and subsidiaries or a third-party consultant pursuant to this Subpart remains
29 with the commissioner and the NAIC's use of the information by the NAIC or a
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1 third-party consultant, designated by the commissioner, is subject to the direction of
2 the commissioner.
3 (c) Excluding documents, materials, and information reported pursuant to
4 R.S. 22:691.6(N), prohibit the NAIC or a third-party consultant, designated by the
5 commissioner from storing the information shared pursuant to this Section in a
6 permanent database after the underlying analysis is completed.
7 (d) Require prompt notice to be given to an insurer whose confidential
8 information in the possession of the NAIC or a third-party consultant, designated by
9 the commissioner, pursuant to this Subpart is subject to a request or subpoena to the
10 NAIC or a third-party consultant designated by the commissioner for disclosure or
11 production.
12 (d) (e) Require the NAIC and its affiliates and subsidiaries or a third-party
13 consultant, designated by the commissioner, to consent to intervention by an insurer
14 in any judicial or administrative action in which the NAIC and its affiliates and
15 subsidiaries or a third-party consultant, designated by the commissioner, may be
16 required to disclose confidential information about the insurer shared with the NAIC
17 and its affiliates and subsidiaries or a third-party consultant, designated by the
18 commissioner, pursuant to this Subpart.
19 (f) For documents, materials, and information reporting, pursuant to R.S.
20 22:691.6(N), in the case of an agreement involving a third-party consultant, provide
21 for notification of the identity of the consultant to the applicable insurers.
22 * * *
23 F. Documents, materials, or other information in the possession or control
24 of the NAIC or a third-party consultant, designated by the commissioner, pursuant
25 to this Subpart shall be confidential by law and privileged, shall not be subject to
26 subpoena, and shall not be subject to discovery or admissible in evidence in any
27 private civil action.
28 G. Except as otherwise may be required under the provisions of this Subpart,
29 the making, publishing, disseminating, circulating, or placing before the public, or
30 causing directly or indirectly to be made, published, disseminated, circulated, or
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1 placed before the public in a newspaper, magazine, or other publication, or in the
2 form of a notice, circular, pamphlet, letter, or poster, or broadcasted over any radio
3 station, television station, or by any other electronic means of communication
4 available to the public, or in any other way as an advertisement, announcement, or
5 statement containing a representation or statement with regard to the group capital
6 calculation, group capital ratio, the liquidity stress test results, or supporting
7 disclosures for the liquidity stress test of any insurer or any insurer group, or of any
8 component derived in the calculation by any insurer, broker, or other person engaged
9 in any manner in the insurance business is prohibited. However, if any materially
10 false statement with respect to the group capital calculation, resulting group capital
11 ratio, an inappropriate comparison of any amount to an insurer's or insurance group’s
12 group capital calculation or resulting group capital ratio, liquidity stress test result,
13 supporting disclosures for the liquidity stress test, or an inappropriate comparison of
14 any amount to an insurer's or insurance group’s liquidity stress test result or
15 supporting disclosures is published in any written publication and the insurer is able
16 to demonstrate to the commissioner, with substantial proof, the falsity of such
17 statement or its inappropriateness, the insurer may publish announcements in a
18 written publication, if the sole purpose thereof is to rebut the materially false
19 statement.
SPEAKER OF THE HOUSE OF REPRESENTATIVES
PRESIDENT OF THE SENATE
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED:
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