New Mexico 2025 Regular Session

New Mexico House Bill HB398 Compare Versions

Version 1 (Old)

Version 2 (New)

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1		-	~~HHHC/HB 398~~
2		-	~~Page 1~~
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	28	+	HOUSE BILL 398
	29	+	57
	30	+	TH LEGISLATURE
	31	+	-
	32	+
	33	+	STATE
	34	+
	35	+	OF
	36	+
	37	+	NEW
	38	+
	39	+	MEXICO
	40	+
	41	+	-
	42	+	FIRST SESSION
	43	+	,
	44	+
	45	+	2025
	46	+	INTRODUCED BY
	47	+	Mark Duncan and Gail Armstrong and Rebecca Dow
28	48		AN ACT
29		-	RELATING TO INSURANCE; AMENDING THE INSURANCE HOLDING COMPANY
30		-	LAW; ADDING DEFINITIONS; PROVIDING FOR GROUP CAPITAL
31		-	CALCULATION REPORTS AND LIQUIDITY STRESS TESTS; AMENDING THE
32		-	HEALTH MAINTENANCE ORGANIZATION LAW TO MODIFY THE TIME LINE
33		-	FOR EXAMINATIONS OF HEALTH MAINTENANCE ORGANIZATIONS AND
34		-	CONTRACT PROVIDERS.
	49	+	RELATING TO INSURANCE; AMENDING THE HEALTH MAINTENANCE
	50	+	ORGANIZATION LAW TO MODIFY THE TIME LINE FOR EXAMINATIONS OF
	51	+	HEALTH MAINTENANCE ORGANIZATIONS AND CONTRACT PROVIDERS.
35	52		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
36		-	SECTION 1. Section 59A-37-2 NMSA 1978 (being Laws 1984,
37		-	Chapter 127, Section 617, as amended) is amended to read:
38		-	"59A-37-2. DEFINITIONS.--As used in the Insurance
39		-	Holding Company Law:
40		-	A. "acquire" means to come into possession or
41		-	control of, and "acquisition" means any agreement,
42		-	arrangement or activity the consummation of which results in
43		-	a person acquiring directly or indirectly the control of
44		-	another person and includes the acquisition of voting
45		-	securities or assets, bulk reinsurance and mergers;
46		-	B. "affiliate" means a person that directly or
47		-	indirectly is controlled by, is under common control with or
48		-	controls another person;
49		-	C. "association" means the national association of
50		-	insurance commissioners;
51		-	D. "commissioner" means an insurance regulation HHHC/HB 398
52		-	Page 2
	53	+	SECTION 1. Section 59A-46-19 NMSA 1978 (being Laws 1993,
	54	+	Chapter 266, Section 19) is amended to read:
	55	+	"59A-46-19. EXAMINATIONS.--
	56	+	A. The superintendent may make an examination of
	57	+	the affairs of any health maintenance organization and
	58	+	providers with whom [such ] the health maintenance organization
	59	+	has contracts, agreements or other arrangements as often as is
	60	+	reasonably necessary for the protection of the interests of the
	61	+	people of this state, but not less frequently than once every
	62	+	[three] five years.
	63	+	.229528.1SA underscored material = new
	64	+	[bracketed material] = delete
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78		-	department of another state or the chief regulator or the
79		-	regulator's deputy of another state;
80		-	E. "control" means the possession of the power to
81		-	direct or cause the direction of the management and policies
82		-	of a person, whether directly or indirectly, through the
83		-	ownership of voting securities, through licensing or
84		-	franchise agreements, by contract other than a commercial
85		-	contract for goods or nonmanagement services, or otherwise,
86		-	unless the power is the result of an official position with
87		-	or corporate office held by an individual. Control shall be
88		-	presumed to exist if any person, directly or indirectly,
89		-	owns, controls, holds with the power to vote or holds proxies
90		-	representing ten or more percent of the voting securities of
91		-	any other person. This presumption may be rebutted by a
92		-	showing, in the manner provided by Section 59A-37-19 NMSA
93		-	1978, that control does not in fact exist. The
94		-	superintendent may determine, after furnishing all persons in
95		-	interest notice and an opportunity to be heard, that control
96		-	exists in fact, notwithstanding the absence of a presumption
97		-	to that effect; provided that the determination is based on
98		-	specific findings of fact in its support;
99		-	F. "enterprise risk" means an activity, a
100		-	circumstance, an event or a series of events involving one or
101		-	more affiliates of an insurer that, if not remedied promptly,
102		-	is likely to have a material adverse effect upon the HHHC/HB 398
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129		-	financial condition or liquidity of the insurer or its whole
130		-	insurance holding company system and includes a situation
131		-	that would cause a company action level event as defined in
132		-	Section 59A-5A-4 NMSA 1978 or would cause the insurer to be
133		-	in a hazardous financial condition as defined in Section 59A-
134		-	41-24 NMSA 1978;
135		-	G. "group-wide supervisor" means the regulatory
136		-	official authorized to conduct and coordinate group-wide
137		-	supervision activities who is determined or acknowledged by
138		-	the superintendent to have sufficient significant contacts
139		-	with the internationally active insurance group as described
140		-	in the National Association of Insurance Commissioners Model
141		-	Laws, Regulations, Guidelines and Other Resources 440-1;
142		-	H. "health maintenance organization" means a
143		-	person that undertakes to provide or arrange for the delivery
144		-	of basic health care services to enrollees on a prepaid
145		-	basis; provided that "prepaid basis" may include the payment
146		-	of copayments and deductibles by enrollees;
147		-	I. "insurance holding company" is a person that
148		-	controls an insurer; "insurance holding company system" means
149		-	a combination of two or more affiliated persons, at least one
150		-	of which is an insurer;
151		-	J. "insurer" means a person that undertakes, under
152		-	contract, to indemnify a person against loss, damage or
153		-	liability arising from an unknown or contingent future event. HHHC/HB 398
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180		-	The term does not include agencies, authorities or
181		-	instrumentalities of the United States, its possessions or
182		-	territories, the commonwealth of Puerto Rico, the District of
183		-	Columbia, a state or any of its political subdivisions or a
184		-	fraternal benefit society;
185		-	K. "internationally active insurance group" means
186		-	an insurance holding company system that includes an insurer
187		-	registered pursuant to Section 59A-37-12 NMSA 1978 that:
188		-	(1) writes premiums in at least three
189		-	counties;
190		-	(2) produces gross premiums written outside
191		-	of the United States of at least ten percent of the insurance
192		-	holding company system's gross written premiums; and
193		-	(3) has total assets of at least fifty
194		-	billion dollars ($50,000,000,000) based on a three-year
195		-	rolling average or has total gross written premiums of at
196		-	least ten billion dollars ($10,000,000,000);
197		-	L. "large life insurance company" means a person,
198		-	as defined by the association, that contracts with a policy
199		-	owner to guarantee to pay a sum of money to one or more named
200		-	beneficiaries when an insured person dies;
201		-	M. "liquidity stress test framework" means the
202		-	publication adopted or amended by the association that
203		-	includes the scope criteria for a specific data year and the
204		-	liquidity stress test instructions and reporting templates HHHC/HB 398
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231		-	for a specific data year;
232		-	N. "person" means an individual, corporation,
233		-	association, partnership, joint stock company, trust,
234		-	unincorporated organization or any similar entity or
235		-	combination of entities;
236		-	O. "scope criteria" means the designated exposure
237		-	bases and minimum magnitudes for a specified data year as
238		-	detailed by the association used to establish a preliminary
239		-	list of insurers scoped into the liquidity stress test
240		-	framework for a data year;
241		-	P. "securityholder" means the owner of any
242		-	security of a person, including common stock, preferred
243		-	stock, debt obligations and any other security convertible
244		-	into or evidencing the right to acquire any of the foregoing;
245		-	Q. "subsidiary" means an affiliate of a person
246		-	controlled by the person either directly or indirectly
247		-	through one or more intermediaries; and
248		-	R. "voting security" means a certificate
249		-	evidencing the ownership or indebtedness of a person, to
250		-	which is attached a right to vote on the management or
251		-	policymaking of that person and includes any security
252		-	convertible into or evidencing a right to acquire such a
253		-	voting security."
254		-	SECTION 2. Section 59A-37-30 NMSA 1978 (being Laws
255		-	2014, Chapter 59, Section 44) is amended to read: HHHC/HB 398
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282		-	"59A-37-30. ENTERPRISE RISK FILING.--The ultimate
283		-	controlling person of every insurer that is subject to
284		-	registration shall file an enterprise risk report each year.
285		-	The report shall reflect that person's knowledge and belief
286		-	of the material risks within the insurance holding company
287		-	system that pose enterprise risk to the insurer. The report
288		-	shall be filed with the lead state insurance supervisory
289		-	official of the insurance holding company system and in
290		-	compliance with the relevant procedures outlined in the
291		-	financial analysis handbook adopted by the association."
292		-	SECTION 3. Section 59A-37-32 NMSA 1978 (being Laws
293		-	2014, Chapter 59, Section 46) is amended to read:
294		-	"59A-37-32. SUPERVISORY COLLEGES.--
295		-	A. In order to determine compliance with the
296		-	Insurance Holding Company Law by an insurer registered
297		-	pursuant to Section 59A-37-11 NMSA 1978, the superintendent
298		-	may participate in a supervisory college for a domestic
299		-	insurer that is part of an insurance holding company system
300		-	with international operations. Concerning a supervisory
301		-	college, the superintendent may:
302		-	(1) initiate its establishment;
303		-	(2) clarify its membership and the
304		-	participation of other supervisors;
305		-	(3) clarify its functions and the role of
306		-	other regulators, including the establishment of a group-wide HHHC/HB 398
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333		-	supervisor;
334		-	(4) coordinate its ongoing activities,
335		-	including planning meetings, supervision and processes for
336		-	information sharing; and
337		-	(5) establish a crisis management plan.
338		-	B. A registered insurer subject to this section
339		-	shall pay the reasonable expenses, including for travel,
340		-	associated with the superintendent's participation in a
341		-	supervisory college pursuant to Subsection C of this section.
342		-	A supervisory college may be convened as a temporary or
343		-	permanent forum for communication and cooperation between the
344		-	regulators charged with the supervision of the insurer or its
345		-	affiliates. The superintendent may establish a regular
346		-	assessment to the insurer for the payment of these expenses.
347		-	C. In order to assess the business strategy,
348		-	financial position, legal and regulatory position, risk
349		-	exposure, risk management and governance processes of an
350		-	insurer, and as part of the examination of individual
351		-	insurers pursuant to Section 59A-37-23 NMSA 1978, the
352		-	superintendent may participate in a supervisory college with
353		-	other regulators charged with the supervision of the insurer
354		-	or its affiliates, including other state, federal and
355		-	international regulatory agencies. The superintendent may
356		-	enter into agreements in accordance with Subsection C of
357		-	Section 59A-37-24 NMSA 1978 that provide the basis for HHHC/HB 398
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384		-	cooperation between the superintendent and the other
385		-	regulatory agencies and the activities of the supervisory
386		-	college. Nothing in this section shall delegate to the
387		-	supervisory college the authority of the superintendent to
388		-	regulate or supervise the insurer or its affiliates within
389		-	its jurisdiction.
390		-	D. The superintendent may act as the group-wide
391		-	supervisor for an internationally active insurance group and
392		-	may also acknowledge another commissioner as the group-wide
393		-	supervisor when the internationally active insurance group:
394		-	(1) does not have substantial insurance
395		-	operations in the United States;
396		-	(2) has substantial insurance operations in
397		-	the United States, but not in New Mexico; or
398		-	(3) has substantial operations in the United
399		-	States, including in New Mexico, but the superintendent has
400		-	determined that another commissioner is the appropriate
401		-	group-wide supervisor.
402		-	E. An insurance holding company system that does
403		-	not qualify as an internationally active insurance group may
404		-	request that the superintendent make a determination as to a
405		-	group-wide supervisor.
406		-	F. The superintendent shall identify a single
407		-	group-wide supervisor for an internationally active insurance
408		-	group in cooperation with other state, federal and HHHC/HB 398
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435		-	international regulatory agencies.
436		-	G. The superintendent may determine that the
437		-	superintendent is the appropriate group-wide supervisor for
438		-	an internationally active insurance group that conducts
439		-	substantial insurance operations conducted in New Mexico.
440		-	H. The superintendent may acknowledge that a
441		-	commissioner from another jurisdiction is the appropriate
442		-	group-wide supervisor. In making this determination, the
443		-	superintendent shall consider the following factors:
444		-	(1) the place of domicile of the insurers
445		-	within the internationally active insurance group that holds
446		-	the largest share of the group's written premiums, assets or
447		-	liabilities;
448		-	(2) the place of domicile of the top-tiered
449		-	insurers in the insurance holding company's system of the
450		-	internationally active insurance group;
451		-	(3) the location of the executive offices or
452		-	largest operational offices of the internationally active
453		-	insurance group;
454		-	(4) whether another commissioner is acting
455		-	or seeking to act as the group-wide supervisor under a
456		-	regulatory system that the superintendent determines to be
457		-	substantially similar to New Mexico's system of regulation or
458		-	otherwise sufficient in terms of providing for group-wide
459		-	supervision, enterprise risk analysis and cooperation with HHHC/HB 398
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486		-	other regulatory officials; and
487		-	(5) whether the commissioner acting or
488		-	seeking to act as the group-wide supervisor provides the
489		-	superintendent with reasonably reciprocal recognition and
490		-	cooperation.
491		-	I. Another commissioner identified as the
492		-	group-wide supervisor may determine that it is appropriate to
493		-	acknowledge another supervisor to serve as the group-wide
494		-	supervisor after considering the factors in Subsection H of
495		-	this section. Such acknowledgment shall be made in
496		-	cooperation with the subject of the acknowledgment, the
497		-	internationally active insurance group and other
498		-	commissioners involved with supervision of members of the
499		-	internationally active insurance group.
500		-	J. Notwithstanding any other provision of law,
501		-	when another commissioner is acting as the group-wide
502		-	supervisor of an internationally active insurance group, the
503		-	superintendent shall acknowledge that commissioner as the
504		-	group-wide supervisor."
505		-	SECTION 4. A new section of the Insurance Holding
506		-	Company Law is enacted to read:
507		-	"GROUP CAPITAL CALCULATION.--
508		-	A. Except as provided below, the ultimate
509		-	controlling person of an insurer subject to registration
510		-	pursuant to the provisions of the Insurance Code shall also HHHC/HB 398
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537		-	file an annual group capital calculation report in accordance
538		-	with the group capital calculation instructions in the
539		-	financial analysis handbook adopted by the association as
540		-	directed by the superintendent.
541		-	B. The following insurance holding company systems
542		-	shall be exempt from filing the group capital calculation
543		-	report:
544		-	(1) an insurance holding company system that
545		-	has only one insurer within its holding company structure,
546		-	only writes business and is licensed in its domestic state
547		-	and assumes no business from any other insurer;
548		-	(2) an insurance holding company system that
549		-	is required to perform a group capital calculation as
550		-	specified by the United States federal reserve board;
551		-	(3) an insurance holding company system
552		-	whose non-United States group-wide supervisor is located in a
553		-	reciprocal jurisdiction that recognizes the United States
554		-	regulatory approach to group supervision and group capital;
555		-	and
556		-	(4) an insurance holding company system:
557		-	(a) that provides information to a lead
558		-	state that meets the association's accreditation requirements
559		-	and financial standards; and
560		-	(b) whose non-United States group-wide
561		-	supervisor recognizes and accepts the world-wide capital HHHC/HB 398
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588		-	assessment for United States insurance groups that operate in
589		-	that jurisdiction.
590		-	C. If an insurance holding company system is
591		-	required to perform a group capital calculation with the
592		-	United States federal reserve board, the superintendent shall
593		-	request the calculation from the United States federal
594		-	reserve board. If the United States federal reserve board
595		-	cannot share the calculation, the insurance holding company
596		-	system is not exempt from the group capital calculation
597		-	report.
598		-	D. Notwithstanding any other provisions of this
599		-	section, a lead state regulator shall require a group capital
600		-	calculation for United States operation of any non-United
601		-	States-based insurance holding company system where, after
602		-	any necessary consultation with other commissioners, it is
603		-	deemed appropriate by the lead state regulator for prudential
604		-	oversight and solvency monitoring purposes or for ensuring a
605		-	competitive insurance marketplace.
606		-	E. Notwithstanding the filing exemptions provided
607		-	in this section, the superintendent may exempt the ultimate
608		-	controlling person from filing that annual group capital
609		-	calculation and accept a limited group capital calculation
610		-	report in accordance with criteria specified by the
611		-	superintendent in regulation.
612		-	F. If the superintendent determines that an HHHC/HB 398
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639		-	insurance holding company system no longer meets the
640		-	requirements for an exemption, the insurance holding company
641		-	system shall file the group capital calculation at the next
642		-	annual filing date unless given an extension by the
643		-	superintendent based on reasonable grounds shown."
644		-	SECTION 5. A new section of the Insurance Holding
645		-	Company Law is enacted to read:
646		-	"LIQUIDITY STRESS TEST.--
647		-	A. A large life insurance company subject to
648		-	registration pursuant to the provisions of the Insurance Code
649		-	shall file the results of a specific year's liquidity stress
650		-	test in accordance with the instructions in the financial
651		-	analysis handbook adopted by the association as directed by
652		-	the superintendent.
653		-	B. A change to the association's liquidity stress
654		-	test framework or to the data year for which the scope
655		-	criteria are to be measured shall be effective on January 1
656		-	of the year following the calendar year when the change was
657		-	adopted.
658		-	C. A large life insurance company that meets the
659		-	requirements of the scope criteria is considered scoped into
660		-	the association's liquidity stress test framework for that
661		-	data year. A large life insurance company that does not meet
662		-	the requirements of the scope criteria is considered scoped
663		-	out of the association's liquidity stress test framework for HHHC/HB 398
664		-	Page 14
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690		-	that data year, unless the superintendent, in consultation
691		-	with the association's financial stability task force or its
692		-	successor, determines that the large life insurance company
693		-	should be scoped into the liquidity stress test framework for
694		-	that year.
695		-	D. The superintendent shall, in consultation with
696		-	the association's financial stability task force or its
697		-	successor, assess the concerns of the superintendent's wishes
698		-	to avoid having insurers scoped in and out of the
699		-	association's liquidity stress test framework.
700		-	E. The superintendent shall comply with the
701		-	association's liquidity stress test framework instruction and
702		-	reporting templates and shall file the results of a specific
703		-	year's determinations.
704		-	F. A large life insurance company subject to
705		-	registration pursuant to the provisions of the Insurance Code
706		-	shall file the results of a specific year's liquidity stress
707		-	test in accordance with the instructions in the financial
708		-	analysis handbook adopted by the association as directed by
709		-	the superintendent.
710		-	G. A change to the association's liquidity stress
711		-	test framework or to the data year for which the scope
712		-	criteria are to be measured shall be effective on January 1
713		-	of the year following the calendar year when the change was
714		-	adopted." HHHC/HB 398
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741		-	SECTION 6. Section 59A-46-19 NMSA 1978 (being Laws
742		-	1993, Chapter 266, Section 19) is amended to read:
743		-	"59A-46-19. EXAMINATIONS.--
744		-	A. The superintendent may make an examination of
745		-	the affairs of any health maintenance organization and
746		-	providers with whom the health maintenance organization has
747		-	contracts, agreements or other arrangements as often as is
748		-	reasonably necessary for the protection of the interests of
749		-	the people of this state, but not less frequently than once
750		-	every five years.
751	90		B. The superintendent may make or request the
752	91		secretary of health to make an examination concerning the
753	92		quality assurance program of the health maintenance
754		-	organization and of any providers with whom the health
	93	+	organization and of any providers with whom [such ] the health
755	94		maintenance organization has contracts, agreements or other
756	95		arrangements as often as is reasonably necessary for the
757	96		protection of the interests of the people of this state.
758	97		C. Every health maintenance organization and
759		-	provider shall submit its books and records for ~~examinations~~
760		-	and in every way facilitate the completion of the
	98	+	provider shall submit its books and records for [such ]
	99	+	examinations and in every way facilitate the completion of the
761	100		examination. Medical records of individuals and contract
762		-	providers shall not be subject to examination. For the
	101	+	providers shall not be subject to [such ] examination. For the
763	102		purpose of examinations, the superintendent and the secretary
764		-	of health may administer oaths to and examine the officers
765		-	and agents of the health maintenance organization and the HHHC/HB 398
766		-	Page 16
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792		-	principals of the providers concerning their business.
	103	+	of health may administer oaths to and examine the officers and
	104	+	agents of the health maintenance organization and the
	105	+	principals of [such] the providers concerning their business.
793	106		D. The expenses of examinations under this section
794	107		shall be assessed against the health maintenance organization
795	108		being examined and remitted to the superintendent.
796		-	E. In lieu of examination, the ~~superintendent may~~
797		-	accept the report of an examination made by ~~the~~
798		-	superintendent or secretary of health of another state.
	109	+	E. In lieu of [such] examination, the
	110	+	superintendent may accept the report of an examination made by
	111	+	the superintendent or secretary of health of another state.
799	112		F. Examination procedures shall be governed by the
800	113		applicable provisions of Chapter 59A, Article 4 NMSA 1978."
	114	+	- 2 -
	115	+	.229528.1SA