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STATE OF OKLAHOMA
1st Session of the 58th Legislature (2021)
COMMITTEE SUBSTITUTE
FOR ENGROSSED
HOUSE BILL 2120 By: McEntire of the House
and
Montgomery of the Senate
COMMITTEE SUBSTITUTE
An Act relating to insurance; a mending 36 O.S. 2011,
Section 607.1, as last amended by Section 2, Chapter
73, O.S.L. 2016 (36 O.S. Supp. 2020, Section 607.1) ,
which relates to insurers; modifying conditions that
consider a certain entity an insurer; requiring
notice and filing for asser ted insolvent insurers;
directing compliance with the Insurance
Commissioner's requirements; authorizing supervision
of insurer; imposing fine; authorizing promulgation
of rules; and providing an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 36 O.S. 2011, Section 607.1, as
last amended by Section 2, Chapter 73, O.S.L. 2016 (36 O.S. Supp.
2020, Section 607.1), is amended to read as follows:
Section 607.1. A. An entity organized purs uant to the
Interlocal Cooperation Act (an "Interlocal Entity") for the purpose
of transacting insurance , except those Interlocal Ent ities created
pursuant to the terms of The Governmental Tort Claims Act , and that
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insures an Oklahoma educational instituti on shall be considered an
insurer at such time that the entity has within a twelve -month
period received aggregate premiums of One Millio n Dollars
($1,000,000.00) for all kinds of insurance that the entity
transacts. Such an The entity shall be eligible to qualify for and
hold a certificate of authority to transact insurance in this state.
B. Notwithstanding the provisions of subsection A of this
section, any Any entity organized pursuant to the Interlocal
Cooperation Act that insures an Oklahoma educatio nal institution and
has within a twelve-month period received premiums or contributions
of any amount for any kind of insurance that the Inte rlocal Entity
transacts shall have an annual audit by an independent certified
public accountant and shall file an audited financial report by an
independent certified public accountant with the Insurance
Commissioner within one hundred eighty (180) days i mmediately
following the close of the Interlocal Entity 's fiscal year. The
annual audited financial report shall b e presented in conformity
with accounting principles generally accepted in the United States
of America and include:
1. The report of an ind ependent certified public accountant in
accordance with accounting principles generally accepted in the
United States of America;
2. A balance sheet reporting assets, liabilities and equity;
3. A statement of operations;
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4. A statement of cash flows;
5. A statement of changes in assets, liabilities and equity;
6. Footnotes to financial statements; and
7. An unqualified opinion from the certified public accountant
that the audited financial report represents a fair presentation of
the Interlocal Entity 's financial position in conformity with
accounting principles generally accepted in the United States of
America.
C. Any entity subject to the provisions of subsection B of this
section, except those entities which purchase full insurance
coverage as determined by the Commissioner, shall file with the
Insurance Commissioner an actuarial opinion prepared by a qualifie d
actuary within one hundred eighty (180) days immediately following
the close of the Interlocal Entity 's fiscal year. The actuarial
opinion should certify the amount and adequacy of the Interlocal
Entity's reserves for loss and loss adjustment expenses , including
amounts for Incurred But Not Reported (IBNR) Claims, and the
adequacy of the Interlocal Entity 's premiums. The actuarial opinion
shall be consistent with the appropriate Actuarial Standards of
Practice (ASOP) as promulgated by the Actuarial Stan dards Board.
As used in this section, "qualified actuary" means an individual
who is a member of the American Academy of Actuaries and who ha s met
the Qualification Standards for Actuaries Issuing Statements of
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Actuarial Opinions in the United States promu lgated by the American
Academy of Actuaries.
D. Extensions of the filing date may be granted by the
Commissioner for thirty -day periods upon a showing by the Interlocal
Entity and its independent certified public accountant or qualified
actuary of the reasons for requesting an extension and determination
by the Commissioner of good cause for an extension. The request for
extension must be sub mitted in writing not less than ten (10) days
prior to the due date in sufficient detail to permit the
Commissioner to make an informed decision with respect to the
requested extension.
E. The Commissioner may assess a fine for failure to file the
required annual audit or actuarial opinion in an amount of not more
than Five Hundred Dollars ($500.00) per day.
F. The audited financial reports and actuarial opinions
required herein are subject to public inspection pursuant to the
Oklahoma Open Records Act.
G. If there is substantial evidence that an insurer subject to
the provisions of this section is insolvent and the condition of
that insurer renders the continuance of its business hazardous to
the public or to hold ers of its policies or certificates of
insurance or if an insurer has exceeded its powers or fails to
comply with the laws of this state, the Insurance Comm issioner
shall:
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1. Notify the insurer and its participating members of the
determination by the Commissioner that the provisions of this
section shall apply;
2. Require the insurer to file with the Commissioner a written
plan of action to abate the Commissioner's determination within
thirty (30) days of receiving notification pursuant to paragraph 1
of this subsection; and
3. Notify the insurer if the Commissioner determines to further
supervise the insurer following receipt of the written plan of
action from the insurer.
H. 1. An insurer subject to the provisions of subsection G of
this section shall comply with any lawful requirements of the
Commissioner and if placed under supervision pursuant to paragraph 3
of subsection G of this section, shall have ninety (90) days from
the date of notice of the supervision except as otherwise provided
by the Commissioner, to comply with any additional requirements of
the Commissioner.
2. The Commissioner may determine at any time during or after
the ninety-day period that judicial or administrative proceedings
should be initiated to place the insurer in conservation,
rehabilitation or liquidation proceedings or other delinquency
proceedings, pursuant to Sections 1801 through 1920 of this title.
If the insurer does not comply with the requirements of the
Commissioner, supervision may continue until such requirements are
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completed or until the Commissioner approves or completes pursuit of
additional options, as provided in the Insurance Code.
I. The Commissioner may assess a fine for failure to timely
file a written plan of action required under paragraph 2 of
subsection G of this section in an amount of not more than Five
Hundred Dollars ($500.00) per day.
J. The Commissioner may promulgate rules to implement th e
provisions of this section.
SECTION 2. This act shall become effective November 1, 2021.
58-1-2046 CB 4/5/2021 11:34:00 AM