Oklahoma 2022 Regular Session

Oklahoma Senate Bill SB1246 Compare Versions

Version 1 (Old)

Version 2 (New)

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3		-	SB1246 HFLR Page 1
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	3	+	ENGR. S. B. NO. 1246 Page 1 1
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29		-	HOUSE OF REPRESENTATIVES - FLOOR VERSION
30		-
31		-	STATE OF OKLAHOMA
32		-
33		-	2nd Session of the 58th Legislature (2022)
34	27
35	28		ENGROSSED SENATE
36	29		BILL NO. 1246 By: Quinn of the Senate
37	30
38	31		and
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40	33		Sneed of the House
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45	38		An Act relating to insurance receivership; ame nding
46	39		36 O.S. 2021, Sections 1636, 1901, 1918, 1930, and
47	40		1938, which relate to transactions within an
48	41		insurance holding company, definitions, claims
49	42		against an insurer, and delinquency proceedings;
50	43		directing Insurance Commissioner to make certain
51	44		determinations; requiring certain insurers secure
52	45		funds under certain circumstances; maintaining
53	46		property ownership over certain documents, records,
54	47		and funds; requiring certain documents be provid ed to
55	48		certain persons; authorizing restrictions against use
56	49		of data under certain circumstances; providing fo r
57	50		access to records when a default of lease or
58	51		agreement occurs; establishing provisions for
59	52		jurisdiction of parties to insurer agreement;
60	53		modifying definition; establishing compliance
61	54		measures; modifying time period for reporting certain
62	55		claim to court; providing for certain alternative
63	56		court procedures in claim hearings; establishing
64	57		service list for certain claim no tices; establishing
65	58		requirements for providing notice and hearing
66	59		information; establishing objection process;
67	60		conforming language; and providing an effective date .
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73	66		BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
	67	+	SECTION 1. AMENDATORY 36 O.S. 2021, Section 1636, is
	68	+	amended to read as follows:
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75		-	SB1246 HFLR Page 2
76		-	BOLD FACE denotes Committee Amendments. 1
	70	+	ENGR. S. B. NO. 1246 Page 2 1
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101		-	SECTION 1. AMENDATORY 36 O.S. 2021, Section 1636, is
102		-	amended to read as follows:
103	95		Section 1636. A. 1. Transactions within an insurance ho lding
104	96		company system to which an insurer subject to r egistration is a
105	97		party shall be subject to the following standards:
106	98		a. the terms shall be fair and reasonable,
107	99		b. agreements for cost-sharing services and management
108	100		shall include such provisions as requ ired by rule and
109	101		regulation issued by the Insurance Commissioner,
110	102		c. charges or fees for services performed shall be
111	103		reasonable,
112	104		d. expenses incurred and payment received shall be
113	105		allocated to the insurer in conformity with customary
114	106		insurance accounting p ractices consistently applied,
115	107		e. the books, accounts and records of each party to all
116	108		such transactions shall be so maintained as to clearly
117	109		and accurately disclose the nature and details of the
118	110		transactions including such accounting information as
119	111		is necessary to support the reasonableness of the
120	112		charges or fees to the respective parties, and
121	113		f. the insurer's surplus as regards policyholders
122	114		following any dividends or distributions to
123	115		shareholder affiliates shall be r easonable in relation
	116	+	to the insurer's outstanding liabilities and adequate
	117	+	to meet its financial needs,
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125		-	SB1246 HFLR Page 3
126		-	BOLD FACE denotes Committee Amendments. 1
	119	+	ENGR. S. B. NO. 1246 Page 3 1
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151		-	to the insurer's outstanding liabilities and adequate
152		-	to meet its financial needs,
153	144		g. if an insurer subject to this act is deemed by the
154	145		Commissioner to be in a ha zardous financial condition
155	146		pursuant to Section 1905 of this title and regulations
156	147		pursuant to Title 365 of the Oklahoma Administrative
157	148		Code or a condition that w ould be grounds for
158	149		supervision, conservation, or a delinquency
159	150		proceeding, the Commissioner may require the insurer
160	151		to secure and maintain from any affiliate with whom
161	152		the insurer has a service or manag ement agreement
162	153		either a deposit held by the Commissioner or a bond,
163	154		as determined by the insurer at the insurer 's
164	155		discretion, for the protection of the insurer for the
165	156		duration of the contract, agreement, or existence of
166	157		the condition for which the Commissioner required the
167	158		deposit or the bond. In determining whether a depo sit
168	159		or a bond is required, the Commissioner should
169	160		consider whether concerns exist with respect to the
170	161		affiliated person's ability to fulfill the contract or
171	162		agreement if the insurer were to be put into
172	163		liquidation. Once the insurer is deemed to be in a
173	164		hazardous financial condition or a condition that
174	165		would be grounds for supervision, conservation , or a
	166	+	delinquency proceeding, and a deposit or bond is
	167	+	necessary, the Commissioner has discretion to
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176		-	SB1246 HFLR Page 4
177		-	BOLD FACE denotes Committee Amendments. 1
	169	+	ENGR. S. B. NO. 1246 Page 4 1
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202		-	delinquency proceeding, and a deposit or bond is
203		-	necessary, the Commissioner has discretion to
204	194		determine the amount of the depo sit or bond, not to
205	195		exceed the value of the contract or agreement in any
206	196		one year, and whether such deposit or bond should be
207	197		required for a single contract, multiple contracts , or
208	198		a contract only with a specific person,
209	199		h. all records and data of the insur er held by an
210	200		affiliate shall remain the property of the insurer .
211	201		All records and data of the insurer shall be subject
212	202		to the control of the insurer, identifiable, and
213	203		segregated or readily capable of segregati on, at no
214	204		additional cost to the insurer, from all other
215	205		persons' records and data. This includes all records
216	206		and data in any form that are otherwise the property
217	207		of the insurer including, but not limited to, claims
218	208		and claim files, policyholder lists, ap plication
219	209		files, litigation files, premium records, rate books,
220	210		underwriting manuals, personnel records, financial
221	211		records, or similar records within the possession,
222	212		custody, or control of the affiliate. At the request
223	213		of the insurer, the affiliate shall provide the
224	214		receiver all records of any type that per tain to the
225	215		insurer's business, access to the operating systems on
	216	+	which the data is main tained, and the software that
	217	+	runs those systems eit her through assumption of
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227		-	SB1246 HFLR Page 5
228		-	BOLD FACE denotes Committee Amendments. 1
	219	+	ENGR. S. B. NO. 1246 Page 5 1
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253		-	which the data is main tained, and the software that
254		-	runs those systems eit her through assumption of
255	244		licensing agreements or otherwise. The receiver may
256	245		restrict the use of the data by the a ffiliate if it is
257	246		not operating the insurer's business. The affiliate
258	247		shall provide a waive r of any landlord lien or other
259	248		encumbrance to give the insurer access to all records
260	249		and data in the event of the affiliate's default under
261	250		a lease or other agreeme nt, and
262	251		i. premiums or other funds belonging to the insurer that
263	252		are collected by or held b y an affiliate are the
264	253		exclusive property of the i nsurer and are subject to
265	254		the control of the insurer. Any right of offset in
266	255		the event an insurer is placed into re ceivership shall
267	256		be subject to Article 19 of this title.
268	257		2. The following transactions inv olving a domestic insurer and
269	258		any person in its insurance holding company system , including
270	259		amendments or modifications of affiliate agreements previously filed
271	260		pursuant to this section, which are subject to any materiality
272	261		standards contained in subparagr aphs a through g of this paragraph,
273	262		shall not be entered into unless the insurer has notified the
274	263		Commissioner in writing of its intention to enter into the
275	264		transaction at least thirty (30) days prior thereto, or such shorter
276	265		period as the Commissioner may permit, and the Commissioner has not
	266	+	disapproved it within that period. The notice for amend ments or
	267	+	modifications shall include the reasons for the change and the
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278		-	SB1246 HFLR Page 6
279		-	BOLD FACE denotes Committee Amendments. 1
	269	+	ENGR. S. B. NO. 1246 Page 6 1
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304		-	disapproved it within that period. The notice for ame ndments or
305		-	modifications shall include the reasons for the change and the
306	294		financial impact on the domestic insurer. Informal notice shall be
307	295		reported, within thirt y (30) days after a termination of a
308	296		previously filed agreement, to the Commissioner for deter mination of
309	297		the type of filing required, if any:
310	298		a. sales, purchases, exchanges, loans, extensions of
311	299		credit, or investments, provided the transactions are
312	300		equal to or exceed:
313	301		(1) with respect to nonlife insure rs, the lesser of
314	302		three percent (3%) of the in surer's admitted
315	303		assets or twenty-five percent (25%) of surplus as
316	304		regards policyholders as of the 31st day of
317	305		December next preceding, and
318	306		(2) with respect to life insurers, three percent (3%)
319	307		of the insurer's admitted assets as of the 31st
320	308		day of December next preceding,
321	309		b. loans or extensions of credit to any person who is not
322	310		an affiliate, where the insurer makes loans or
323	311		extensions of credit with the agreement or
324	312		understanding that the proceeds of the trans actions,
325	313		in whole or in substantial part, are to be used to
326	314		make loans or extensions of credit to, to purchase
327	315		assets of, or to make investments in, any affiliate of
	316	+	the insurer making the loans or extensions of credit
	317	+	provided the transactions are equal t o or exceed:
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329		-	SB1246 HFLR Page 7
330		-	BOLD FACE denotes Committee Amendments. 1
	319	+	ENGR. S. B. NO. 1246 Page 7 1
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355		-	the insurer making the loans or extensions of credit
356		-	provided the transactions are equal t o or exceed:
357	344		(1) with respect to nonlife insur ers, the lesser of
358	345		three percent (3%) of the insurer 's admitted
359	346		assets or twenty-five percent (25%) of surplus as
360	347		regards policyholders as of the 31st day of
361	348		December next preceding, and
362	349		(2) with respect to life insurers, three percent (3%)
363	350		of the insurer's admitted assets as of the 31st
364	351		day of December next preceding,
365	352		c. reinsurance agreements or modifications thereto,
366	353		including:
367	354		(1) all reinsurance pooling agreem ents, and
368	355		(2) agreements in which the reinsuranc e premium or a
369	356		change in the insurer 's liabilities, or the
370	357		projected reinsurance premium or a change in the
371	358		insurer's liabilities in any of the next three
372	359		(3) years, equals or exceeds five percent (5%) of
373	360		the insurer's surplus as regards policyholders,
374	361		as of the 31st day of December next preceding ,
375	362		including those agreements which may require as
376	363		consideration the transfe r of assets from an
377	364		insurer to a nonaffiliate, if an agreement or
378	365		understanding exists betw een the insurer and
	366	+	nonaffiliate that any portio n of the assets will
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380		-	SB1246 HFLR Page 8
381		-	BOLD FACE denotes Committee Amendments. 1
	368	+	ENGR. S. B. NO. 1246 Page 8 1
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406		-	nonaffiliate that any portio n of the assets will
407	393		be transferred to one or more affiliates of the
408	394		insurer,
409	395		d. all management agreements, service c ontracts, tax
410	396		allocation agreements, guarantees and all cost -sharing
411	397		arrangements,
412	398		e. guarantees when made by a domestic insurer; provided,
413	399		however, that a guarantee which is quantifiab le as to
414	400		amount is not subject to the notice requirements of
415	401		this paragraph unless it exceeds the lesser of one-
416	402		half of one percent (.5%) of the insurer 's admitted
417	403		assets or ten percent (10%) of surplus as rega rds
418	404		policyholders as of the 31st day of Decemb er next
419	405		preceding. Further, all guarantees which are not
420	406		quantifiable as to amount are subject to the notice
421	407		requirements of this paragraph,
422	408		f. direct or indirect acquisitions or investments in a
423	409		person that controls the insurer or in an affiliate of
424	410		the insurer in an amount which, together with its
425	411		present holdings in such investments, exceeds two and
426	412		one-half percent (2.5%) of the insurer 's surplus to
427	413		policyholders. Direct or indirect acquisitions or
428	414		investments in subsidiaries acquired pursuant to
429	415		Section 2 of this act (or authorized under any other
	416	+	section of this title) , or in nonsubsidiary insurance
430	417
431		-	SB1246 HFLR Page 9
432		-	BOLD FACE denotes Committee Amendments. 1
	418	+	ENGR. S. B. NO. 1246 Page 9 1
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457		-	section of this title) , or in nonsubsidiary insurance
458	443		affiliates that are subject to the provisions of this
459	444		act, are exempt from this requirement, and
460	445		g. any material transactions, specified by regulation,
461	446		which the Commissioner determines may adversely affect
462	447		the interests of the insurer's policyholders.
463	448		Nothing in this paragraph shall be deemed to authorize or perm it
464	449		any transactions which, in the case of an ins urer not a member of
465	450		the same insurance holdin g company system, would be otherwise
466	451		contrary to law.
467	452		3. A domestic insurer may not enter into transactions which are
468	453		part of a plan or series of like transactio ns with persons within
469	454		the insurance holding com pany system if the purpose of those
470	455		separate transactions is to avoid the statutory threshold amount and
471	456		thus avoid the review that would occur otherwise. If the
472	457		Commissioner determines that separate transac tions were entered into
473	458		over any twelve-month period for that purpose, the Commissioner may
474	459		exercise his or her authority under Section 11 of this act.
475	460		4. The Commissioner, in reviewing transactions pursuant to
476	461		paragraph 2 of this subsection, shall consid er whether the
477	462		transactions comply with the stan dards set forth in paragraph 1 of
478	463		this subsection and whether they may adversely affect the interests
479	464		of policyholders.
	465	+	5. The Commissioner shall be notified within thirty (30) days
	466	+	of any investment of the domestic insurer in any one corporation if
480	467
481		-	SB1246 HFLR Page 10
482		-	BOLD FACE denotes Committee Amendments. 1
	468	+	ENGR. S. B. NO. 1246 Page 10 1
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507		-	5. The Commissioner shall be notified within thirty (30) days
508		-	of any investment of the domestic insurer in any one corporation if
509	493		the total investment in the corporation by the insu rance holding
510	494		company system exceeds ten percent (10%) of the corporati on's voting
511	495		securities.
512	496		6. Any affiliate that is party to an agreement or contract with
513	497		a domestic insurer that is subject to subparagraph d of paragraph 2
514	498		of subsection A of this section shall be subject to the jurisdiction
515	499		of any supervision, seizure, co nservatorship, or receivership
516	500		proceedings against the insurer and to the auth ority of any
517	501		supervisor, conservator , rehabilitator, or liquidator for the
518	502		insurer appointed pu rsuant to Articles 18 and 19 of this title for
519	503		the purpose of interpreting, enforcing , and overseeing the
520	504		affiliate's obligations under the agreement or contract to perform
521	505		services for the insurer that:
522	506		a. are an integral part of the insurer 's operations
523	507		including but not limited to management,
524	508		administrative, accounting, data processing,
525	509		marketing, underwriting, claims handling, investment,
526	510		any other similar functions , or
527	511		b. are essential to the insurer 's ability to fulfill its
528	512		obligations under insurance policies.
529	513		7. The Commissioner may require that an agreement or contrac t
530	514		pursuant to subparagraph d of paragraph 2 of subsection A of this
	515	+	section for the provision of services described in subparagraphs a
531	516
532		-	SB1246 HFLR Page 11
533		-	BOLD FACE denotes Committee Amendments. 1
	517	+	ENGR. S. B. NO. 1246 Page 11 1
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558		-	section for the provision of services described in subparagraphs a
559	542		and b of paragraph 6 of subsection A of this section that the
560	543		affiliate consents to the jurisdiction as set forth in this section.
561	544		B. No domestic insurer shall pay any extraordinary dividend or
562	545		make any other extraordinary distribution to its sh areholders until
563	546		thirty (30) days after the Commissioner has received notice of the
564	547		declaration thereof and has not within tha t period disapproved the
565	548		payment, or until the Commissioner has approved the payment within
566	549		the thirty-day period. For purposes o f this section, an
567	550		extraordinary dividen d or distribution includes any dividend or
568	551		distribution of cash or other property whos e fair market value
569	552		together with that of other dividends or distributions made within
570	553		the preceding twelve (12) months exceeds th e greater of:
571	554		1. Ten percent (10%) of t he insurer's surplus as regards
572	555		policyholders as of the 31st day of December next prec eding; or
573	556		2. The net gain from operations of the insurer, if the insurer
574	557		is a life insurer, or the net income, if the insurer is not a life
575	558		insurer, not including realiz ed capital gains, for the twelve -month
576	559		period ending the 31st day of December next pre ceding, but shall not
577	560		include pro rata distributions of any class of the insurer 's own
578	561		securities.
579	562		In determining whether a divide nd or distribution is
580	563		extraordinary, an insurer other than a life insurer may carry
581	564		forward net income from the previous two ( 2) calendar years that has
	565	+	not already been paid out as dividends. This carry -forward shall be
582	566
583		-	SB1246 HFLR Page 12
584		-	BOLD FACE denotes Committee Amendments. 1
	567	+	ENGR. S. B. NO. 1246 Page 12 1
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608	591
609		-	not already been paid out as dividends. This carry -forward shall be
610	592		computed by taking the net income from the second and third
611	593		preceding calendar years, not including realized capital gai ns, less
612	594		dividends paid in the second an d immediate preceding calendar years.
613	595		Notwithstanding any other provision of law, an insurer may
614	596		declare an extraordinary dividend or distribution which is
615	597		conditional upon the Commissioner's approval, and the declar ation
616	598		shall confer no rights upon shareh olders until (1) the Commissioner
617	599		has approved the payment of the dividend or distribution or (2) the
618	600		Commissioner has not disappr oved payment within the thirty -day
619	601		period.
620	602		C. 1. Notwithstanding the control of a do mestic insurer by any
621	603		person, the officers and directors of the insurer shall not thereby
622	604		be relieved of any obligation or liability to which they would
623	605		otherwise be subject by law, and the insurer shall be man aged so as
624	606		to assure its separate operating id entity consistent with this act.
625	607		2. Nothing in this section shall preclude a domestic insurer
626	608		from having or sharing a common manage ment or cooperative or joint
627	609		use of personnel, property or services with one or more other
628	610		persons under arrangements meeti ng the standards of paragraph 1 of
629	611		subsection A of this section.
630	612		3. Not less than one-third (1/3) of the directors of a domestic
631	613		insurer, and not less than one -third (1/3) of the members of each
632	614		committee of the board of directors of any domestic insurer, shall
	615	+	be persons who are not officers o r employees of the insurer or of
633	616
634		-	SB1246 HFLR Page 13
635		-	BOLD FACE denotes Committee Amendments. 1
	617	+	ENGR. S. B. NO. 1246 Page 13 1
636	618		2
637	619		3
638	620		4
639	621		5
640	622		6
641	623		7
642	624		8
643	625		9
644	626		10
645	627		11
646	628		12
647	629		13
648	630		14
649	631		15
650	632		16
651	633		17
652	634		18
653	635		19
654	636		20
655	637		21
656	638		22
657	639		23
658	640		24
659	641
660		-	be persons who are not officers o r employees of the insurer or of
661	642		any entity controlling, controlled by, or under common contr ol with
662	643		the insurer and who are not b eneficial owners of a controlling
663	644		interest in the voting stock of the insurer or entit y. At least one
664	645		such person must be inc luded in any quorum for the transaction of
665	646		business at any meeting of the board of directors or any committee
666	647		thereof.
667	648		4. The board of directors of a domestic insurer sh all establish
668	649		one or more committees comprised solely of directors who are not
669	650		officers or employees of the insurer or of any entity controlling,
670	651		controlled by, or under common co ntrol with the insurer and who are
671	652		not beneficial owners of a controlling int erest in the voting stock
672	653		of the insurer or an y such entity. The committee or committ ees
673	654		shall have responsibility for nominating candidates for director for
674	655		election by sharehol ders or policyholders, evaluating the
675	656		performance of officers deemed to be pr incipal officers of the
676	657		insurer and recommendi ng to the board of directors the selecti on and
677	658		compensation of the principal officers.
678	659		5. The provisions of paragraphs 3 and 4 of th is subsection
679	660		shall not apply to a do mestic insurer if the person controlling the
680	661		insurer, such as an insurer, a mutual ins urance holding company, or
681	662		a publicly held corporation, has a board of directors and committees
682	663		thereof that meet the requirements of paragraphs 3 and 4 of this
683	664		subsection with respect to such controlling entit y.
684	665
685		-	SB1246 HFLR Page 14
686		-	BOLD FACE denotes Committee Amendments. 1
	666	+	ENGR. S. B. NO. 1246 Page 14 1
687	667		2
688	668		3
689	669		4
690	670		5
691	671		6
692	672		7
693	673		8
694	674		9
695	675		10
696	676		11
697	677		12
698	678		13
699	679		14
700	680		15
701	681		16
702	682		17
703	683		18
704	684		19
705	685		20
706	686		21
707	687		22
708	688		23
709	689		24
710	690
711	691		6. An insurer may make application to the Commissioner for a
712	692		waiver from the requi rements of this subsection, if the insurer's
713	693		annual direct written and assumed premium, exclu ding premiums
714	694		reinsured with the Fede ral Crop Insurance Corporation and Federal
715	695		Flood Program National Flood Insurance Progra m, is less than Three
716	696		Hundred Million Dollars ($300,000,000.00) . An insurer may also make
717	697		application to the Commissi oner for a waiver from the requirements
718	698		of this subsection based upon unique circum stances. The
719	699		Commissioner may consider various factors including, but not limited
720	700		to, the type of business entity, vo lume of business written,
721	701		availability of qualified boa rd members, or the ownership or
722	702		organizational structure of the entity.
723	703		D. For purposes of this act, in determining whethe r an
724	704		insurer's surplus as regards policyholder s is reasonable in relation
725	705		to the insurer's outstanding liabilities and adequate to me et its
726	706		financial needs, the following factors, among others, shall be
727	707		considered:
728	708		1. The size of the insurer as measured b y its assets, capital
729	709		and surplus, reserves, p remium writings, insurance in fo rce and
730	710		other appropriate criteria;
731	711		2. The extent to which the insurer's business is diversified
732	712		among several lines of insurance;
733	713		3. The number and size of risks insured in ea ch line of
734	714		business;
735	715
736		-	SB1246 HFLR Page 15
737		-	BOLD FACE denotes Committee Amendments. 1
	716	+	ENGR. S. B. NO. 1246 Page 15 1
738	717		2
739	718		3
740	719		4
741	720		5
742	721		6
743	722		7
744	723		8
745	724		9
746	725		10
747	726		11
748	727		12
749	728		13
750	729		14
751	730		15
752	731		16
753	732		17
754	733		18
755	734		19
756	735		20
757	736		21
758	737		22
759	738		23
760	739		24
761	740
762	741		4. The extent of the geo graphical dispersion of the insu rer's
763	742		insured risks;
764	743		5. The nature and extent of the i nsurer's reinsurance program;
765	744		6. The quality, diversification and liquidity of the insurer's
766	745		investment portfolio;
767	746		7. The recent past and projected future trend in the size of
768	747		the insurer's investment portfolio;
769	748		8. The surplus as regards policyholders m aintained by other
770	749		comparable insurers;
771	750		9. The adequacy of the insurer 's reserves; and
772	751		10. The quality and liquidity of i nvestments in affiliates.
773	752		The Commissioner may treat any such investment as a disallowed asset
774	753		for purposes of determining the adequ acy of surplus as regards
775	754		policyholders whenev er in the judgment of the Commissione r the
776	755		investment so warrants.
777	756		SECTION 2. AMENDATORY 36 O.S. 2021, Section 1901, is
778	757		amended to read as follows:
779	758		Section 1901. For the purpose of Article 19 of the Insurance
780	759		Code:
781	760		1. "Impairment" or "insolvency." The capital of a stock
782	761		insurer, or limited stock life, a ccident and health insurer, the net
783	762		assets of a Lloyds Lloyd’s association, or the surplus of a mutual
784	763		or reciprocal insurer, shall be deemed to be impaired and the
785	764		insurer shall be deemed to be insolvent, when such insurer shall not
786	765
787		-	SB1246 HFLR Page 16
788		-	BOLD FACE denotes Committee Amendments. 1
	766	+	ENGR. S. B. NO. 1246 Page 16 1
789	767		2
790	768		3
791	769		4
792	770		5
793	771		6
794	772		7
795	773		8
796	774		9
797	775		10
798	776		11
799	777		12
800	778		13
801	779		14
802	780		15
803	781		16
804	782		17
805	783		18
806	784		19
807	785		20
808	786		21
809	787		22
810	788		23
811	789		24
812	790
813	791		be possessed of assets at leas t equal to all liabilities and
814	792		required reserves together with its tot al issued and outstanding
815	793		capital stock if a stock insurer, the net assets if a Lloyds Lloyd’s
816	794		association, or the minimum surplus if a mutual or reciprocal
817	795		insurer required by this code to be maintained for the kind or kinds
818	796		of insurance it is then authorized to transact.
819	797		2. "Insurer" means any person, firm, corporation, health
820	798		maintenance organizations, association or aggregation of persons
821	799		doing an insurance business and subject to the insur ance supervisory
822	800		authority of, or to liquidatio n, rehabilitation, reorganization or
823	801		conservation by the Insurance Commissioner or the equivalent
824	802		insurance supervisory official of another state.
825	803		3. "Delinquency proceeding " means any proceeding commenced
826	804		against an insurer pursuant to this article for t he purpose of
827	805		liquidating, rehabilitating, reorganizing or conserving such
828	806		insurer.
829	807		4. "State" means any state of the United States and also the
830	808		District of Columbia, Alaska, Hawaii, and Puerto Rico.
831	809		5. "Foreign country" means territory not in any state.
832	810		6. "Domiciliary state" means the state in which an insurer is
833	811		incorporated or organiz ed, or in the case of an insurer incorporated
834	812		or organized in a foreign country, the state in which such insurer,
835	813		having become authorized to do business in such state, has at the
836	814		commencement of delinquency proceedings, the largest amount of its
837	815
838		-	SB1246 HFLR Page 17
839		-	BOLD FACE denotes Committee Amendments. 1
	816	+	ENGR. S. B. NO. 1246 Page 17 1
840	817		2
841	818		3
842	819		4
843	820		5
844	821		6
845	822		7
846	823		8
847	824		9
848	825		10
849	826		11
850	827		12
851	828		13
852	829		14
853	830		15
854	831		16
855	832		17
856	833		18
857	834		19
858	835		20
859	836		21
860	837		22
861	838		23
862	839		24
863	840
864	841		assets held in trust and assets held on deposit for the benefit of
865	842		its policyholders or policyholders and creditors in the United
866	843		States, and any such insurer is deemed to be dom iciled in such
867	844		state.
868	845		7. "Ancillary state" means any state other than a domiciliary
869	846		state.
870	847		8. "Reciprocal state" means any state other than this state in
871	848		which in substance and effect the provisions of the U niform Insurers
872	849		Liquidation Act, as defined in Section 1921 of this title, are in
873	850		force, including the provisions requiring that the I nsurance
874	851		Commissioner or equivalent insurance supervisory official be the
875	852		receiver of a delinquent insurer that has enacted a law that sets
876	853		forth a scheme for the admini stration of an insurer in receivership
877	854		by the state's insurance commissioner, or compar able insurance
878	855		regulatory official.
879	856		9. "General assets" means all property, real, personal or
880	857		otherwise, not specifically mortgaged, pledged, deposited or
881	858		otherwise encumbered for the security or benefit of specified
882	859		persons or a limited class or classes of persons, and as to such
883	860		specifically encumbered property the term includes all such property
884	861		or its proceeds in excess of the amount necessary to discharge the
885	862		sum or sums secured thereby. Assets held in trust and assets held
886	863		on deposit for the securit y or benefit of all policyholders or all
887	864
888		-	SB1246 HFLR Page 18
889		-	BOLD FACE denotes Committee Amendments. 1
	865	+	ENGR. S. B. NO. 1246 Page 18 1
890	866		2
891	867		3
892	868		4
893	869		5
894	870		6
895	871		7
896	872		8
897	873		9
898	874		10
899	875		11
900	876		12
901	877		13
902	878		14
903	879		15
904	880		16
905	881		17
906	882		18
907	883		19
908	884		20
909	885		21
910	886		22
911	887		23
912	888		24
913	889
914	890		policyholders and creditors in the United States shall be deemed
915	891		general assets.
916	892		10. "Preferred claim" means any claim with res pect to which the
917	893		law of the state or of the United States accords priority of
918	894		payments from the general assets of the insurer.
919	895		11. "Special deposit claim " means any claim secured by a
920	896		deposit made pursuant t o statute for the security or benefit of a
921	897		limited class or classes of persons, but not including any general
922	898		assets.
923	899		12. "Secured claim" means any claim secured by mortgage, trust
924	900		deed, pledge, deposit as security, escrow, or otherwise, but not
925	901		including special deposit claim or claims against genera l assets.
926	902		The term also includes claims which more than four months prior to
927	903		the commencement of delinquency proceedings in the state of the
928	904		insurer's domicile have become liens upon specific assets by reason
929	905		of judicial process.
930	906		13. "Receiver" means receiver, liquidator, rehabilitator, or
931	907		conservator as the context may require.
932	908		SECTION 3. AMENDATORY 36 O.S. 2021, Section 1918, is
933	909		amended to read as follows:
934	910		Section 1918. A. All claims against an insurer against which
935	911		delinquency proceedings have been begun shall set forth in
936	912		reasonable detail the amount of the c laim, or the basis upon which
937	913		such amount can be ascertained, the facts upon which the claim is
938	914
939		-	SB1246 HFLR Page 19
940		-	BOLD FACE denotes Committee Amendments. 1
	915	+	ENGR. S. B. NO. 1246 Page 19 1
941	916		2
942	917		3
943	918		4
944	919		5
945	920		6
946	921		7
947	922		8
948	923		9
949	924		10
950	925		11
951	926		12
952	927		13
953	928		14
954	929		15
955	930		16
956	931		17
957	932		18
958	933		19
959	934		20
960	935		21
961	936		22
962	937		23
963	938		24
964	939
965	940		based, and the priorities asserted, if any. All such claims shall
966	941		be verified signed by the affidavit of the claimant, or someone
967	942		authorized to act on his the claimant's behalf and having knowledge
968	943		of the facts, and shall be supported by such docu ments as may be
969	944		material thereto. The claimant shall, in the time and man ner set
970	945		forth by the receiver, fully comply with any and all requests by the
971	946		receiver for providing information or evidence that is supplementary
972	947		to the information that is required p ursuant to Article 19 of this
973	948		title including, but not limited to, testimony under oat h,
974	949		affidavits, and depositions.
975	950		B. All claims filed in this state shall be filed wit h the
976	951		receiver, whether domiciliary or ancillary, in this state, on or
977	952		before the last date for filing as specified in this article by the
978	953		court.
979	954		C. Within ten (10) days of the receipt of any claim, or within
980	955		such further period as the court may , for good cause shown; fix, the
981	956		receiver shall report the claim to the court, specifying in such
982	957		report his the receiver's recommendation with respect to the action
983	958		to be taken thereon. Upon receipt of such report, the court shall
984	959		fix a time for hearing the claim and shall direct that the claimant
985	960		or the receiver, as the court shall specify, shall give such notice
986	961		as the court shall determine to such persons as shall appear to th e
987	962		court to be interested therein. All such notices shall specify the
988	963		time and place of the hearing and shall concisely state the amount
989	964
990		-	SB1246 HFLR Page 20
991		-	BOLD FACE denotes Committee Amendments. 1
	965	+	ENGR. S. B. NO. 1246 Page 20 1
992	966		2
993	967		3
994	968		4
995	969		5
996	970		6
997	971		7
998	972		8
999	973		9
1000	974		10
1001	975		11
1002	976		12
1003	977		13
1004	978		14
1005	979		15
1006	980		16
1007	981		17
1008	982		18
1009	983		19
1010	984		20
1011	985		21
1012	986		22
1013	987		23
1014	988		24
1015	989
1016	990		and nature of the claim, the priorities asserted, if any, and the
1017	991		recommendation of the receiver with reference thereto .
1018	992		D. At the hearing, all persons interested shall be entitled to
1019	993		appear and the court shall enter an order allowing, allowing in
1020	994		part, or disallowing the claim. Any such order shall be deemed to
1021	995		be an appealable order.
1022	996		SECTION 4. AMENDATORY 36 O.S. 2021, Section 1930, is
1023	997		amended to read as follows:
1024	998		Section 1930. A. If upon commencement of delinquency
1025	999		proceedings under this article or at any time during the proceedings
1026	1000		the insurer shall not be clearly solvent, the court shall, after
1027	1001		such notice and hearing as it deems proper, make an order declaring
1028	1002		the insurer to be insolvent. Thereupon, regardless of any prior
1029	1003		notice which may have been given to creditors, the Insurance
1030	1004		Commissioner shall notify all persons who may have claim s against
1031	1005		the insurer and who have not filed proper proofs thereof to present
1032	1006		the same to the Commissioner, at a place specified in the notice,
1033	1007		within four (4) months from the date of entry of the order, or
1034	1008		within a longer time prescribed by the court not to exceed one
1035	1009		hundred eighty (180) days which shall be specified in the notice.
1036	1010		The notice shall be given in a manner determined by the court.
1037	1011		B. Only upon application of the liquidator, the receivership
1038	1012		court may allow alternative procedures and requir ements for the
1039	1013		filing of proofs of claim or for allowing or proving claims. Upon
1040	1014
1041		-	SB1246 HFLR Page 21
1042		-	BOLD FACE denotes Committee Amendments. 1
	1015	+	ENGR. S. B. NO. 1246 Page 21 1
1043	1016		2
1044	1017		3
1045	1018		4
1046	1019		5
1047	1020		6
1048	1021		7
1049	1022		8
1050	1023		9
1051	1024		10
1052	1025		11
1053	1026		12
1054	1027		13
1055	1028		14
1056	1029		15
1057	1030		16
1058	1031		17
1059	1032		18
1060	1033		19
1061	1034		20
1062	1035		21
1063	1036		22
1064	1037		23
1065	1038		24
1066	1039
1067	1040		application, if the court dispenses with the requirements of filing
1068	1041		a proof of claim by a person, class , or group of persons, a p roof of
1069	1042		claim for such a person, class , or group shall be deemed as having
1070	1043		been filed for all purposes, except that the receivership c ourt's
1071	1044		waiver of proof of claim requirements shall not impact guarant y
1072	1045		association proof of claim filing requirement or co verage
1073	1046		determinations to the extent that the g uaranty fund statute or
1074	1047		filing requirements are inconsistent with the court's waiver of
1075	1048		proof.
1076	1049		C. Proofs of claim may be filed after the date specified in the
1077	1050		notice, but no such claim shall share in the distr ibution of the
1078	1051		assets until all allowed claims , proofs of which have been filed
1079	1052		before that date, have been paid in full with interest .
1080	1053		SECTION 5. AMENDATORY 36 O.S. 2021, Section 1938, is
1081	1054		amended to read as follows:
1082	1055		Section 1938. A. Upon written notice to the receiver, a p erson
1083	1056		shall be placed on the service list to receive notice of matters
1084	1057		filed by the receiver. It shall be the responsibility of the person
1085	1058		requesting notice to inform the receiver in writing of any changes
1086	1059		to his or her address, or to request that his or h er name be deleted
1087	1060		from the service list. The receiver may require that the person on
1088	1061		the service list provide confirmation that they wish to remain on
1089	1062		the service list. Any person who fails to confirm upon the
1090	1063		receiver's request may be removed from the service list. Inclusion
1091	1064
1092		-	SB1246 HFLR Page 22
1093		-	BOLD FACE denotes Committee Amendments. 1
	1065	+	ENGR. S. B. NO. 1246 Page 22 1
1094	1066		2
1095	1067		3
1096	1068		4
1097	1069		5
1098	1070		6
1099	1071		7
1100	1072		8
1101	1073		9
1102	1074		10
1103	1075		11
1104	1076		12
1105	1077		13
1106	1078		14
1107	1079		15
1108	1080		16
1109	1081		17
1110	1082		18
1111	1083		19
1112	1084		20
1113	1085		21
1114	1086		22
1115	1087		23
1116	1088		24
1117	1089
1118	1090		on the service list does not confer standing in the delinquenc y
1119	1091		proceeding to raise, appear , or be heard on any issue.
1120	1092		B. Except as otherwise provided by this act, notice and hearing
1121	1093		of any matter submitted by the receiver to the receiv ership court
1122	1094		for approval pursuant to this act shall be conducted as follows:
1123	1095		1. The receiver shall file an application explaining the
1124	1096		proposed action and the basis for such action. The receiver may
1125	1097		include any evidence in support of the application. If the receiver
1126	1098		determines that any documents supporting the application are
1127	1099		confidential, the receiver may submit them to the receivership court
1128	1100		under seal for in camera inspection ;
1129	1101		2. The receiver shall provide notice of the application to all
1130	1102		persons on the service list and any other parties as determined by
1131	1103		the receiver. Notice may be provided by first class mail postage
1132	1104		paid, electronic mail, or facsimile transmission, at the receiver 's
1133	1105		discretion. For purposes of this section, notice is deemed to be
1134	1106		given on the date that it is deposited with the United States
1135	1107		Postmaster or transmitted, as applicable, to the last known address
1136	1108		as shown on the service list ;
1137	1109		3. Any party in interest objecting to the a pplication shall
1138	1110		file an objection specifying the ground s therefore within fourteen
1139	1111		(14) days or such longer time as the court may specify in the notice
1140	1112		of the filing of the application and shall serve copies on the
1141	1113		receiver and any other persons served wi th the application within
1142	1114
1143		-	SB1246 HFLR Page 23
1144		-	BOLD FACE denotes Committee Amendments. 1
	1115	+	ENGR. S. B. NO. 1246 Page 23 1
1145	1116		2
1146	1117		3
1147	1118		4
1148	1119		5
1149	1120		6
1150	1121		7
1151	1122		8
1152	1123		9
1153	1124		10
1154	1125		11
1155	1126		12
1156	1127		13
1157	1128		14
1158	1129		15
1159	1130		16
1160	1131		17
1161	1132		18
1162	1133		19
1163	1134		20
1164	1135		21
1165	1136		22
1166	1137		23
1167	1138		24
1168	1139
1169	1140		the same time period. An objecting party shall have the burden of
1170	1141		showing why the receivership court should not authorize the proposed
1171	1142		action;
1172	1143		4. If no objection to the application is timely filed, the
1173	1144		receivership court may ent er an order approving the application
1174	1145		without a hearing or hold a hearing to determine if the receiver's
1175	1146		application should be approved. The receiver may request that the
1176	1147		receivership court enter an order or hold a hearing on an expedited
1177	1148		basis; and
1178	1149		5. If an objection is timely filed, the receivership court may
1179	1150		hold a hearing. If the receivership court approves the application
1180	1151		and, upon a motion by the receiver, determines that the objection
1181	1152		was frivolous or filed merely for delay or for other improper
1182	1153		purpose, the receivership court shall order the objecting par ty to
1183	1154		pay the receiver's reasonable costs and fees of defending the
1184	1155		action.
1185	1156		A. C. In any proceeding commenced against an insurer pursuant
1186	1157		to Article 18 by a judicial proceeding or Article 19 of this title
1187	1158		for the purpose of liquidating, rehabilitating, re organizing, or
1188	1159		conserving such insurer, hereinafter called delinquency proceeding,
1189	1160		the compensation of personnel employed or retained to assist the
1190	1161		Insurance Department Commissioner with the proceeding shall be
1191	1162		approved by the court at a full hearing before the compensation may
1192	1163		be paid. The Insurance Commissioner shall apply to the court for
1193	1164
1194		-	SB1246 HFLR Page 24
1195		-	BOLD FACE denotes Committee Amendments. 1
	1165	+	ENGR. S. B. NO. 1246 Page 24 1
1196	1166		2
1197	1167		3
1198	1168		4
1199	1169		5
1200	1170		6
1201	1171		7
1202	1172		8
1203	1173		9
1204	1174		10
1205	1175		11
1206	1176		12
1207	1177		13
1208	1178		14
1209	1179		15
1210	1180		16
1211	1181		17
1212	1182		18
1213	1183		19
1214	1184		20
1215	1185		21
1216	1186		22
1217	1187		23
1218	1188		24
1219	1189
1220	1190		the hearing approval; provided, that if any board has been created
1221	1191		by law to commence and administer delinq uency proceedings under
1222	1192		Article 18 or 19 of this title, or if any board or association is
1223	1193		authorized by the Commissioner to provide assistance to the
1224	1194		Commissioner, the board or association shall apply to the court.
1225	1195		Provided, this section shall not apply t o a supervisorship
1226	1196		authorized by Article 18 of this title.
1227	1197		B. D. Upon receiving the application for approval of
1228	1198		compensation, the court shall schedule a hearing. The the party
1229	1199		responsible for the filing of the application shall cause notice in
1230	1200		writing of the application, time to file objections , and hearing to
1231	1201		be served upon the following persons not less than ten (10) days
1232	1202		before the hearing is scheduled objection period expires:
1233	1203		1. The persons or firms requesting the compensation;
1234	1204		2. The Commissioner, if not the applicant; and
1235	1205		3. Ten persons, or such lesser n umber as there may be, who hold
1236	1206		the largest number of shares in the insurance company involved in
1237	1207		the delinquency proceeding, as indicated by the company's stock
1238	1208		register as of the time that the c ompany was placed under
1239	1209		supervision pursuant to Section 1804 of this title or at the time
1240	1210		that an application was filed with the court for the commencement of
1241	1211		a delinquency proceeding pursuant to Se ction 1903 of this title.
1242	1212		Said shareholders shall serve a s representatives of the insurance
1243	1213		company.
1244	1214
1245		-	SB1246 HFLR Page 25
1246		-	BOLD FACE denotes Committee Amendments. 1
	1215	+	ENGR. S. B. NO. 1246 Page 25 1
1247	1216		2
1248	1217		3
1249	1218		4
1250	1219		5
1251	1220		6
1252	1221		7
1253	1222		8
1254	1223		9
1255	1224		10
1256	1225		11
1257	1226		12
1258	1227		13
1259	1228		14
1260	1229		15
1261	1230		16
1262	1231		17
1263	1232		18
1264	1233		19
1265	1234		20
1266	1235		21
1267	1236		22
1268	1237		23
1269	1238		24
1270	1239
1271	1240		C. E. The notice shall state the time and period for filing
1272	1241		objections, place of the hearing if there are objections, the
1273	1242		reasons for the hearing , and the following rights of any party
1274	1243		served with notice:
1275	1244		1. To appear in person at the hearing or to be represented by
1276	1245		counsel;
1277	1246		2. To testify under oath, call witnesses to testify, and
1278	1247		furnish documentary evidence, relevant to the determination of the
1279	1248		compensation;
1280	1249		3. To cross-examine witnesses and have a reasonabl e opportunity
1281	1250		to inspect all documentary evidence; and
1282	1251		4. To subpoena witnesses and compel the production of testimony
1283	1252		and documents, relevant to the determination of the compensation.
1284	1253		The person making service shall make an affidavit of such service
1285	1254		and file the notice and affidavit with the court.
1286	1255		D. F. At the hearing, the court shall fully investigate the
1287	1256		compensation of persons employed or retained to assist the Insurance
1288	1257		Department Commissioner with the conduct of the delinquency
1289	1258		proceeding. The court shall not approve the compensation until it
1290	1259		has been made to appear to the satisfaction of the court, based upon
1291	1260		competent evidence, that such compensation is justified.
1292	1261		SECTION 6. This act shall become effective November 1, 2022.
1293	1262
1294		-	COMMITTEE REPORT BY: COMMITTEE ON INSURANCE, dated 04/18/2022 - DO
1295		-	PASS.
	1263	+	ENGR. S. B. NO. 1246 Page 26 1
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	1287	+
	1288	+	Passed the Senate the 7th day of March, 2022.
	1289	+
	1290	+
	1291	+
	1292	+	Presiding Officer of the Senate
	1293	+
	1294	+
	1295	+	Passed the House of Representatives the ____ day of __________,
	1296	+	2022.
	1297	+
	1298	+
	1299	+
	1300	+	Presiding Officer of the House
	1301	+	of Representatives
	1302	+