An Act
ENROLLED SENATE
BILL NO. 738 By: Montgomery of the Senate
and
McEntire of the House
An Act relating to insurance; amending 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 an entity an insurer; requiring notice and
filing for asserted insolvent insurers; directing
compliance with the Insurance Commissioner's
requirements; authorizing supervision of insure r;
imposing fine; authorizing promulgation of rules; and
providing an effective date.
SUBJECT: Insurance
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 pursuant to the
Interlocal Cooperation Act (an "Interlocal Entity") for the purpose
of transacting insurance, except those Interlocal Entities created
pursuant to the terms of The Governmental Tort Claims Act, that
insures an Oklahoma educational institution shall be considered an
insurer at such time that the entity has within a twelve -month
period received aggregate premiums of One Million Dollars
($1,000,000.00) for all kinds of insurance that the entity
ENR. S. B. NO. 738 Page 2
transacts. Such an 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 educational institution and
has within a twelve-month period received premiums or contributions
of any amount for any kind of insurance that the Interlocal 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 immediately
following the close of the Interlocal Entity's fiscal year. The
annual audited financial report shall be presented in conformity
with accounting principles generally accepted in the United States
of America and include:
1. The report of an independent 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 op erations;
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 represent s 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 entitie s which purchase full insurance
coverage as determined by the Commissioner, shall file with the
Insurance Commissioner an actuarial opinion prepared by a qualified
actuary within one hundred eighty (180) days immediately following
ENR. S. B. NO. 738 Page 3
the close of the Interloc al 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 Interlo cal Entity's premiums. The actuarial opinion
shall be consistent with the appropriate Actuarial Standards of
Practice (ASOP) as promulgated by the Actuarial Standards Board.
As used in this section, "qualified actuary" means an individual
who is a member of the American Academy of Actuaries and who has met
the Qualification Standards for Actuaries Issuing Statements of
Actuarial Opinions in the United States promulgated by the American
Academy of Actuaries.
D. Extensions of the filing date may be grante d 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 submitted 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 insp ection pursuant to the
Oklahoma Open Records Act.
G. The Insurance Commissioner shall, if there is substantial
reason to believe that any insurer subject to this section is
insolvent, or if any such insurer's condition is such as to render
the continuance of its business hazardous to the public or to
holders of its policies or certificates of insurance, or it has
exceeded its powers, or it has failed to comply with the law, or if
such insurer gives its consent:
1. Notify the insurer and its participatin g members of the
Commissioner's determination;
ENR. S. B. NO. 738 Page 4
2. Require the insurer to file with the Insurance Commissioner
a written plan of action to abate the Commissioner's determination
within thirty (30) days of notification; and
3. If the Commissioner makes a further determination to
supervise, notify the insurer that it is under supervision pursuant
to this section.
H. An insurer subject to subsection G of this section shall
comply with the lawful requirements of the Commissioner and, if
placed under supervision, shall have ninety (90) days from the date
of notice within which to comply with the requirements of the
Commissioner unless the Commissioner designates a lesser or greater
period of time or unless the Commissioner determines at any time
during or after the ninety-day period of time that judicial or
administrative proceedings should be initiated to place such insurer
in conservation, rehabilitation or liquidation proceedings or other
delinquency proceedings, pursuant to Sections 1801 through 1920 of
this title. If such insurer does not comply with such requirements,
such supervision may continue until such requirements are remedied
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 subsection G of this
section in an amount of not more than Five Hundred Dollars ($500.00)
per day.
J. The Insurance Commissioner may promulgate rules to im plement
the provisions of this section.
SECTION 2. This act shall become effective November 1, 2021.
ENR. S. B. NO. 738 Page 5
Passed the Senate the 29th day of April, 2021.
Presiding Officer of the Senate
Passed the House of Representatives the 21st day of April, 2021.
Presiding Officer of the House
of Representatives
OFFICE OF THE GOVERNOR
Received by the Office of the Governor this _______ _____________
day of _________________ __, 20_______, at _______ o'clock _______ M.
By: _______________________ __________
Approved by the Governor of the State of Oklahoma this _____ ____
day of _________________ __, 20_______, at _______ o'clock _______ M.
_________________________________
Governor of the State of Oklahoma
OFFICE OF THE SECRETARY OF STATE
Received by the Office of the Secretary of State this _______ ___
day of __________________, 20 _______, at _______ o'clock _______ M.
By: _______________________________ __