83R24158 TJS-F
By: Hancock S.B. No. 1379
(Sheets)
Substitute the following for S.B. No. 1379: No.
A BILL TO BE ENTITLED
AN ACT
relating to the standard valuation for life insurance, accident and
health insurance, and annuities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 425.052, Insurance Code, is amended by
amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) In this subchapter:
(1) "Accident and health insurance" means contracts
that incorporate morbidity risk and provide protection against
economic loss resulting from accident, sickness, or medical
conditions and as may be specified in the valuation manual.
(2) "Appointed actuary" means a qualified actuary who
is appointed in accordance with the valuation manual to prepare the
actuarial opinion required by Section 425.0545.
(3) "Company" means an entity that:
(A) has written, issued, or reinsured life
insurance contracts, accident and health insurance contracts, or
deposit-type contracts in this state and has at least one such
policy in force or on claim; or
(B) has written, issued, or reinsured life
insurance contracts, accident and health insurance contracts, or
deposit-type contracts in any state and is required to hold a
certificate of authority to write life insurance, accident and
health insurance, or deposit-type contracts in this state.
(4) "Deposit-type contract" means a contract that does
not incorporate mortality or morbidity risk and as may be specified
in the valuation manual.
(5) "Life insurance" means contracts that incorporate
mortality risk, including annuity and pure endowment contracts, and
as may be specified in the valuation manual.
(6) "Policyholder behavior" means any action a
policyholder, a contract holder, or any other person with the right
to elect options, such as a certificate holder, may take under a
policy or contract subject to this subchapter, including lapse,
withdrawal, transfer, deposit, premium payment, loan,
annuitization, or benefit elections prescribed by the policy or
contract but excluding events of mortality or morbidity that result
in benefits prescribed in their essential aspects by the terms of
the policy or contract.
(7) "Principle-based valuation" means the valuation
described by Section 425.074.
(8) "Qualified actuary" means an individual who is
qualified to sign the applicable statement of actuarial opinion in
accordance with the American Academy of Actuaries' qualification
standards for actuaries signing such statements and who meets the
requirements specified in the valuation manual.
(9) "Reserves" [, "reserves"] means reserve
liabilities.
(10) "Tail risk" means a risk that occurs either where
the frequency of low probability events is higher than expected
under a normal probability distribution or where there are observed
events of very significant size or magnitude.
(11) "Valuation manual" means the manual of valuation
instructions adopted by the commissioner by order.
(c) The definitions under Subsection (a) of "accident and
health insurance," "appointed actuary," "company," "deposit-type
contract," "life insurance," "policyholder behavior,"
"principle-based valuation," "qualified actuary," and "tail risk"
apply only on and after the operative date of the valuation manual.
SECTION 2. The heading to Section 425.053, Insurance Code,
is amended to read as follows:
Sec. 425.053. ANNUAL VALUATION OF RESERVES FOR POLICIES AND
CONTRACTS ISSUED BEFORE OPERATIVE DATE OF VALUATION MANUAL.
SECTION 3. Section 425.053, Insurance Code, is amended by
amending Subsections (a) and (c) and adding Subsections (d) and (e)
to read as follows:
(a) The department shall annually value or cause to be
[have] valued the reserves for all outstanding life insurance
policies and annuity and pure endowment contracts of each life
insurance company engaged in business in this state issued before
the operative date of the valuation manual. [The department may
certify the amount of those reserves, specifying the mortality
table or tables, rate or rates of interest, and methods, including
the net level premium method or another method, used in computing
those reserves.]
(c) Instead of valuing the reserves as required by
Subsection (a) for a foreign or alien company, the department may
accept any valuation made by or for the insurance supervisory
official of another state or jurisdiction if[:
[(1)] the valuation complies with the minimum standard
provided by this subchapter[; and
[(2) the official accepts as sufficient and valid for
all legal purposes a certificate of valuation made by the
department that states the valuation was made in a specified manner
according to which the aggregate reserves would be at least as large
as they would be if computed in the manner prescribed by the law of
that state or jurisdiction].
(d) Except as otherwise provided by this subchapter,
policies and contracts issued on or after the operative date of the
valuation manual are governed by Section 425.0535.
(e) The minimum standards for the valuation of policies and
contracts issued before the operative date of the valuation manual
are as provided by Sections 425.058 through 425.071 and Section
425.072(b), as applicable. Sections 425.072(a), 425.073, and
425.074 do not apply to a policy or contract described by this
subsection.
SECTION 4. Subchapter B, Chapter 425, Insurance Code, is
amended by adding Section 425.0535 to read as follows:
Sec. 425.0535. ANNUAL VALUATION OF RESERVES FOR POLICIES
AND CONTRACTS ISSUED ON OR AFTER OPERATIVE DATE OF VALUATION
MANUAL. (a) The commissioner shall annually value, or cause to be
valued, the reserves for all outstanding life insurance contracts,
annuity and pure endowment contracts, accident and health
contracts, and deposit-type contracts of each company issued on or
after the operative date of the valuation manual as provided by this
section.
(b) In lieu of the valuation of the reserves required of a
foreign or alien company, the commissioner may accept a valuation
made, or caused to be made, by the insurance supervisory official of
another state if the valuation complies with the minimum standard
provided by this subchapter.
(c) Sections 425.072(a), 425.073, and 425.074 apply to all
policies and contracts issued on or after the operative date of the
valuation manual.
SECTION 5. The heading to Section 425.054, Insurance Code,
is amended to read as follows:
Sec. 425.054. ACTUARIAL OPINION OF RESERVES BEFORE
OPERATIVE DATE OF VALUATION MANUAL [REQUIRED].
SECTION 6. Section 425.054, Insurance Code, is amended by
amending Subsection (a) and adding Subsections (a-1), (j), (k),
(l), (m), (n), (o), (p), and (q) to read as follows:
(a) This section applies only to an actuarial opinion of
reserves before the operative date of the valuation manual.
(a-1) For purposes of this section, "qualified actuary"
means:
(1) a qualified actuary, as that term is defined by
Section 802.002; or
(2) a person who, before September 1, 1993, satisfied
the requirements of the former State Board of Insurance to submit an
opinion under former Section 2A(a)(1), Article 3.28.
(j) Except as provided by Subsections (l), (n), (o), and
(p), any document or other information in the possession or control
of the department that is a memorandum in support of the opinion or
other material provided by the company to the commissioner in
connection with a memorandum is confidential and not subject to:
(1) disclosure under Chapter 552, Government Code;
(2) subpoena;
(3) discovery; or
(4) admissibility as evidence in a private civil
action.
(k) The commissioner or any person who receives a document
or other information described by Subsection (j) while acting under
the authority of the commissioner may not testify and may not be
compelled to testify in a private civil action concerning the
document or other information.
(l) The commissioner may:
(1) share documents or other information, including
the confidential and privileged documents or information described
by Subsection (j), with another state, federal, or international
regulatory agency, with the National Association of Insurance
Commissioners and its affiliates and subsidiaries, and with state,
federal, and international law enforcement authorities, provided
that the recipient agrees to maintain the confidentiality of the
document or information;
(2) receive documents or other information, including
confidential documents or information, from the National
Association of Insurance Commissioners and its affiliates and
subsidiaries, and from regulatory and law enforcement officials of
other foreign or domestic jurisdictions, provided that the
commissioner shall maintain as confidential any document or
information received with notice or understanding that it is
confidential under the laws of the jurisdiction that is the source
of the document or information; and
(3) enter into agreements governing sharing and use of
documents and other information consistent with this section.
(m) Disclosing information or providing a document to the
commissioner under this section, or sharing information as
authorized under this section, does not result in a waiver of any
applicable privilege or claim of confidentiality that may apply to
the document or information.
(n) A memorandum in support of the opinion, and any other
material provided by the company to the commissioner in connection
with the memorandum, may be subject to subpoena for the purpose of
defending an action seeking damages from the actuary submitting the
memorandum by reason of an action required by this section or rules
adopted under this section.
(o) The memorandum or other material provided by the company
to the commissioner in connection with the memorandum may otherwise
be released by the commissioner with the written consent of the
company, or to the Actuarial Board for Counseling and Discipline or
its successor on receipt of a request stating that the memorandum or
other material is required for the purpose of professional
disciplinary proceedings and setting forth procedures satisfactory
to the commissioner for preserving the confidentiality of the
memorandum or other material.
(p) The memorandum ceases to be confidential if:
(1) any portion of the memorandum is cited by the
company in its marketing;
(2) the memorandum is cited by the company before a
government agency other than a state insurance department; or
(3) the memorandum is released by the company to the
news media.
(q) This section does not prohibit the commissioner from
using information acquired under this section in the furtherance of
a legal or regulatory action relating to the administration of this
code.
SECTION 7. Subchapter B, Chapter 425, Insurance Code, is
amended by adding Section 425.0545 to read as follows:
Sec. 425.0545. ACTUARIAL OPINION OF RESERVES AFTER
OPERATIVE DATE OF VALUATION MANUAL. (a) A company that has
outstanding life insurance contracts, accident and health
insurance contracts, or deposit-type contracts in this state and is
subject to regulation by the department shall annually submit the
opinion of the appointed actuary as to whether the reserves and
related actuarial items held in support of the policies and
contracts are computed appropriately, are based on assumptions that
satisfy contractual provisions, are consistent with prior reported
amounts, and are in compliance with applicable laws of this state.
An opinion under this section must comply with provisions of the
valuation manual, including in regard to any items necessary to its
scope.
(b) Unless exempted by the valuation manual, a company
described by Subsection (a) shall include with the opinion required
by that subsection an opinion of the same appointed actuary
concerning whether the reserves and related actuarial items held in
support of the policies and contracts specified in the valuation
manual, when considered in light of the assets held by the company
with respect to the reserves and related actuarial items, including
investment earnings on the assets and considerations anticipated to
be received and retained under the policies and contracts, make
adequate provision for the company's obligations under the policies
and contracts, including benefits under and expenses associated
with the policies and contracts.
(c) Each opinion required by this section must:
(1) be in the form and contain the substance that is
specified by the valuation manual and is acceptable to the
commissioner;
(2) be submitted with the annual statement reflecting
the valuation of reserves for each year ending on or after the
operative date of the valuation manual;
(3) apply to all policies and contracts subject to
this section, plus other actuarial liabilities specified by the
valuation manual; and
(4) be based on standards adopted from time to time by
the Actuarial Standards Board or its successor, and on any
additional standards prescribed by the valuation manual.
(d) In the case of an opinion required to be submitted by a
foreign or alien company, the commissioner may accept the opinion
filed by the company with the insurance supervisory official of
another state if the commissioner determines that the opinion
reasonably meets the requirements applicable to a company domiciled
in this state.
SECTION 8. Section 425.055(a), Insurance Code, is amended
to read as follows:
(a) A memorandum [that, in form and substance, complies with
the commissioner's rules] shall be prepared to support each
actuarial opinion required by Section 425.054 or 425.0545. The
form and substance of each supporting memorandum must comply with
the commissioner's rules for memorandums subject to Section
425.054, or the valuation manual for memorandums subject to Section
425.0545.
SECTION 9. Section 425.056(a), Insurance Code, is amended
to read as follows:
(a) Except in cases of fraud or wilful misconduct or as
provided by Subsection (b), a person who certifies an opinion under
Section 425.054 or 425.0545 is not liable for damages to a person,
other than the life insurance company covered by the opinion, for an
act, error, omission, decision, or other conduct with respect to
the person's opinion.
SECTION 10. Section 425.057, Insurance Code, is amended to
read as follows:
Sec. 425.057. DISCIPLINARY ACTION: COMPANY OR PERSON
CERTIFYING OPINION. A company or person that certifies an opinion
under Section 425.054 or 425.0545 and that violates Section
425.054, 425.0545, or 425.055 or rules adopted or orders issued
under those sections is subject to disciplinary action under
Chapter 82.
SECTION 11. The heading to Section 425.058, Insurance Code,
is amended to read as follows:
Sec. 425.058. COMPUTATION [VALUATION] OF MINIMUM STANDARD
[POLICY OR CONTRACT]: GENERAL RULE.
SECTION 12. The heading to Section 425.059, Insurance Code,
is amended to read as follows:
Sec. 425.059. COMPUTATION [VALUATION] OF MINIMUM STANDARD
FOR CERTAIN ANNUITIES AND PURE ENDOWMENT CONTRACTS.
SECTION 13. The heading to Section 425.064, Insurance Code,
is amended to read as follows:
Sec. 425.064. COMMISSIONERS RESERVE VALUATION METHOD FOR
LIFE INSURANCE AND ENDOWMENT BENEFITS.
SECTION 14. The heading to Section 425.065, Insurance Code,
is amended to read as follows:
Sec. 425.065. COMMISSIONERS ANNUITY RESERVE VALUATION
METHOD FOR ANNUITY AND PURE ENDOWMENT BENEFITS.
SECTION 15. Subchapter B, Chapter 425, Insurance Code, is
amended by adding Sections 425.072, 425.073, 425.074, 425.075,
425.076, and 425.077 to read as follows:
Sec. 425.072. MINIMUM STANDARD FOR ACCIDENT AND HEALTH
INSURANCE CONTRACTS. (a) The standard prescribed by the valuation
manual for accident and health insurance contracts issued on or
after the operative date of the valuation manual is the minimum
standard of valuation required under Section 425.0535.
(b) For disability, accident and sickness, and accident and
health insurance contracts issued before the operative date of the
valuation manual, the minimum standard of valuation is the standard
in existence before the operative date of the valuation manual.
Sec. 425.073. POLICIES ISSUED ON OR AFTER THE OPERATIVE
DATE OF THE VALUATION MANUAL. (a) Except as otherwise provided by
this section, for policies issued on or after the operative date of
the valuation manual, the standard prescribed by the valuation
manual is the minimum standard of valuation required under Section
425.0535.
(b) The commissioner by order shall adopt a valuation manual
and determine the operative date of the valuation manual. A
valuation manual adopted by the commissioner under this section
must be substantially similar to the valuation manual approved by
the National Association of Insurance Commissioners. The operative
date must be January 1 of the first calendar year immediately
following a year in which, on or before July 1, the commissioner
determines that:
(1) the valuation manual has been adopted by the
National Association of Insurance Commissioners by an affirmative
vote of at least 42 members, or three-fourths of the members voting,
whichever is greater;
(2) the National Association of Insurance
Commissioners Standard Model Valuation Law, as amended by the
National Association of Insurance Commissioners in 2009, or
legislation including substantially similar terms and provisions,
has been enacted by states representing greater than 75 percent of
the direct premiums written as reported in the following annual
statements submitted for 2008:
(A) life insurance and accident and health annual
statements;
(B) health annual statements; or
(C) fraternal annual statements; and
(3) the National Association of Insurance
Commissioners Standard Model Valuation Law, as amended by the
National Association of Insurance Commissioners in 2009, or
legislation including substantially similar terms and provisions,
has been enacted by at least 42 of the following 55 jurisdictions:
(A) the 50 United States;
(B) American Samoa;
(C) the United States Virgin Islands;
(D) the District of Columbia;
(E) Guam; and
(F) Puerto Rico.
(c) After a valuation manual has been adopted by the
commissioner by order, any changes to the valuation manual must be
adopted by order and must be substantially similar to changes
adopted by the National Association of Insurance Commissioners.
Unless a change in the valuation specifies a later effective date,
the effective date for changes to the valuation manual may not be
earlier than January 1 of the year immediately following the date on
which the commissioner determines that the changes to the valuation
manual have been adopted by the National Association of Insurance
Commissioners by an affirmative vote representing:
(1) at least three-fourths of the members of the
National Association of Insurance Commissioners voting, but not
less than a majority of the total membership; and
(2) members of the National Association of Insurance
Commissioners representing jurisdictions totaling greater than 75
percent of the direct premiums written as reported in the most
recently available annual statements as provided by Subsections
(b)(2)(A)-(C).
(d) The valuation manual must specify:
(1) the minimum valuation standards for and
definitions of the policies or contracts subject to Section
425.0535, including:
(A) the commissioner's reserve valuation method
for life insurance contracts subject to Section 425.0535;
(B) the commissioner's annuity reserve
valuation method for annuity contracts subject to Section 425.0535;
and
(C) the minimum reserves for all other policies
or contracts subject to Section 425.0535;
(2) the policies or contracts that are subject to the
requirements of a principle-based valuation under Section 425.074
and the minimum valuation standards consistent with those
requirements, including:
(A) the requirements for the format of reports to
the commissioner under Section 425.074(b)(3), which must include
the information necessary to determine if a valuation is
appropriate and in compliance with this subchapter;
(B) the assumptions prescribed for risks over
which the company does not have significant control or influence;
and
(C) the procedures for corporate governance and
oversight of the actuarial function, and a process for appropriate
waiver or modification of the procedures;
(3) the policies that are not subject to a
principle-based valuation under Section 425.074;
(4) the data and form of data required under Section
425.074, to whom the data must be submitted, and other desired
requirements, including requirements concerning data analyses and
reporting of analyses; and
(5) other requirements, including requirements
relating to reserve methods, models for measuring risk, generation
of economic scenarios, assumptions, margins, use of company
experience, disclosure, certification, reports, actuarial opinions
and memorandums, transition rules, and internal controls.
(e) With respect to policies that are not subject to a
principle-based valuation under Section 425.074 as described by
Subsection (d)(3), the minimum valuation standard specified in the
valuation manual must:
(1) be consistent with the minimum valuation standard
before the operative date of the valuation manual; or
(2) develop reserves that quantify the benefits and
guarantees, and the funding, associated with the contracts and
their risks at a level of conservatism that reflects conditions
that include unfavorable events that have a reasonable probability
of occurring.
(f) In the absence of a specific valuation requirement or if
a specific valuation requirement in the valuation manual does not
in the commissioner's opinion comply with this subchapter, the
company shall, with respect to the requirement, comply with minimum
valuation standards prescribed by the commissioner by rule.
(g) The commissioner may employ or contract with a qualified
actuary, at the expense of the company, to perform an actuarial
examination of the company and provide an opinion concerning the
appropriateness of any reserve assumption or method used by the
company, or to review and provide an opinion on a company's
compliance with any requirement of this subchapter. The
commissioner may rely on the opinion, regarding provisions
contained within this subchapter, of a qualified actuary engaged by
the insurance supervisory official of another state.
(h) The commissioner may require a company to change an
assumption or method as necessary in the commissioner's opinion to
comply with a requirement of the valuation manual or this
subchapter.
(i) The commissioner may take other disciplinary action as
permitted under Chapter 82.
Sec. 425.074. REQUIREMENTS OF A PRINCIPLE-BASED VALUATION.
(a) A company shall establish reserves using a principle-based
valuation that meets the conditions for policies or contracts
provided by the valuation manual. At a minimum, the valuation
shall:
(1) quantify the benefits and guarantees, and the
funding, associated with the contracts and their risks at a level of
conservatism that reflects conditions that include unfavorable
events that have a reasonable probability of occurring during the
terms of the contracts;
(2) with respect to policies and contracts with
significant tail risk, reflect conditions appropriately adverse to
quantify the tail risk;
(3) incorporate assumptions, risk analysis methods,
and financial models and management techniques that are consistent
with those used in the company's overall risk assessment process,
while recognizing potential differences in financial reporting
structures and any prescribed assumptions or methods;
(4) incorporate assumptions:
(A) prescribed by the valuation manual; or
(B) established:
(i) using the company's available
experience, to the extent that data is relevant and statistically
credible; or
(ii) to the extent that the company data is
not available, relevant, or statistically credible, using other
relevant, statistically credible experience; and
(5) provide margins for uncertainty, including
adverse deviation and estimation error, such that the greater the
uncertainty the larger the margin and resulting reserve.
(b) A company using a principle-based valuation for one or
more policies or contracts subject to this section and as specified
by the valuation manual shall:
(1) establish procedures for corporate governance and
oversight of the actuarial valuation function consistent with
procedures specified by the valuation manual;
(2) provide to the commissioner and the company's
board of directors an annual certification of the effectiveness of
the internal controls with respect to the principle-based
valuation; and
(3) develop, and file with the commissioner on
request, a principle-based valuation report that complies with
standards prescribed in the valuation manual.
(c) A company's internal controls with respect to the
principle-based valuation must be designed to ensure that all
material risks inherent in the liabilities and associated assets
subject to the valuation are included in the valuation, and that
valuations are made in accordance with the valuation manual. The
certification described by Subsection (b)(2) must be based on the
controls in place as of the end of the preceding calendar year.
(d) A principle-based valuation may include a prescribed
formulaic reserve component.
Sec. 425.075. EXPERIENCE REPORTING FOR POLICIES IN FORCE ON
OR AFTER OPERATIVE DATE OF VALUATION MANUAL. A company shall submit
mortality, morbidity, policyholder behavior, or expense experience
and other data as prescribed in the valuation manual.
Sec. 425.076. CONFIDENTIALITY. (a) In this section,
"confidential information" means:
(1) a memorandum in support of an opinion submitted
under Section 425.0545 and any other documents, materials, and
other information, including, but not limited to, all working
papers, and copies thereof, created, produced, or obtained by or
disclosed to the commissioner or any other person in connection
with such memorandum;
(2) all documents, materials, and other information,
including, but not limited to, all working papers, and copies
thereof, created, produced, or obtained by or disclosed to the
commissioner or any other person in the course of an examination
made under Section 425.073(g); provided, however, that if an
examination report or other material prepared in connection with an
examination made under Subchapter B, Chapter 401, is not held as
private and confidential information under Subchapter B, Chapter
401, an examination report or other material prepared in connection
with an examination made under Section 425.073(g) shall not be
"confidential information" to the same extent as if such
examination report or other material had been prepared under
Subchapter B, Chapter 401;
(3) any reports, documents, materials, and other
information developed by a company in support of, or in connection
with, an annual certification by the company under Section
425.074(b)(2) evaluating the effectiveness of the company's
internal controls with respect to a principle-based valuation and
any other documents, materials, and other information, including,
but not limited to, all working papers, and copies thereof,
created, produced, or obtained by or disclosed to the commissioner
or any other person in connection with such reports, documents,
materials, and other information;
(4) any principle-based valuation report developed
under Section 425.074(b)(3) and any other documents, materials, and
other information, including, but not limited to, all working
papers, and copies thereof, created, produced, or obtained by or
disclosed to the commissioner or any other person in connection
with such report; and
(5) any documents, materials, data, and other
information submitted by a company under Section 425.075
(collectively, "experience data") and any other documents,
materials, data, and other information, including, but not limited
to, all working papers, and copies thereof, created or produced in
connection with such experience data, in each case that include any
potentially company-identifying or personally identifiable
information, that is provided to or obtained by the commissioner
(together with any "experience data," the "experience materials")
and any other documents, materials, data, and other information,
including, but not limited to, all working papers, and copies
thereof, created, produced, or obtained by or disclosed to the
commissioner or any other person in connection with such experience
materials.
(b) Except as provided in this section, a company's
confidential information is confidential by law and privileged, and
shall not be subject to Chapter 552, Government Code, shall not be
subject to subpoena, and shall not be subject to discovery or
admissible in evidence in any private civil action; provided,
however, that the commissioner is authorized to use the
confidential information in the furtherance of any regulatory or
legal action brought against the company as a part of the
commissioner's official duties.
(c) Neither the commissioner nor any person who received
confidential information while acting under the authority of the
commissioner shall be permitted or required to testify in any
private civil action concerning any confidential information.
(d) In order to assist in the performance of the
commissioner's duties, the commissioner may share confidential
information (1) with other state, federal, and international
regulatory agencies and with the National Association of Insurance
Commissioners and its affiliates and subsidiaries and (2) in the
case of confidential information specified in Subsections (a)(1)
and (a)(4) only, with the Actuarial Board for Counseling and
Discipline or its successor upon request stating that the
confidential information is required for the purpose of
professional disciplinary proceedings and with state, federal, and
international law enforcement officials; in the case of (1) and
(2), provided that such recipient agrees, and has the legal
authority to agree, to maintain the confidentiality and privileged
status of such documents, materials, data, and other information in
the same manner and to the same extent as required for the
commissioner.
(e) The commissioner may receive documents, materials,
data, and other information, including otherwise confidential and
privileged documents, materials, data, or information, from the
National Association of Insurance Commissioners and its affiliates
and subsidiaries, from regulatory or law enforcement officials of
other foreign or domestic jurisdictions and from the Actuarial
Board for Counseling and Discipline or its successor and shall
maintain as confidential or privileged any document, material,
data, or other information received with notice or the
understanding that it is confidential or privileged under the laws
of the jurisdiction that is the source of the document, material, or
other information.
(f) The commissioner may enter into agreements governing
sharing and use of information consistent with Subsections (b)
through (k).
(g) No waiver of any applicable privilege or claim of
confidentiality in the confidential information shall occur as a
result of disclosure to the commissioner under this section or as a
result of sharing as authorized in Subsection (d).
(h) A privilege established under the law of any state or
jurisdiction that is substantially similar to the privilege
established under Subsections (b) through (k) shall be available
and enforced in any proceeding in, and in any court of, this state.
(i) In this section, a reference to a regulatory agency, law
enforcement agency, or the National Association of Insurance
Commissioners includes an employee, agent, consultant, or
contractor of the agency or association, as applicable.
(j) Notwithstanding this section, any confidential
information specified in Subsections (a)(1) and (a)(4) may be:
(1) subject to subpoena for the purpose of defending
an action seeking damages from the appointed actuary submitting the
related memorandum in support of an opinion submitted under Section
425.054 or 425.0545 or a principle-based valuation report developed
under Section 425.074(b)(3) by reason of an action required by this
subchapter or by rules adopted or orders issued under this
subchapter; and
(2) released by the commissioner with the written
consent of the company.
(k) Once any portion of a memorandum in support of an
opinion submitted under Section 425.0545 or a principle-based
valuation report developed under Section 425.074(b)(3) is cited by
the company in its marketing or is publicly volunteered to or before
a governmental agency other than a state insurance department or is
released by the company to the news media, all portions of such
memorandum or report shall no longer be confidential.
Sec. 425.077. SINGLE STATE EXEMPTION. The commissioner may
exempt specific product forms or product lines of a domestic
company that is licensed and doing business only in this state from
the requirements of Section 425.073 if:
(1) the commissioner has issued an exemption in
writing to the company and has not subsequently revoked the
exemption in writing; and
(2) the company computes reserves using assumptions
and methods used before the operative date of the valuation manual
in addition to any requirements established by the commissioner and
adopted by rule.
SECTION 16. The commissioner of insurance shall determine
whether the National Association of Insurance Commissioners and a
sufficient number of states and other jurisdictions have adopted a
valuation manual as required by Section 425.073(b), Insurance Code,
as added by this Act. As soon as practicable after the commissioner
of insurance determines that the National Association of Insurance
Commissioners and a sufficient number of states and other
jurisdictions have adopted the valuation manual as required by that
section, the commissioner of insurance shall adopt rules or issue
orders necessary to implement this Act.
SECTION 17. This Act takes effect January 1, 2014.