Texas 2015 - 84th Regular

Texas Senate Bill SB655 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	By: Eltife S.B. No. 655
2		-	(Smithee)
	1	+	S.B. No. 655
3	2
4	3
5		-	A BILL TO BE ENTITLED
6	4		AN ACT
7	5		relating to own risk and solvency assessment by insurers and
8	6		insurance groups; providing a penalty.
9	7		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	8		SECTION 1. Subtitle B, Title 6, Insurance Code, is amended
11	9		by adding Chapter 830 to read as follows:
12	10		CHAPTER 830. OWN RISK AND SOLVENCY ASSESSMENT
13	11		Sec. 830.001. APPLICABILITY AND PURPOSE. (a) This chapter
14	12		applies to each domestic insurer unless exempt under Section
15	13		830.006.
16	14		(b) The purpose of this chapter is to provide the
17	15		requirements for maintaining a risk management framework and
18	16		completing an own risk and solvency assessment and to provide
19	17		guidance and instructions for filing an own risk and solvency
20	18		assessment summary report with the commissioner.
21	19		(c) The own risk and solvency assessment summary report will
22	20		contain confidential and sensitive information related to an
23	21		insurer or insurance group's identification of risks material and
24	22		relevant to the insurer or insurance group filing the report. This
25	23		information will include proprietary and trade secret information
26	24		that has the potential for harm and competitive disadvantage to the
27	25		insurer or insurance group if the information is made public. The
28	26		summary report is a confidential document filed with the
29	27		commissioner, and the commissioner may share the summary report
30	28		only as stated in this chapter in order to assist the commissioner
31	29		in the performance of the commissioner's duties. An own risk and
32	30		solvency assessment summary report is not subject to public
33	31		disclosure in any event.
34	32		Sec. 830.002. DEFINITIONS. In this chapter:
35	33		(1) "Guidance manual" means the version of the Own
36	34		Risk and Solvency Assessment Guidance Manual developed and adopted
37	35		by the National Association of Insurance Commissioners that is in
38	36		effect at the time a summary report is provided. A change in the
39	37		guidance manual becomes effective on the January 1 following the
40	38		calendar year in which the changes are adopted by the National
41	39		Association of Insurance Commissioners.
42	40		(2) "Insurance group" means the insurers and
43	41		affiliates included within an insurance holding company system as
44	42		described by Section 823.006.
45	43		(3) "Insurer" has the meaning assigned by Section
46	44		823.002(6).
47	45		(4) "Own risk and solvency assessment" means a
48	46		confidential internal assessment, appropriate to the nature,
49	47		scale, and complexity of an insurer or insurance group, conducted
50	48		by that insurer or insurance group, of the material and relevant
51	49		risks associated with the insurer or insurance group's current
52	50		business plan and the sufficiency of capital resources to support
53	51		those risks.
54	52		(5) "Summary report" means a confidential, high-level
55	53		summary of an insurer's or insurance group's own risk and solvency
56	54		assessment.
57	55		Sec. 830.003. RISK MANAGEMENT FRAMEWORK. An insurer shall
58	56		maintain a risk management framework to assist the insurer with
59	57		identifying, assessing, monitoring, managing, and reporting on the
60	58		insurer's material and relevant risks. This requirement may be
61	59		satisfied if the insurance group of which the insurer is a member
62	60		maintains a risk management framework applicable to the operations
63	61		of the insurer.
64	62		Sec. 830.004. OWN RISK AND SOLVENCY ASSESSMENT REQUIREMENT.
65	63		(a) Subject to Section 830.006, an insurer, or the insurance group
66	64		of which the insurer is a member, shall regularly conduct,
67	65		consistent with a process comparable to the guidance manual, an own
68	66		risk and solvency assessment, appropriate to the nature, scale, and
69	67		complexity of the insurer or insurance group, of the material and
70	68		relevant risks associated with the insurer's or insurance group's
71	69		current business plan and the sufficiency of capital resources to
72	70		support those risks.
73	71		(b) The insurer, or the insurance group of which the insurer
74	72		is a member, shall conduct the own risk and solvency assessment
75	73		described by Subsection (a):
76	74		(1) annually; and
77	75		(2) at any other time there are significant changes to
78	76		the risk profile of the insurer or the insurance group of which the
79	77		insurer is a member.
80	78		Sec. 830.005. SUMMARY REPORT REQUIRED. (a) On the
81	79		commissioner's request, an insurer shall submit to the commissioner
82	80		a summary report or a combination of reports that together contain
83	81		the information described in the guidance manual. The commissioner
84	82		may not make a request under this subsection more than once each
85	83		year.
86	84		(b) Without regard to whether the commissioner has made a
87	85		request under Subsection (a), if the insurer is a member of an
88	86		insurance group, the insurer shall submit to the commissioner the
89	87		reports required by Subsection (a) if the commissioner is the lead
90	88		state commissioner of the insurance group.
91	89		(c) In determining the lead state commissioner for purposes
92	90		of this section, the commissioner shall consider the procedures
93	91		adopted by the National Association of Insurance Commissioners.
94	92		(d) The reports must include a signature of the insurer's or
95	93		insurance group's chief risk officer or other executive responsible
96	94		for the oversight of the insurer's enterprise risk management
97	95		process attesting to the best of the officer's or executive's belief
98	96		and knowledge that:
99	97		(1) the insurer applies the enterprise risk management
100	98		process described in the summary report; and
101	99		(2) a copy of the report has been provided to the
102	100		insurer's board of directors or the appropriate committee of the
103	101		board of directors.
104	102		(e) An insurer may comply with Subsection (a) or (b) by
105	103		providing the most recent and substantially similar report that the
106	104		insurer or another member of an insurance group of which the insurer
107	105		is a member provided to the commissioner of another state or to a
108	106		supervisor or regulator of a foreign jurisdiction, if that report
109	107		provides information that is comparable to the information
110	108		described in the guidance manual. A report in a language other than
111	109		English must be accompanied by a translation of that report into the
112	110		English language.
113	111		Sec. 830.006. EXEMPTION. (a) An insurer is exempt from
114	112		the requirements of this chapter if:
115	113		(1) the insurer has annual direct written and
116	114		unaffiliated assumed premium, including international direct and
117	115		assumed premium but excluding premiums reinsured with the Federal
118	116		Crop Insurance Corporation and Federal Flood Program, of less than
119	117		$500 million; and
120	118		(2) the insurance group of which the insurer is a
121	119		member has annual direct written and unaffiliated assumed premium,
122	120		including international direct and assumed premium but excluding
123	121		premiums reinsured with the Federal Crop Insurance Corporation and
124	122		Federal Flood Program, of less than $1 billion.
125	123		(b) If an insurer qualifies for exemption under Subsection
126	124		(a)(1), but the insurance group of which the insurer is a member
127	125		does not qualify for exemption under Subsection (a)(2), then the
128	126		summary report required under Section 830.005 must include every
129	127		insurer within the insurance group.
130	128		(c) An insurer may satisfy the requirement under Subsection
131	129		(b) by submitting more than one summary report for any combination
132	130		of insurers if the combination of reports includes each insurer
133	131		within the insurance group.
134	132		(d) If an insurer does not qualify for exemption under
135	133		Subsection (a)(1), but the insurance group of which it is a member
136	134		qualifies for exemption under Subsection (a)(2), then the insurer
137	135		must submit a summary report under Section 830.005 that is
138	136		applicable to that insurer.
139	137		(e) An insurer that does not qualify for exemption under
140	138		Subsection (a) may apply to the commissioner for a waiver from the
141	139		requirements of this chapter based on unique circumstances. In
142	140		deciding whether to grant the insurer's request for waiver, the
143	141		commissioner may consider the type and volume of business written,
144	142		the ownership and organizational structure, and any other factor
145	143		the commissioner considers relevant to the insurer or insurance
146	144		group of which the insurer is a member. If the insurer is part of an
147	145		insurance group with insurers domiciled in more than one state, the
148	146		commissioner shall coordinate with the lead state commissioner and
149	147		with the other domiciliary commissioners in considering whether to
150	148		grant the insurer's request for a waiver.
151	149		(f) Notwithstanding the exemptions stated in this section,
152	150		the commissioner may require that an insurer maintain a risk
153	151		management framework, conduct an own risk and solvency assessment,
154	152		and file a summary report if:
155	153		(1) there are unique circumstances, including the type
156	154		and volume of business written, the ownership and organizational
157	155		structure, federal agency requests, and international supervisor
158	156		requests;
159	157		(2) the insurer has risk-based capital for a company
160	158		action level event as set forth in department rules;
161	159		(3) the insurer meets one or more of the standards of
162	160		an insurer considered to be in hazardous financial condition under
163	161		Chapter 404 or department rule; or
164	162		(4) the insurer otherwise exhibits qualities of a
165	163		troubled insurer as determined by the commissioner.
166	164		(g) If an insurer that qualifies for an exemption under
167	165		Subsection (a) subsequently ceases to qualify for that exemption
168	166		due to changes in premium as reflected in the insurer's most recent
169	167		annual statement or in the most recent annual statements of the
170	168		insurers within the insurance group of which the insurer is a
171	169		member, the insurer must comply with the requirements of this
172	170		chapter not later than December 31 of the calendar year following
173	171		the calendar year the threshold is exceeded.
174	172		Sec. 830.007. CONTENTS OF SUMMARY REPORT. (a) An insurer
175	173		shall prepare a summary report in accordance with the guidance
176	174		manual and subject to the requirements of Subsection (b). An
177	175		insurer shall maintain documentation and supporting information
178	176		and shall make the documentation and supporting information
179	177		available on examination or on request of the commissioner.
180	178		(b) When reviewing the summary report or making requests for
181	179		additional information, the department shall use procedures
182	180		similar to the procedures currently used in the analysis and
183	181		examination of multistate or global insurers and insurance groups.
184	182		Sec. 830.008. CONFIDENTIALITY. (a) Documents, materials,
185	183		or other information, including a summary report, in the possession
186	184		or control of the department that is obtained by, created by, or
187	185		disclosed to the commissioner or any other person under this
188	186		chapter, including documents, materials, and other information
189	187		shared or received under Subsection (e), and documents, materials,
190	188		or other information in the possession or control of the National
191	189		Association of Insurance Commissioners or third-party consultant
192	190		under this chapter, are confidential and privileged and not subject
193	191		to:
194	192		(1) Chapter 552, Government Code;
195	193		(2) a response to subpoena; or
196	194		(3) discovery or admissibility in evidence in any
197	195		civil action.
198	196		(b) Documents, materials, or other information, including a
199	197		summary report prepared under this chapter and additional
200	198		information submitted under Section 830.007, in the possession or
201	199		control of the department that is obtained by, created by, or
202	200		disclosed to the commissioner or any other person under this
203	201		chapter is recognized by this state as being proprietary and to
204	202		contain trade secrets.
205	203		(c) The commissioner may use the documents, materials, or
206	204		other information described in this section to further any
207	205		regulatory or legal action brought as part of the commissioner's
208	206		official duties. The commissioner shall not otherwise make the
209	207		documents, materials, or other information public without the prior
210	208		written consent of the insurer.
211	209		(d) The commissioner and any other person who receives own
212	210		risk and solvency assessment-related information under this
213	211		chapter, in an examination, or otherwise under any other law may not
214	212		testify or be required to testify in any private civil action
215	213		concerning any documents, materials, or information subject to
216	214		Subsection (a) or (b).
217	215		(e) In order to assist in the performance of the
218	216		commissioner's regulatory duties, the commissioner may, on
219	217		request, share documents, materials, or other own risk and solvency
220	218		assessment-related information, including confidential and
221	219		privileged documents, materials, or information subject to
222	220		Subsection (a) or (b) or confidential or privileged documents,
223	221		materials, or information subject to Chapter 401, 404, or 823, as
224	222		necessary, with:
225	223		(1) other state, federal, and international financial
226	224		regulatory agencies or insurance supervisors;
227	225		(2) members of a supervisory college described in
228	226		Section 823.0145;
229	227		(3) the National Association of Insurance
230	228		Commissioners; or
231	229		(4) a third-party consultant designated by the
232	230		commissioner.
233	231		(f) Before the commissioner may share information under
234	232		this section, the recipient of the information shall:
235	233		(1) agree in writing to maintain the confidential and
236	234		privileged status of the documents, materials, or other information
237	235		shared under this section; and
238	236		(2) verify in writing the recipient's legal authority
239	237		to maintain the confidential and privileged status of that
240	238		information.
241	239		(g) The commissioner may receive documents, materials, or
242	240		other own risk and solvency assessment-related information or any
243	241		other relevant information, including otherwise confidential and
244	242		privileged documents, materials, or information and proprietary
245	243		and trade-secret information or documents, from:
246	244		(1) a regulatory official of a foreign or domestic
247	245		jurisdiction, including a member of a supervisory college described
248	246		in Section 823.0145; and
249	247		(2) the National Association of Insurance
250	248		Commissioners.
251	249		(h) The commissioner shall maintain as confidential or
252	250		privileged any documents, materials, or information received under
253	251		Subsection (g) with notice and understanding that it is
254	252		confidential or privileged under the laws of the jurisdiction that
255	253		is the source of the document, material, or information.
256	254		Sec. 830.009. AGREEMENT CONCERNING CONFIDENTIAL AND
257	255		PRIVILEGED INFORMATION. (a) The commissioner shall enter into a
258	256		written agreement with the National Association of Insurance
259	257		Commissioners or a third-party consultant that governs the sharing
260	258		and use of information provided under this chapter. The agreement
261	259		must comply with and contain all the requirements listed in this
262	260		section.
263	261		(b) The agreement must specify procedures and protocols
264	262		regarding the confidentiality and security of information shared
265	263		with the National Association of Insurance Commissioners or
266	264		third-party consultant under this chapter, including procedures
267	265		and protocols for sharing by the National Association of Insurance
268	266		Commissioners with other state regulators from states in which the
269	267		insurance group has domiciled insurers.
270	268		(c) The agreement must provide that the recipient:
271	269		(1) agrees in writing to maintain the confidential and
272	270		privileged status of the own risk and solvency assessment-related
273	271		documents, materials, or other information; and
274	272		(2) has verified in writing the legal authority to
275	273		maintain the confidential and privileged status of the information.
276	274		(d) The agreement must specify that ownership of
277	275		information shared with the National Association of Insurance
278	276		Commissioners or third-party consultant under this chapter remains
279	277		with the commissioner and that the National Association of
280	278		Insurance Commissioners' or third-party consultant's use of the
281	279		information is subject to the direction of the commissioner.
282	280		(e) The agreement must prohibit the National Association of
283	281		Insurance Commissioners or third-party consultant from storing the
284	282		information shared under this chapter in a permanent database after
285	283		the underlying analysis is completed.
286	284		(f) The agreement must require prompt notice to be given to
287	285		an insurer whose confidential information in the possession of the
288	286		National Association of Insurance Commissioners or third-party
289	287		consultant under this chapter is subject to a request or subpoena to
290	288		the National Association of Insurance Commissioners or third-party
291	289		consultant for disclosure or production.
292	290		(g) The agreement must require the National Association of
293	291		Insurance Commissioners or third-party consultant to consent to
294	292		intervention by an insurer in any judicial or administrative action
295	293		in which the National Association of Insurance Commissioners or
296	294		third-party consultant may be required to disclose confidential
297	295		information about the insurer shared with the National Association
298	296		of Insurance Commissioners or third-party consultant under this
299	297		chapter.
300	298		(h) The agreement must provide for the insurer's written
301	299		consent in the case of an agreement involving a third-party
302	300		consultant.
303	301		Sec. 830.010. AUTHORITY OF COMMISSIONER NOT AFFECTED. The
304	302		commissioner's sharing of information and documents under this
305	303		chapter does not constitute a delegation of regulatory authority or
306	304		rulemaking, and the commissioner is solely responsible for the
307	305		administration, execution, and enforcement of the provisions of
308	306		this chapter.
309	307		Sec. 830.011. PRIVILEGE AND CONFIDENTIALITY NOT WAIVED. A
310	308		waiver of an applicable privilege or claim of confidentiality in a
311	309		document, proprietary and trade-secret materials, or other own risk
312	310		and solvency assessment-related information does not occur as a
313	311		result of disclosure of the document, materials, or other
314	312		information to the commissioner under this chapter or as a result of
315	313		sharing as authorized by this chapter.
316	314		Sec. 830.012. ADMINISTRATIVE PENALTY. (a) An insurer
317	315		that, without good cause, fails to timely file the summary report as
318	316		required by this chapter commits a violation subject to an
319	317		administrative penalty under Chapter 84.
320	318		(b) Each day the violation continues is a separate violation
321	319		for purposes of this section.
322	320		(c) The commissioner may reduce the amount of the penalty
323	321		assessed under this section if the insurer demonstrates to the
324	322		commissioner that the imposition of the penalty would constitute a
325	323		financial hardship to the insurer.
326	324		SECTION 2. Notwithstanding Chapter 830, Insurance Code, as
327	325		added by this Act, an insurer is not required to submit a summary
328	326		report as required by that chapter before January 1, 2016.
329	327		SECTION 3. This Act takes effect immediately if it receives
330	328		a vote of two-thirds of all the members elected to each house, as
331	329		provided by Section 39, Article III, Texas Constitution. If this
332	330		Act does not receive the vote necessary for immediate effect, this
333	331		Act takes effect September 1, 2015.
	332	+	______________________________ ______________________________
	333	+	President of the Senate Speaker of the House
	334	+	I hereby certify that S.B. No. 655 passed the Senate on
	335	+	April 9, 2015, by the following vote: Yeas 30, Nays 1.
	336	+	______________________________
	337	+	Secretary of the Senate
	338	+	I hereby certify that S.B. No. 655 passed the House on
	339	+	May 6, 2015, by the following vote: Yeas 133, Nays 14, two
	340	+	present not voting.
	341	+	______________________________
	342	+	Chief Clerk of the House
	343	+	Approved:
	344	+	______________________________
	345	+	Date
	346	+	______________________________
	347	+	Governor