Texas 2017 - 85th Regular

Texas House Bill HB3220 Compare Versions

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Version 2 (New)

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1		-	By: Phillips (Senate Sponsor - Hancock) H.B. No. 3220
2		-	(In the Senate - Received from the House May 1, 2017;
3		-	May 2, 2017, read first time and referred to Committee on
4		-	Administration; May 2, 2017, reported favorably by the following
5		-	vote: Yeas 6, Nays 0; May 2, 2017, sent to printer.)
6		-	Click here to see the committee vote
	1	+	H.B. No. 3220
7	2
8	3
9		-	A BILL TO BE ENTITLED
10	4		AN ACT
11	5		relating to the regulation of insurance holding company systems,
12	6		including internationally active insurance groups; authorizing a
13	7		fee.
14	8		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
15	9		SECTION 1. Section 823.002, Insurance Code, is amended by
16	10		adding Subdivisions (4-b) and (6-a) to read as follows:
17	11		(4-b) "Group-wide supervisor" means the regulatory
18	12		official authorized to engage in conducting and coordinating
19	13		group-wide supervision activities who is determined or
20	14		acknowledged by the commissioner under Section 823.0147 to have
21	15		sufficient significant contacts with the internationally active
22	16		insurance group.
23	17		(6-a) "Internationally active insurance group" means
24	18		an insurance holding company system that:
25	19		(A) includes an insurer registered under
26	20		Subchapter B; and
27	21		(B) meets the following criteria:
28	22		(i) has premiums written in at least three
29	23		countries;
30	24		(ii) has a percentage of gross premiums
31	25		written outside the United States of at least 10 percent of the
32	26		insurance holding company system's total gross written premiums;
33	27		and
34	28		(iii) based on a three-year rolling
35	29		average, has total assets of at least $50 billion or total gross
36	30		written premiums of at least $10 billion.
37	31		SECTION 2. Sections 823.011(a), (d), and (d-1), Insurance
38	32		Code, are amended to read as follows:
39	33		(a) This section applies only to information, including
40	34		documents and copies of documents, that is:
41	35		(1) reported or otherwise provided under Subchapter B
42	36		or C or Section 823.201(d) or (e) or Section 823.0147;
43	37		(2) disclosed to the commissioner under Section
44	38		823.010; or
45	39		(3) obtained by or disclosed to the commissioner or
46	40		another person in the course of an examination or investigation
47	41		under Subchapter H or Chapter 401.
48	42		(d) Except as provided by Subsection (e), if the recipient
49	43		of documents or other information described by Subsection (a)
50	44		agrees in writing to maintain the confidential and privileged
51	45		status of the documents or other information, and verifies in
52	46		writing the legal authority to maintain the confidential and
53	47		privileged status of the documents or information, the commissioner
54	48		or another person may disclose the information to any of the
55	49		following entities functioning in an official capacity:
56	50		(1) a commissioner of insurance or an insurance
57	51		department of another state;
58	52		(2) an authorized law enforcement official;
59	53		(3) a district attorney of this state;
60	54		(4) the attorney general;
61	55		(5) a grand jury;
62	56		(6) members of a supervisory college described by
63	57		Section 823.0145;
64	58		(7) the National Association of Insurance
65	59		Commissioners and its affiliates and subsidiaries; or
66	60		(8) another state, federal, or international
67	61		regulatory agency.
68	62		(d-1) The commissioner may receive documents or
69	63		information, including otherwise confidential and privileged
70	64		documents or information, from the entities listed in Subsection
71	65		(d)[,] and shall maintain as confidential or privileged any
72	66		document or information received by the commissioner with notice or
73	67		an understanding that the document or information is confidential
74	68		or privileged under the laws of the jurisdiction of the entity that
75	69		provides the document or information.
76	70		SECTION 3. Subchapter A, Chapter 823, Insurance Code, is
77	71		amended by adding Section 823.0147 to read as follows:
78	72		Sec. 823.0147. GROUP-WIDE SUPERVISION OF INTERNATIONALLY
79	73		ACTIVE INSURANCE GROUPS. (a) The commissioner is authorized to act
80	74		as the group-wide supervisor for any internationally active
81	75		insurance group under the provisions of this section.
82	76		(b) The commissioner may otherwise acknowledge another
83	77		regulatory official as the group-wide supervisor where the
84	78		internationally active insurance group:
85	79		(1) does not have substantial insurance operations in
86	80		the United States;
87	81		(2) has substantial insurance operations in the United
88	82		States, but not in this state; or
89	83		(3) has substantial insurance operations in the United
90	84		States and this state, but the commissioner has determined under
91	85		the factors in Subsections (e) and (k) that the other regulatory
92	86		official is the appropriate group-wide supervisor.
93	87		(c) An insurance holding company system that does not
94	88		otherwise qualify as an internationally active insurance group may
95	89		request that the commissioner make a determination or
96	90		acknowledgment as to a group-wide supervisor under this section.
97	91		(d) In cooperation with other state, federal, and
98	92		international regulatory agencies, the commissioner will identify
99	93		a single group-wide supervisor for an internationally active
100	94		insurance group. The commissioner may determine that the
101	95		commissioner is the appropriate group-wide supervisor for an
102	96		internationally active insurance group that conducts substantial
103	97		insurance operations concentrated in this state. The commissioner
104	98		may acknowledge that a regulatory official from another
105	99		jurisdiction is the appropriate group-wide supervisor for the
106	100		internationally active insurance group.
107	101		(e) The commissioner shall consider the following factors
108	102		when making a determination or acknowledgment under Subsection (d):
109	103		(1) the place of domicile of the insurers within the
110	104		internationally active insurance group that hold the largest share
111	105		of the group's written premiums, assets, or liabilities;
112	106		(2) the place of domicile of the top-tiered insurers
113	107		in the insurance holding company system of the internationally
114	108		active insurance group;
115	109		(3) the location of the executive offices or largest
116	110		operational offices of the internationally active insurance group;
117	111		(4) whether another regulatory official is acting or
118	112		is seeking to act as the group-wide supervisor under a regulatory
119	113		system that the commissioner determines to be:
120	114		(A) substantially similar to the system of
121	115		regulation provided under the laws of this state; or
122	116		(B) otherwise sufficient in terms of providing
123	117		for group-wide supervision, enterprise risk analysis, and
124	118		cooperation with other regulatory officials; and
125	119		(5) whether another regulatory official acting or
126	120		seeking to act as the group-wide supervisor provides the
127	121		commissioner with reasonably reciprocal recognition and
128	122		cooperation.
129	123		(f) A commissioner identified under this section as the
130	124		group-wide supervisor may determine that it is appropriate to
131	125		acknowledge another supervisor to serve as the group-wide
132	126		supervisor. The acknowledgment of the group-wide supervisor shall
133	127		be made after consideration of the factors listed in Subsection
134	128		(e), and shall be made in cooperation with and subject to the
135	129		acknowledgment of other regulatory officials involved with
136	130		supervision of members of the internationally active insurance
137	131		group, and in consultation with the internationally active
138	132		insurance group.
139	133		(g) Notwithstanding any other provision of law, when
140	134		another regulatory official is acting as the group-wide supervisor
141	135		of an internationally active insurance group, the commissioner
142	136		shall acknowledge that regulatory official as the group-wide
143	137		supervisor.
144	138		(h) The commissioner shall make a determination or
145	139		acknowledgment as to the appropriate group-wide supervisor for an
146	140		internationally active insurance group under Subsection (d) or (f)
147	141		in the event of a material change in the internationally active
148	142		insurance group that results in:
149	143		(1) the internationally active insurance group's
150	144		insurers domiciled in this state holding the largest share of the
151	145		group's premiums, assets, or liabilities; or
152	146		(2) this state being the place of domicile of the
153	147		top-tiered insurers in the insurance holding company system of the
154	148		internationally active insurance group.
155	149		(i) Under Subchapter H, the commissioner is authorized to
156	150		collect from any insurer registered under Subchapter B all
157	151		information necessary to determine whether the commissioner may act
158	152		as the group-wide supervisor of an internationally active insurance
159	153		group or if the commissioner may acknowledge another regulatory
160	154		official to act as the group-wide supervisor. Prior to issuing a
161	155		determination that an internationally active insurance group is
162	156		subject to group-wide supervision by the commissioner, the
163	157		commissioner shall notify the insurer registered under Subchapter B
164	158		and the ultimate controlling person within the internationally
165	159		active insurance group. The internationally active insurance group
166	160		shall have not less than 30 days to provide the commissioner with
167	161		additional information pertinent to the pending determination. The
168	162		commissioner may publish on the department's website the identity
169	163		of internationally active insurance groups that the commissioner
170	164		has determined are subject to group-wide supervision by the
171	165		commissioner.
172	166		(j) If the commissioner is the group-wide supervisor for an
173	167		internationally active insurance group, the commissioner is
174	168		authorized to engage in any of the following group-wide supervision
175	169		activities:
176	170		(1) assess the enterprise risks within the
177	171		internationally active insurance group to ensure that:
178	172		(A) the material financial condition and
179	173		liquidity risks to the members of the internationally active
180	174		insurance group that are engaged in the business of insurance are
181	175		identified by management; and
182	176		(B) reasonable and effective mitigation measures
183	177		are in place;
184	178		(2) request, from any member of an internationally
185	179		active insurance group subject to the commissioner's supervision,
186	180		information necessary and appropriate to assess enterprise risk,
187	181		including information about the members of the internationally
188	182		active insurance group regarding:
189	183		(A) governance, risk assessment, and management;
190	184		(B) capital adequacy; and
191	185		(C) material intercompany transactions;
192	186		(3) coordinate and, through the authority of the
193	187		regulatory officials of the jurisdictions where members of the
194	188		internationally active insurance group are domiciled, compel
195	189		development and implementation of reasonable measures designed to
196	190		ensure that the internationally active insurance group is able to
197	191		timely recognize and mitigate enterprise risks to members of the
198	192		internationally active insurance group that are engaged in the
199	193		business of insurance;
200	194		(4) communicate with other state, federal, and
201	195		international regulatory agencies for members within the
202	196		internationally active insurance group and share relevant
203	197		information, subject to the confidentiality provisions of Section
204	198		823.011, through supervisory colleges in Section 823.0145 or
205	199		otherwise;
206	200		(5) enter into agreements with or obtain documentation
207	201		from any insurer registered under Subchapter B, any member of the
208	202		internationally active insurance group, and any other state,
209	203		federal, and international regulatory agencies for members of the
210	204		internationally active insurance group, providing the basis for or
211	205		otherwise clarifying the commissioner's role as group-wide
212	206		supervisor, including provisions for resolving disputes with other
213	207		regulatory officials, provided that such agreements or
214	208		documentation may not serve as evidence in any proceeding to show
215	209		that any insurer or person within an insurance holding company
216	210		system not domiciled or incorporated in this state is doing
217	211		business in this state or is otherwise subject to jurisdiction in
218	212		this state; and
219	213		(6) other group-wide supervision activities,
220	214		consistent with the authorities and purposes enumerated above, as
221	215		considered necessary by the commissioner.
222	216		(k) If the commissioner acknowledges that another
223	217		regulatory official from a jurisdiction that is not accredited by
224	218		the National Association of Insurance Commissioners is the
225	219		group-wide supervisor, the commissioner is authorized to
226	220		reasonably cooperate, through supervisory colleges or otherwise,
227	221		with group-wide supervision undertaken by the group-wide
228	222		supervisor, provided that:
229	223		(1) the commissioner's cooperation is in compliance
230	224		with the laws of this state; and
231	225		(2) the regulatory official acknowledged as the
232	226		group-wide supervisor also recognizes and cooperates with the
233	227		commissioner's activities as a group-wide supervisor for other
234	228		internationally active insurance groups where applicable.
235	229		(l) Where recognition and cooperation are not reasonably
236	230		reciprocal under Subsection (k)(2), the commissioner is authorized
237	231		to refuse recognition and cooperation.
238	232		(m) The commissioner is authorized to enter into agreements
239	233		with or obtain documentation from any insurer registered under
240	234		Subchapter B, any affiliate of the insurer, and other state,
241	235		federal, and international regulatory agencies for members of the
242	236		internationally active insurance group that provides the basis for
243	237		or otherwise clarifies a regulatory official's role as group-wide
244	238		supervisor.
245	239		(n) The commissioner may adopt rules necessary for the
246	240		administration of this section.
247	241		(o) A registered insurer subject to this section shall be
248	242		liable for and shall pay the reasonable expenses of the
249	243		commissioner's participation in the administration of this
250	244		section, including the engagement of attorneys, actuaries, and any
251	245		other professionals and all reasonable travel expenses.
252	246		SECTION 4. Section 823.054(b), Insurance Code, is amended
253	247		to read as follows:
254	248		(b) If the amount of a single transaction or the total
255	249		amount of all transactions involving sales, purchases, exchanges,
256	250		loans or other extensions of credit, or investments is more than
257	251		[the lesser of] one-half of one percent of an insurer's admitted
258	252		assets [or five percent of an insurer's surplus,] as of December 31
259	253		of the year preceding the date of the transaction or transactions,
260	254		the transaction or transactions, respectively, are considered to be
261	255		material for purposes of this section.
262	256		SECTION 5. (a) Section 823.011, Insurance Code, as amended
263	257		by this Act, applies only to information, including documents and
264	258		copies of documents, obtained by or reported, disclosed, or
265	259		otherwise provided to the commissioner of insurance on or after the
266	260		effective date of this Act. Information, including documents and
267	261		copies of documents, obtained by or reported, disclosed, or
268	262		otherwise provided to the commissioner of insurance before the
269	263		effective date of this Act is governed by the law in effect on the
270	264		date the transaction occurred, and the former law is continued in
271	265		effect for that purpose.
272	266		(b) Section 823.054, Insurance Code, as amended by this Act,
273	267		applies only to a transaction that occurs on or after the effective
274	268		date of this Act. A transaction that occurs before the effective
275	269		date of this Act is governed by the law in effect on the date the
276	270		transaction occurred, and the former law is continued in effect for
277	271		that purpose.
278	272		SECTION 6. This Act takes effect immediately if it receives
279	273		a vote of two-thirds of all the members elected to each house, as
280	274		provided by Section 39, Article III, Texas Constitution. If this
281	275		Act does not receive the vote necessary for immediate effect, this
282	276		Act takes effect September 1, 2017.
283		-	* * * * *
	277	+	______________________________ ______________________________
	278	+	President of the Senate Speaker of the House
	279	+	I certify that H.B. No. 3220 was passed by the House on April
	280	+	28, 2017, by the following vote: Yeas 134, Nays 0, 2 present, not
	281	+	voting.
	282	+	______________________________
	283	+	Chief Clerk of the House
	284	+	I certify that H.B. No. 3220 was passed by the Senate on May
	285	+	8, 2017, by the following vote: Yeas 31, Nays 0.
	286	+	______________________________
	287	+	Secretary of the Senate
	288	+	APPROVED: _____________________
	289	+	Date
	290	+	_____________________
	291	+	Governor