85R6548 BEE-F
By: Hancock S.B. No. 1071
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of insurance holding company systems,
including internationally active insurance groups; authorizing a
fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 823.011(a), (d), and (d-1), Insurance
Code, are amended to read as follows:
(a) This section applies only to information, including
documents and copies of documents, that is:
(1) reported or otherwise provided under Subchapter
I-1, B, or C or Section 823.201(d) or (e);
(2) disclosed to the commissioner under Section
823.010; or
(3) obtained by or disclosed to the commissioner or
another person in the course of an examination or investigation
under Subchapter H or Chapter 401.
(d) Except as provided by Subsection (e), if the recipient
of documents or other information to which this section applies
agrees in writing to maintain the confidential and privileged
status of the documents or other information, and verifies in
writing the legal authority to maintain the confidential and
privileged status of the documents or information, the commissioner
or another person may disclose the information to any of the
following entities functioning in an official capacity:
(1) a commissioner of insurance or an insurance
department of another state;
(2) an authorized law enforcement official;
(3) a district attorney of this state;
(4) the attorney general;
(5) a grand jury;
(6) members of a supervisory college described by
Section 823.0145;
(7) the National Association of Insurance
Commissioners and its affiliates and subsidiaries; or
(8) another state, federal, or international
regulatory agency.
(d-1) The commissioner may receive documents or
information, including otherwise confidential and privileged
documents or information, from the entities listed in Subsection
(d)[,] and shall maintain as confidential or privileged any
document or information received by the commissioner with notice or
an understanding that the document or information is confidential
or privileged under the laws of the jurisdiction of the entity that
provides the document or information.
SECTION 2. Section 823.054(b), Insurance Code, is amended
to read as follows:
(b) If the amount of a single transaction or the total
amount of all transactions involving sales, purchases, exchanges,
loans or other extensions of credit, or investments is more than
[the lesser of] one-half of one percent of an insurer's admitted
assets [or five percent of an insurer's surplus,] as of December 31
of the year preceding the date of the transaction or transactions,
the transaction or transactions, respectively, are considered to be
material for purposes of this section.
SECTION 3. Chapter 823, Insurance Code, is amended by
adding Subchapter I-1 to read as follows:
SUBCHAPTER I-1. GROUP-WIDE SUPERVISION OF INTERNATIONALLY ACTIVE
INSURANCE GROUPS
Sec. 823.421. DEFINITIONS. In this subchapter:
(1) "Foreign regulatory official" means a
governmental official of another state or country who is authorized
to regulate an internationally active insurance group in accordance
with this subchapter.
(2) "Group-wide supervisor" means the regulatory
official designated by the commissioner to have sufficient
significant contacts with an internationally active insurance
group to conduct and coordinate group-wide supervision activities
for the internationally active insurance group under this
subchapter.
(3) "Internationally active insurance group" means an
insurance holding company system described by Section 823.422 and
includes an insurer registered under Subchapter B.
Sec. 823.422. CLASSIFICATION AS INTERNATIONALLY ACTIVE
INSURANCE GROUP. (a) For purposes of this subchapter and except as
provided by Subsection (c), an insurance holding company system is
an internationally active insurance group if the insurance holding
company system:
(1) writes premiums in at least three countries;
(2) writes at least 10 percent of the insurance
holding company system's total gross written premiums outside the
United States; and
(3) for the period described by Subsection (b):
(A) has average total assets of at least $50
billion; or
(B) writes total gross premiums of an average of
at least $10 billion.
(b) The period applicable to Subsection (a)(3) is:
(1) the three most recent fiscal years of the
insurance holding company system that precede the fiscal year in
which the determination under this section is made; or
(2) if the insurance holding company system has been
in operation for less than the period described by Subdivision (1),
the period for which the insurance holding company system has been
in operation.
(c) The commissioner may waive a requirement described by
Subsection (a) in determining an insurance holding company system
to be an internationally active insurance group if the commissioner
determines that the insurance holding company system substantially
satisfies Subsection (a).
(d) The commissioner may publish on the department's
Internet website a list of insurance holding company systems
classified as internationally active insurance groups under this
section.
Sec. 823.423. DESIGNATION OF GROUP-WIDE SUPERVISOR. (a)
In cooperation with other state, federal, and international
regulatory agencies and in consultation with the internationally
active insurance group, the commissioner shall designate a single
group-wide supervisor for each group in accordance with this
subchapter. The commissioner may not designate a group-wide
supervisor before the period for additional information under
Section 823.425 has expired.
(b) The commissioner shall designate the commissioner or a
foreign regulatory official as the group-wide supervisor under
Subsection (a).
(c) At the request of an insurance holding company system
registered under Subchapter B that does not otherwise meet the
requirements of an internationally active insurance group under
Section 823.422, the commissioner may designate a group-wide
supervisor for the insurance holding company system in accordance
with this subchapter.
Sec. 823.424. INFORMATION FOR DESIGNATION. The
commissioner may order the production of information in accordance
with Subchapter H necessary to make a designation under Section
823.423 from an insurer registered under Subchapter B that is part
of the internationally active insurance group.
Sec. 823.425. NOTICE OF DESIGNATION; ADDITIONAL
INFORMATION FOR DESIGNATION. (a) In this section, "ultimate
controlling person" means the person in an internationally active
insurance group who is not controlled by another person.
(b) Before making a designation under Section 823.423, the
commissioner shall provide written notice that the commissioner is
making a designation under that section to:
(1) each insurer registered under Subchapter B that is
a member of the insurance holding company system to be designated as
an internationally active insurance group; and
(2) the ultimate controlling person of the insurance
holding company system.
(c) The insurance holding company system to be designated as
an internationally active insurance group shall provide any
additional information to the commissioner for a designation under
Section 823.423 not later than the 30th day after the date the group
receives the notice described by Subsection (b).
Sec. 823.426. DESIGNATION OF COMMISSIONER. (a) The
commissioner may designate the commissioner as the group-wide
supervisor for any internationally active insurance group under
Section 823.423.
(b) Except as provided by Section 823.427, the commissioner
shall designate the commissioner as the group-wide supervisor of an
internationally active insurance group under Section 823.423 if the
group conducts substantial insurance operations in this state.
Sec. 823.427. DESIGNATION OF FOREIGN REGULATORY OFFICIAL.
(a) The commissioner shall designate a foreign regulatory official
as the group-wide supervisor under Section 823.423 if the foreign
regulatory official acts as the group-wide supervisor.
(b) The commissioner may designate a foreign regulatory
official as the group-wide supervisor under Section 823.423 if:
(1) the foreign regulatory official consents to the
designation; and
(2) the internationally active insurance group:
(A) does not have substantial insurance
operations in this state; or
(B) has substantial insurance operations in this
state, but the commissioner has determined that the foreign
regulatory official is a more appropriate supervisor in accordance
with this section.
(c) In determining whether a foreign regulatory official is
a more appropriate group-wide supervisor under Subsection
(b)(2)(B), the commissioner shall consider:
(1) the place of domicile of the insurers within the
internationally active insurance group that hold the largest share
of the group's written premiums, assets, or liabilities;
(2) the place of domicile of the top-tiered insurers
in the insurance holding company system of the internationally
active insurance group;
(3) the location of the executive offices or largest
operational offices of the internationally active insurance group;
(4) whether a foreign regulatory official is acting or
is seeking to act as the group-wide supervisor under a regulatory
system that the commissioner determines to be:
(A) substantially similar to the system of
regulation provided under the laws of this state; or
(B) otherwise sufficient in terms of providing
for group-wide supervision, enterprise risk analysis, and
cooperation with other regulatory officials; and
(5) whether a foreign regulatory official acting or
seeking to act as the group-wide supervisor provides the
commissioner with reasonably reciprocal recognition and
cooperation.
Sec. 823.428. CHANGE OF DESIGNATION. The commissioner may
change the designation of a foreign regulatory official as the
group-wide supervisor under Section 823.423 in the event of a
material change that results in:
(1) the internationally active insurance group's
insurers domiciled in this state holding the largest share of the
group's premiums, assets, or liabilities; or
(2) this state being the place of domicile of the
top-tiered insurers in the insurance holding company system of an
internationally active insurance group.
Sec. 823.429. POWERS OF COMMISSIONER AS GROUP-WIDE
SUPERVISOR. (a) This section applies only to an internationally
active insurance group for which the commissioner is designated as
the group-wide supervisor.
(b) The commissioner may assess the enterprise risks within
the internationally active insurance group to ensure that:
(1) the material financial condition and liquidity
risks to the members of the group that are engaged in the business
of insurance are identified by management; and
(2) reasonable and effective mitigation measures are
in place.
(c) The commissioner may request from any member of the
internationally active insurance group information necessary and
appropriate to assess enterprise risk, including information about
the members of the group regarding:
(1) governance, risk assessment, and management;
(2) capital adequacy; and
(3) material intercompany transactions.
(d) The commissioner may coordinate and, through the
authority of the regulatory officials of the jurisdictions in which
members of the internationally active insurance group are
domiciled, compel development and implementation of reasonable
measures designed to ensure that the group is able to timely
recognize and mitigate enterprise risks to members of the group
that are engaged in the business of insurance.
(e) The commissioner may communicate with other state,
federal, and international regulatory agencies for members of the
internationally active insurance group and share relevant
information subject to Section 823.011, through supervisory
colleges described by Section 823.0145 or otherwise.
(f) The commissioner may enter into agreements, including
an agreement for resolving disputes with other regulatory
officials, with or obtain documentation related to the
commissioner's role as group-wide supervisor from:
(1) any insurer registered under Subchapter B;
(2) any member of the internationally active insurance
group; and
(3) any other state, federal, or international
agencies regulating members of the internationally active
insurance group.
(g) The commissioner may perform any other group-wide
supervision activity consistent with this subchapter or considered
necessary by the commissioner for the administration of this
subchapter.
(h) An agreement entered into or documentation obtained
under Subsection (f) may not be used as evidence in any proceeding
to show that any foreign insurer or person within an insurance
holding company system is doing business in this state or is
otherwise subject to this state's jurisdiction.
Sec. 823.430. POWERS OF COMMISSIONER WHEN FOREIGN
REGULATORY OFFICIAL IS GROUP-WIDE SUPERVISOR. (a) This section
applies only to an internationally active insurance group for which
a foreign regulatory official is designated as the group-wide
supervisor under Section 823.423.
(b) The commissioner may enter into agreements with or
obtain documentation from any insurer registered under Subchapter
B, any affiliate of the insurer, and other state, federal, and
international regulatory agencies for members of the
internationally active insurance group to obtain information
related to the foreign regulatory official's role as group-wide
supervisor.
(c) If the commissioner designates a foreign regulatory
official from a jurisdiction that is not accredited by the National
Association of Insurance Commissioners as the group-wide
supervisor under Section 823.423, the commissioner may reasonably
cooperate with regulatory actions taken by the supervisor, through
supervisory colleges described by Section 823.0145 or otherwise,
if:
(1) the commissioner's cooperation is in compliance
with the laws of this state; and
(2) where applicable, the foreign regulatory official
also recognizes and cooperates with the commissioner's regulatory
actions as a group-wide supervisor for other internationally active
insurance groups.
(d) Where recognition and cooperation under Subsection
(c)(2) is not reasonably reciprocal, the commissioner may refuse
recognition of and cooperation with the foreign regulatory
official's regulatory action.
Sec. 823.431. EXPENSES OF COMMISSIONER. A registered
insurer subject to this subchapter shall pay the reasonable
expenses of the commissioner's participation in the administration
of this subchapter, including the engagement of attorneys,
actuaries, and other professionals and reasonable travel expenses.
SECTION 4. (a) Section 823.011, Insurance Code, as amended
by this Act, applies only to information, including documents and
copies of documents, obtained by or reported, disclosed, or
otherwise provided to the commissioner of insurance on or after the
effective date of this Act. Information, including documents and
copies of documents, obtained by or reported, disclosed, or
otherwise provided to the commissioner of insurance before the
effective date of this Act is governed by the law in effect on the
date the transaction occurred, and the former law is continued in
effect for that purpose.
(b) Section 823.054, Insurance Code, as amended by this Act,
applies only to a transaction that occurs on or after the effective
date of this Act. A transaction that occurs before the effective
date of this Act is governed by the law in effect on the date the
transaction occurred, and the former law is continued in effect for
that purpose.
SECTION 5. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2017.