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H. B. 2819
(By Delegates Guthrie, Hartman, Ashley and Walters)
[Introduced March 5, 2013; referred to the
Committee on Banking and Insurance then the Judiciary.]
A BILL to amend and reenact §33-31-16a of the Code of West
Virginia, 1931, as amended; and to amend and reenact §33-40-3
of said code, all relating to the financial oversight of
entities regulated by the Insurance Commissioner; requiring
captive insurance companies organized as risk retention groups
to comply with risk-based capital for insurers'
provisions and
a specific state rule; and incorporating a solvency trend test
for property and casualty insurance companies.
Be it enacted by the Legislature of West Virginia:
That §33-31-16a of the Code of West Virginia, 1931, as
amended, be amended and reenacted; and that §33-40-3 of said code
be amended and reenacted, all to read as follows:
ARTICLE 31. CAPTIVE INSURANCE.
§33-31-16a. Laws applicable; Risk Retention Groups.
In addition to the applicable provisions of this article, any
captive insurance company organized as a risk retention group is
subject to the following provisions of this chapter: section nine,
article two (examination of insurers, agents, brokers and
solicitors; access to books, records, etc.); section fourteen,
article four (financial statement filings; annual and quarterly
statements; required format; foreign insurers; agents of the
commissioner); section fifteen-a, article four (credit for
reinsurance; definitions; requirements; trust accounts; reductions
from liability; security; effective date); article seven (assets
and liabilities); article ten (rehabilitation and liquidation);
article twenty-seven (insurance holding company systems); article
thirty-three (annual audited financial report); article thirty-four
(administrative supervision); article thirty-four-a (standards and
commissioner's authority for companies deemed to be in hazardous
financial condition); article thirty-five (criminal sanctions for
failure to report impairment); article thirty-six (Business
Transacted with Producer Controlled Property/Casualty Insurer Act);
article thirty-seven (managing general agents); article
thirty-eight (Reinsurance Intermediary Act); article forty
(risk-based capital for insurers);
and article forty-one (Insurance
Fraud Prevention Act), of this chapter and as well as any rules
promulgated thereunder under those provisions in accordance with
article three, chapter twenty-nine-a of this code, including Property And Casualty Actuarial Opinion, 114 CSR 41A.
ARTICLE 40. RISK-BASED CAPITAL (RBC) FOR INSURERS.
§33-40-3. Company action level event.
(a) "Company action level event" means any of the following
events:
(1) The filing of an RBC report by an insurer which indicates
that:
(A) The insurer's total adjusted capital is greater than or
equal to its regulatory action level RBC, but less than its company
action level RBC; or
(B) If a life and/or health insurer, the insurer has total
adjusted capital which is greater than or equal to its company
action level RBC, but less than the product of its authorized
control level RBC and two and one-half and has a negative trend; or
__________(C) If a property and casualty insurer, the insurer has total
adjusted capital which is greater than or equal to its company
action level RBC, but less than the product of its authorized
control level RBC and three and triggers the trend test determined
in accordance with the trend test calculation included in the
property and casualty RBC instructions;
(2) The notification by the commissioner to the insurer of an
adjusted RBC report that indicates an event in subdivision (1) of
this subsection, provided the insurer does not challenge the
adjusted RBC report under section seven of this article; or
(3) If, pursuant to section seven of this article, an insurer
challenges an adjusted RBC report that indicates the event in
subdivision (1) of this subsection, the notification by the
commissioner to the insurer that the commissioner has, after a
hearing, rejected the insurer's challenge.
(b) In the event of a company action level event, the insurer
shall prepare and submit to the commissioner an RBC plan which
shall:
(1) Identify the conditions which contribute to the company
action level event;
(2) Contain proposals of corrective actions which the insurer
intends to take and would be expected to result in the elimination
of the company action level event;
(3) Provide projections of the insurer's financial results in
the current year and at least the four succeeding years or, in the
case of an HMO, in the current year and at least the two succeeding
years, both in the absence of proposed corrective actions and
giving effect to the proposed corrective actions, including
projections of statutory operating income, net income, capital
and/or surplus. (The projections for both new and renewal business
may include separate projections for each major line of business
and separately identify each significant income, expense and
benefit component);
(4) Identify the key assumptions impacting the insurer's projections and the sensitivity of the projections to the
assumptions; and
(5) Identify the quality of, and problems associated with, the
insurer's business, including, but not limited to, its assets,
anticipated business growth and associated surplus strain,
extraordinary exposure to risk, mix of business and use of
reinsurance, if any, in each case.
(c) The RBC plan shall be submitted:
(1) Within forty-five days of the company action level event;
or
(2) If the insurer challenges an adjusted RBC report pursuant
to section seven of this article, within forty-five days after
notification to the insurer that the commissioner has, after a
hearing, rejected the insurer's challenge.
(d) Within sixty days after the submission by an insurer of an
RBC plan to the commissioner, the commissioner shall notify the
insurer whether the RBC plan may be implemented or is, in the
judgment of the commissioner, unsatisfactory. If the commissioner
determines the RBC plan is unsatisfactory, the notification to the
insurer shall set forth the reasons for the determination and may
set forth proposed revisions which will render the RBC plan
satisfactory in the judgment of the commissioner. Upon
notification from the commissioner, the insurer shall prepare a
revised RBC plan, which may incorporate by reference any revisions proposed by the commissioner, and shall submit the revised RBC plan
to the commissioner:
(1) Within forty-five days after the notification from the
commissioner; or
(2) If the insurer challenges the notification from the
commissioner under section seven of this article, within forty-five
days after a notification to the insurer that the commissioner has,
after a hearing, rejected the insurer's challenge.
(e) In the event of a notification by the commissioner to an
insurer that the insurer's RBC plan or revised RBC plan is
unsatisfactory, the commissioner may, at the commissioner's
discretion, subject to the insurer's right to a hearing under
section seven of this article, specify in the notification that the
notification constitutes a regulatory action level event.
(f) Every domestic insurer that files an RBC plan or revised
RBC plan with the commissioner shall file a copy of the RBC plan or
revised RBC plan with the Insurance Commissioner in any state in
which the insurer is authorized to do business if:
(1) The state has an RBC provision substantially similar to
subsection (a), section eight of this article; and
(2) The Insurance Commissioner of that state has notified the
insurer of its request for the filing in writing, in which case the
insurer shall file a copy of the RBC plan or revised RBC plan in
that state no later than the later of:
(I) (A) Fifteen days after the receipt of notice to file a
copy of its RBC plan or revised RBC plan with the state; or
(ii) (B) The date on which the RBC plan or revised RBC plan is
filed under subsections (c) and (d) of this section.
NOTE: The purpose of this bill is to ensure that the laws of
West Virginia satisfy the accreditation standards of the National
Association of Insurance Commissioners (NAIC). More specifically,
this bill amends the insurance code with respect to risk-based
capital and captive insurance companies organized as risk retention
groups.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.