Bill Text: IA SF189 | 2013-2014 | 85th General Assembly | Enrolled

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: A bill for an act relating to a risk management framework for insurers and insurance groups and including penalty and applicability provisions. (Formerly SSB 1079.) Effective 7-1-13.

Spectrum: Committee Bill

Status: (Passed) 2013-12-31 - END OF 2013 ACTIONS [SF189 Detail]

Download: Iowa-2013-SF189-Enrolled.html

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Senate File 189
AN ACT
RELATING TO A RISK MANAGEMENT FRAMEWORK FOR INSURERS AND
INSURANCE GROUPS AND INCLUDING PENALTY AND APPLICABILITY
PROVISIONS.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
Section 1. NEW SECTION . 522.1 Purpose and scope ——
legislative intent.
1. The purpose of this chapter is to require insurers
to maintain a risk management framework and complete an own
risk and solvency assessment and to provide guidance and
instructions for the filing of own risk and solvency assessment
reports with the commissioner.
2. The general assembly finds and declares that own risk and
solvency assessment summary reports will contain confidential
and sensitive information related to an insurer’s or insurance
group’s identification of risks material and relevant to the
insurer or insurance group filing the report. This information
will include proprietary and trade secret information that has
the potential for harm and competitive disadvantage to the
insurer or insurance group if the information is made public.
It is the intent of the general assembly that own risk and
solvency assessment summary reports filed with the commissioner
are confidential documents, shall be shared only as provided in
this chapter and to assist the commissioner in the performance
of the commissioner’s duties, and shall not be subject to
public disclosure.
Sec. 2. NEW SECTION . 522.2 Definitions.
1. “Affiliate” , or a person affiliated with a specific
person, means the same as defined in section 521A.1.
2. “Commissioner” means the Iowa commissioner of insurance.

Senate File 189, p. 2
3. “Insurance group” means the insurers and affiliates
included within an insurance holding company system as defined
in section 521A.1.
4. “Insurer” means the same as defined in section 521A.1.
5. “Own risk and solvency assessment” or “assessment” means
a confidential internal assessment, appropriate to the nature,
scale, and complexity of an insurer or insurance group, that is
conducted by that insurer or insurance group, of the material
and relevant risks associated with the insurer or insurance
group’s current business plan, and the sufficiency of capital
resources to support those risks.
6. “Own risk and solvency assessment guidance manual” or
“guidance manual” means the current version of the own risk
and solvency assessment guidance manual developed and adopted
by the national association of insurance commissioners and
amended from time to time. A change in the guidance manual is
effective and applicable to this chapter on January 1 following
the calendar year in which the change was adopted by the
national association of insurance commissioners.
7. “Own risk and solvency assessment summary report” or
“summary report” means a confidential high-level summary of the
own risk and solvency assessment conducted by an insurer or
insurance group.
8. “Supervisory college” means a temporary or permanent
forum for communication and cooperation between regulators
charged with supervision of an insurer or its affiliates.
Sec. 3. NEW SECTION . 522.3 Risk management framework.
An insurer shall maintain a risk management framework to
assist the insurer with identifying, assessing, monitoring,
managing, and reporting on the insurer’s material and relevant
risks. This requirement is satisfied if the insurance group
of which the insurer is a member maintains a risk management
framework applicable to the operations of the insurer.
Sec. 4. NEW SECTION . 522.4 Own risk and solvency assessment
requirement.
1. Subject to section 522.6, an insurer, or the insurance
group of which the insurer is a member, shall regularly conduct
an own risk and solvency assessment consistent and comparable
with the assessment process contained in the own risk and
solvency assessment guidance manual.
2. An own risk and solvency assessment shall be conducted at
least annually, but an assessment shall also be conducted at
any time when there are significant changes to the risk profile

Senate File 189, p. 3
of an insurer or the insurance group of which the insurer is a
member.
Sec. 5. NEW SECTION . 522.5 Own risk and solvency assessment
summary report.
1. a. Beginning in 2015, an insurer shall annually submit
to the commissioner an own risk and solvency assessment summary
report or any combination of reports that together contain the
information described in the own risk and solvency assessment
guidance manual that is applicable to the insurer or the
insurance group of which the insurer is a member.
b. If the insurer is a member of an insurance group, the
insurer shall submit the report or reports required by this
section to the state commissioner that is the lead state
commissioner of the insurance group of which the insurer is
a member, as determined by the procedures contained in the
financial analysis handbook adopted by the national association
of insurance commissioners.
c. The own risk and solvency assessment summary report shall
be filed after the insurer or the insurance group of which the
insurer is a member conducts the insurer’s or insurance group’s
strategic planning process. The insurer or insurance group
shall notify the commissioner as to the date that the summary
report will be filed.
2. The own risk and solvency assessment summary report shall
include the signature of the insurer’s or insurance group’s
chief risk officer or another executive having responsibility
for the oversight of the insurer’s enterprise risk management
process, attesting that to the best of that person’s belief and
knowledge the insurer applies the enterprise risk management
process described in the summary report and that a copy of the
summary report has been provided to the insurer’s or insurance
group’s board of directors or the appropriate committee of that
board.
3. An insurer may comply with subsection 1 by submitting
the most recent and substantially similar report provided by
the insurer or another member of the insurance group of which
the insurer is a member to the commissioner of insurance of
another state or to a supervisor or regulator of a foreign
jurisdiction, if that report provides information that is
comparable to the information described in the own risk and
solvency assessment guidance manual. Any such report that is
submitted in a language other than English must be accompanied
by a translation of that report into the English language.

Senate File 189, p. 4
Sec. 6. NEW SECTION . 522.6 Exemption.
1. An insurer is exempt from the requirements of this
chapter if both of the following apply:
a. The insurer has annual direct written and unaffiliated
assumed premium, including international direct and assumed
premium, but excluding premiums reinsured with the federal crop
insurance corporation and the federal flood program, of less
than five hundred million dollars.
b. The insurance group of which the insurer is a member
has annual direct written and unaffiliated assumed premium,
including international direct and assumed premium, but
excluding premiums reinsured with the federal crop insurance
corporation and the federal flood program, of less than one
billion dollars.
2. If an insurer qualifies for exemption from the
requirements of this chapter pursuant to paragraph “a” of
subsection 1, but the insurance group of which the insurer
is a member does not qualify for exemption pursuant to
paragraph “b” of subsection 1, then the own risk and solvency
assessment summary report that is required pursuant to section
521H.5 shall include information concerning every insurer
in the insurance group. This requirement may be satisfied
by the submission of more than one summary report for any
combination of insurers in the insurance group provided that
the combination of reports submitted includes every insurer in
the insurance group.
3. If an insurer does not qualify for exemption pursuant
to paragraph “a” of subsection 1, but the insurance group of
which the insurer is a member qualifies for exemption pursuant
to paragraph “b” of subsection 1, then the only own risk and
solvency assessment summary report that is required pursuant to
section 522.5 is the report applicable to that insurer.
4. An insurer that does not qualify for exemption pursuant
to subsection 1 may apply to the commissioner for a waiver
from the requirements of this chapter based upon unique
circumstances. In deciding whether to grant the insurer’s
request for a waiver, the commissioner may consider the type
and volume of business written, ownership and organizational
structure, and any other factors the commissioner considers
relevant to the insurer or the insurance group of which the
insurer is a member. If the insurer is part of an insurance
group with insurers domiciled in more than one state, the
commissioner shall coordinate with the state commissioner

Senate File 189, p. 5
that is the lead state commissioner of the insurance group,
as determined pursuant to section 522.5, and with the other
domiciliary commissioners in considering whether to grant the
insurer’s request for a waiver.
5. Notwithstanding the exemptions provided in this section,
the commissioner may do the following:
a. Require that an insurer maintain a risk management
framework, conduct an own risk and solvency assessment, and
file an own risk and solvency assessment summary report based
on unique circumstances including but not limited to the type
and volume of business written, ownership and organizational
structure, federal agency requests, and international
supervisor requests.
b. Require that an insurer maintain a risk management
framework, conduct an own risk and solvency assessment,
and file an own risk and solvency assessment summary report
if the insurer has a risk-based capital level that is a
company-action-level event as set forth in section 521E.3 for
insurers and section 521F.4 for health organizations or that
would cause the insurer to be in hazardous financial condition
as set forth in 191 IAC 110, or if the insurer otherwise
exhibits qualities of a troubled insurer as determined by the
commissioner.
6. If an insurer that qualifies for an exemption pursuant
to subsection 1 subsequently no longer qualifies for that
exemption due to changes in premium as reflected in the
insurer’s most recent annual statement or in the most recent
annual statements of the other insurers in the insurance group
of which the insurer is a member, the insurer shall have one
year following the year the threshold is exceeded to comply
with the requirements of this chapter.
Sec. 7. NEW SECTION . 522.7 Contents of own risk and
solvency assessment summary report.
1. The own risk and solvency assessment summary report
shall be prepared consistent with the own risk and solvency
assessment guidance manual, subject to the requirements of
subsection 2. Documentation and supporting information shall
be maintained and made available upon examination of an insurer
or upon request of the commissioner.
2. The review of an own risk and solvency assessment summary
report, and any additional requests for information, shall
be made using procedures similar to the procedures currently
used in the analysis and examination of multistate or global

Senate File 189, p. 6
insurers and insurance groups.
Sec. 8. NEW SECTION . 522.8 Confidentiality.
1. Documents, materials, or other information, including
an own risk and solvency assessment summary report, in
the possession or control of the insurance division of the
department of commerce, that are obtained by, created by,
or disclosed to the commissioner or to any other person
pursuant to this chapter, are recognized in this state as being
proprietary and containing trade secrets. All such documents,
materials, or other information, including the summary report,
shall be confidential and privileged, shall not be subject to
chapter 22, shall not be subject to subpoena, and shall not be
subject to discovery or admissible in evidence in any private
civil action. However, the commissioner is authorized to use
such documents, materials, or other information, including the
summary report, in the furtherance of any regulatory or legal
action brought as a part of the commissioner’s official duties.
The commissioner shall not otherwise make the documents,
materials, or other information, including the summary report,
public without the prior written consent of the insurer that
provided the documents, materials, or other information,
including the summary report.
2. The commissioner or any person who received documents,
materials, or other information related to own risk and
solvency assessments, through examination or otherwise, while
acting under the authority of the commissioner or with whom
such documents, materials, or other information are shared
pursuant to this chapter, shall not be permitted or required to
testify in any private civil action concerning any confidential
documents, materials, or information, including summary
reports, subject to subsection 1.
3. In order to assist in the performance of the
commissioner’s regulatory duties, the commissioner may do any
of the following:
a. Upon request, share documents, materials, or other own
risk and solvency assessment-related information, including
the confidential and privileged documents, materials, or
information subject to subsection 1, and including proprietary
and trade secret documents, materials, or information, with
other state, federal, or international financial regulatory
agencies, including members of any supervisory college, with
the national association of insurance commissioners, and with
any third-party consultants designated by the commissioner,

Senate File 189, p. 7
provided that the recipient agrees in writing to maintain
the confidentiality and privileged status of the documents,
materials, or other assessment-related information and verifies
in writing the legal authority to maintain such confidentiality
and privilege.
b. Receive documents, materials, or other own risk
and solvency assessment-related information, including
otherwise confidential and privileged documents, materials,
or information, and proprietary and trade secret documents,
materials, and information, from regulatory officials of other
foreign or domestic jurisdictions, including members of any
supervisory college, and from the national association of
insurance commissioners, and shall maintain as confidential or
privileged any documents, materials, or information received
with notice or the understanding that the documents, materials,
or other information received are confidential and privileged
under the laws of the jurisdiction that is the source of the
documents, materials, or information.
4. In order to assist in the performance of the
commissioner’s regulatory duties, the commissioner shall enter
into a written agreement with the national association of
insurance commissioners or with a third-party consultant that
is consistent with subsection 3, governing the sharing and use
of information provided pursuant to this chapter, and that does
all of the following:
a. Specifies procedures and protocols regarding the
confidentiality and security of information shared with the
national association of insurance commissioners or with a
third-party consultant pursuant to this chapter, including
procedures and protocols of the national association of
insurance commissioners for sharing information with other
state regulators from states in which an insurance group has
domiciled insurers. The agreement shall require that the
recipient of such information must agree in writing to maintain
the confidentiality and privileged status of the own risk and
solvency assessment-related documents, materials, or other
information and verify in writing the legal authority to
maintain confidentiality and privilege.
b. Specifies that ownership of information shared with
the national association of insurance commissioners or with
a third-party consultant pursuant to this chapter remains
with the commissioner and that use of the information by
the national association of insurance commissioners or by a

Senate File 189, p. 8
third-party consultant is subject to the direction of the
commissioner.
c. Prohibits the national association of insurance
commissioners or a third-party consultant from storing the
information shared pursuant to this chapter in a permanent
database after the underlying analysis is completed.
d. Requires that prompt notice be given to an insurer whose
confidential information is in the possession of the national
association of insurance commissioners or a third-party
consultant pursuant to this chapter, that the information is
subject to a request or subpoena to the national association
of insurance commissioners or the third-party consultant for
disclosure or production.
e. Requires the national association of insurance
commissioners or a third-party consultant to consent to
intervention by an insurer in any judicial or administrative
action in which the national association of insurance
commissioners or the third-party consultant may be required
to disclose confidential information about the insurer that
was shared with the association or consultant pursuant to this
chapter.
f. In the case of an agreement involving a third-party
consultant, provides for the insurer’s written consent to the
agreement.
5. The sharing of documents, materials, or information by
the commissioner pursuant to this chapter shall not constitute
a delegation of regulatory authority or rulemaking, and the
commissioner is solely responsible for the administration,
execution, and enforcement of the provisions of this chapter.
6. No waiver of any applicable privilege or claim of
confidentiality in the documents, proprietary and trade secret
materials, or other own risk and solvency assessment-related
information shall occur as a result of the disclosure of such
documents, materials, or information to the commissioner under
this section or as a result of the sharing of those documents,
materials, or information as authorized in this chapter.
7. Documents, materials, or other information in the
possession or control of the national association of insurance
commissioners or a third-party consultant pursuant to this
chapter shall be confidential and privileged, shall not be
subject to chapter 22, shall not be subject to subpoena, and
shall not be subject to discovery or admissible in evidence in
any private civil action.

Senate File 189, p. 9
Sec. 9. NEW SECTION . 522.9 Penalties.
1. If an insurer fails, without just cause, to file an
own risk and solvency assessment summary report by the filing
date stipulated to the commissioner pursuant to section 522.5,
subsection 1, the commissioner shall, after notice and hearing,
impose a penalty of five hundred dollars for each day after
the stipulated date that the summary report is not filed. The
penalties shall be collected by the commissioner and deposited
in the general fund of the state. The maximum penalty which
may be imposed under this section is fifty thousand dollars.
2. The commissioner may reduce the penalty to be imposed if
the insurer demonstrates to the commissioner that imposition
of the penalty would constitute a financial hardship to the
insurer.
Sec. 10. NEW SECTION . 522.10 Severability.
If any provision of this chapter, or the application of this
chapter to any person or circumstance, is held invalid, such
holding shall not affect the provisions or applications of this
chapter which can be given effect without the invalid provision
or application, and to that end the provisions of this chapter
are severable.
Sec. 11. APPLICABILITY DATE. The provisions of this Act are
applicable beginning on January 1, 2015.
______________________________
PAM JOCHUM
President of the Senate
______________________________
KRAIG PAULSEN
Speaker of the House
I hereby certify that this bill originated in the Senate and
is known as Senate File 189, Eighty-fifth General Assembly.
______________________________
MICHAEL E. MARSHALL
Secretary of the Senate
Approved _______________, 2013
______________________________
TERRY E. BRANSTAD
Governor