Bill Text: MI HB5242 | 2019-2020 | 100th Legislature | Engrossed
Bill Title: Insurance: other; authority of the director of department of insurance and financial services to regulate holding companies; expand. Amends sec. 1301 of 1956 PA 218 (MCL 500.1301) & adds sec. 1359.
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Passed) 2020-01-28 - Assigned Pa 16'20 With Immediate Effect [HB5242 Detail]
Download: Michigan-2019-HB5242-Engrossed.html
Substitute For
HOUSE BILL NO. 5242
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 1301 (MCL 500.1301), as amended by 2015 PA 244, and by adding section 1359.
the people of the state of michigan enact:
Sec. 1301. As used in this chapter:
(a) "Enterprise
risk" means an activity, circumstance, event, or series of events
involving 1 or more affiliates of an insurer that, if not remedied promptly, is
likely to have a material adverse effect on the financial condition or
liquidity of the insurer or its insurance holding company system as a whole,
including, but not limited to, anything that would cause the insurer to be
hazardous to policyholders, creditors, and the public.
(b)
"Group-wide supervisor" means the regulatory official authorized to
engage in conducting and coordinating group-wide supervision activities who is
determined or acknowledged by the director under section 1359 to have sufficient
contacts with the internationally active insurance group.
(c)
(b) "Insurer" means that term as defined in
section 106 and includes a nonprofit dental care corporation operating under
1963 PA 125, MCL 550.351 to 550.373. Insurer does not include agencies,
authorities, or instrumentalities of the United States, its possessions and
territories, the commonwealth of Puerto Rico, the District of Columbia or a
state or political subdivision of a state, fraternal benefit societies, or
nonprofit health care corporations.
(d)
"Internationally active insurance group" means an insurance holding
company system to which both of the following apply:
(i) The insurance holding company system
includes an insurer registered under section 1324.
(ii) The insurance holding company system
meets all of the following criteria:
(A)
The insurance holding company system has premiums written in at least 3
countries.
(B)
The percentage of gross premiums written outside the United States is at least 10%
of the insurance holding company system's total gross written premiums.
(C)
Based on a 3-year rolling average, the total assets of the insurance holding
company system are at least $50,000,000,000.00 or the total gross written
premiums of the insurance holding company system are at least $10,000,000,000.00.
(e)
(c) "NAIC" means the National Association of
Insurance Commissioners.
(f)
(d) "Person" means that term as defined in
section 114, except that it does not include a securities broker performing no
more than the usual and customary broker's function, so long as the securities
broker holds less than 10% of the voting securities of an insurer or of any
person that controls an insurer.
Sec. 1359. (1) The director may act as
the group-wide supervisor for any internationally active insurance group in
accordance with this section. However, the director may otherwise acknowledge
another regulatory official as the groupwide supervisor if any of the
following apply to the internationally active insurance group:
(a)
The internationally active insurance group does not have substantial insurance
operations in the United States.
(b)
The internationally active insurance group has substantial insurance operations
in the United States, but not in this state.
(c)
The internationally active insurance group has substantial insurance operations
in the United States and this state, but the director has determined under the
factors set forth in subsections (3), (4), and (8) that the other regulatory
official is the appropriate group-wide supervisor.
(2)
An insurance holding company system that does not otherwise qualify as an
internationally active insurance group may request that the director make a
determination or acknowledgement as to a group-wide supervisor under this
section.
(3)
Subject to subsection (4), in cooperation with other state, federal, and
international regulatory agencies, the director shall identify a single
group-wide supervisor for an internationally active insurance group. The
director may determine that the director is the appropriate group-wide
supervisor for an internationally active insurance group that conducts substantial
insurance operations concentrated in this state. However, the director may
acknowledge that a regulatory official from another jurisdiction is the
appropriate group-wide supervisor for the internationally active insurance
group. The director shall consider all of the following factors when making a
determination or acknowledgement under this subsection:
(a)
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.
(b)
The place of domicile of the top-tiered insurer or insurers in the insurance
holding company system of the internationally active insurance group.
(c)
The location of the executive offices or largest operational offices of the
internationally active insurance group.
(d)
Whether another regulatory official is acting or is seeking to act as the
groupwide supervisor under a regulatory system that the director determines to
be either of the following:
(i) Substantially similar to the system
of regulation provided under the laws of this state.
(ii) Otherwise sufficient in terms of
providing for group-wide supervision, enterprise risk analysis, and cooperation
with other regulatory officials.
(e)
Whether another regulatory official acting or seeking to act as the group-wide
supervisor provides the director with reasonably reciprocal recognition and
cooperation.
(4)
A commissioner identified under this section as the group-wide supervisor may
determine that it is appropriate to acknowledge another supervisor to serve as
the group-wide supervisor. The acknowledgement of the group-wide supervisor must
be made in consideration of the factors under subsection (3), and must be made
in cooperation with and subject to the acknowledgement of other regulatory
officials involved with supervision of members of the internationally active
insurance group, and in consultation with the internationally active insurance
group.
(5)
Notwithstanding any other provision of law, if another regulatory official is
acting as the group-wide supervisor of an internationally active insurance
group, the director shall acknowledge that regulatory official as the
group-wide supervisor. However, the director shall make a determination or
acknowledgement as to the appropriate group-wide supervisor for the
internationally active insurance group under subsection (3) in the event of a
material change in the internationally active insurance group that results in
either of the following:
(a)
The internationally active insurance group's insurers domiciled in this state
holding the largest share of the group's premiums, assets, or liabilities.
(b)
This state being the place of domicile of the top-tiered insurer or insurers in
the insurance holding company system of the internationally active insurance
group.
(6)
Pursuant to section 1351, the director may collect from an insurer registered
under section 1324 all information necessary to determine whether the director
may act as the group-wide supervisor of an internationally active insurance
group or if the director may acknowledge another regulatory official to act as
the group-wide supervisor. Before issuing a determination that an
internationally active insurance group is subject to group-wide supervision by
the director, the director shall notify the insurer registered under section
1324 and the ultimate controlling person within the internationally active
insurance group. The internationally active insurance group has at least 30
days to provide the director with additional information pertinent to the
pending determination. The director shall publish on its website the identity
of internationally active insurance groups that the director has determined are
subject to group-wide supervision by the director.
(7)
If the director is the group-wide supervisor for the internationally active
insurance group, the director may engage in any of the following group-wide
supervision activities:
(a)
Assess the enterprise risks within the internationally active insurance group
to ensure both of the following:
(i) That the material financial
condition and liquidity risk to the members of the internationally active
insurance group that are engaged in the business of insurance are identified by
management.
(ii) That reasonable and effective
mitigation measures are in place.
(b)
Request, from any member of the internationally active insurance group subject
to the director's supervision, information necessary and appropriate to assess
enterprise risk, including, but not limited to, information about the members
of the internationally active insurance group regarding any of the following:
(i) Governance, risk assessment, and
management.
(ii) Capital adequacy.
(iii) Material intercompany transactions.
(c)
Coordinate and, through the authority of the regulatory officials of the jurisdictions
where members of the internationally active insurance group are domiciled,
compel development and implementation of reasonable measures designed to ensure
that the internationally active insurance group is able to timely recognize and
mitigate enterprise risks to members of the internationally active insurance
group that are engaged in the business of insurance.
(d)
Communicate with other state, federal, and international regulatory agencies
for members within the internationally active insurance group and share
relevant information, subject to the confidentiality provisions of section
1355, through supervisory colleges as provided in section 1357 or otherwise.
(e)
Enter into agreements with or obtain documentation from any insurer registered
under section 1324, any member of the internationally active insurance group,
and any other state, federal, and international regulatory agencies for members
of the internationally active insurance group, providing the basis for or
otherwise clarifying the director's role as group-wide supervisor, including
provisions for resolving disputes with the other regulatory officials. The agreements
or documentation described in this subdivision must not serve as evidence in
any proceeding that any insurer or person within an insurance holding company
system not domiciled or incorporated in this state is doing business in this
state or is otherwise subject to jurisdiction in this state.
(f)
Other group-wide supervision activities, consistent with the authorities and
purposes provided in this subsection, as considered necessary by the director.
(8)
If the director acknowledges that another regulatory official from a
jurisdiction that is not accredited by the NAIC is the group-wide supervisor,
the director may reasonably cooperate, through supervisory colleges or
otherwise, with group-wide supervision undertaken by the group-wide supervisor
if both of the following apply:
(a)
The director's cooperation is in compliance with the laws of this state.
(b)
The regulatory official acknowledged as the group-wide supervisor also
recognizes and cooperates with the director's activities as a group-wide
supervisor for other internationally active insurance groups where applicable.
If recognition and cooperation described in this subdivision is not reasonably
reciprocal, the director may refuse recognition and cooperation.
(9)
The director may enter into agreements with or obtain documentation from any
insurer registered under section 1324, any affiliate of the insurer, and other
state, federal, and international regulatory agencies for members of the
internationally active insurance group, that provide the basis for or otherwise
clarify a regulatory official's role as group-wide supervisor.
(10) A registered insurer subject to this section is liable for and shall pay the reasonable expenses of the director's participation in the administration of this section, including the engagement of attorneys, actuaries, and any other professionals and all reasonable travel expenses.