Bill Text: TX SB1071 | 2017-2018 | 85th Legislature | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to the regulation of insurance holding company systems, including internationally active insurance groups; authorizing a fee.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2017-04-24 - Committee report printed and distributed [SB1071 Detail]
Download: Texas-2017-SB1071-Introduced.html
Bill Title: Relating to the regulation of insurance holding company systems, including internationally active insurance groups; authorizing a fee.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2017-04-24 - Committee report printed and distributed [SB1071 Detail]
Download: Texas-2017-SB1071-Introduced.html
85R6548 BEE-F | ||
By: Hancock | S.B. No. 1071 |
|
||
|
||
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)[ |
||
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 | ||
[ |
||
assets [ |
||
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. |