SB 110-FN – AS INTRODUCED
SENATE BILL 110-FN
This bill establishes the administrative supervision act.
This bill is a request of the insurance department.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [
in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Fifteen
AN ACT establishing the administrative supervision act.
Be it Enacted by the Senate and House of Representatives in General Court convened:
402-L:1 Definitions. In this chapter:
I. “Commissioner” means the insurance commissioner.
II. “Consent” means agreement to administrative supervision by the insurer, including agreement to the terms of the supervision order.
III. “Department” means the insurance department.
IV. “Insurer” means and includes every entity or person licensed, authorized or permitted by the commissioner to transact the business of insurance in this state, and for which the commissioner is granted authority to conduct an examination into its affairs, including all fraternal benefit societies as defined in RSA 418 and all providers of continuing care or life care contracts as defined in RSA 420-D; provided, however, that fraternal benefit societies and providers of continuing care or life care contracts shall not be construed to be “insurers” except for the limited purpose of administrative supervision under the provisions of this chapter.
402-L:2 Applicability. The provisions of this chapter shall apply to:
I. All domestic insurers.
II. Any other insurer doing business in this state whose state of domicile has requested in writing that the commissioner apply the provisions of the chapter regarding such insurer.
402-L:3 Notice to Comply with Written Requirements of Commissioner; Noncompliance; Administrative Supervision.
I. An insurer may be subject to administrative supervision by the commissioner only if the insurer gives its consent.
II. Upon receiving consent of the insurer to the terms of the supervision order, the commissioner may issue an agreed supervision order which shall provide:
(a) A statement of the commissioner’s grounds for seeking a supervision order;
(b) A date certain upon which the supervision order shall expire, ending the supervision period;
(c) A written list to the insurer of the requirements to abate the order prior to its expiration date; and
(d) A statement that the insurer is under the supervision of the commissioner and that the commissioner is applying and effectuating the provisions of this chapter.
III. The commissioner may employ staff personnel, outside counsel, and other consultants as necessary for the proper conduct of the administrative supervision. All reasonable costs of such outside counsel and other consultants, including the costs attributable to the use of staff personnel, shall be borne by the insurer under administrative supervision.
402-L:4 Confidentiality of Certain Proceedings and Records.
I. Except as set forth in this section, all administrative and judicial proceedings arising under this chapter shall be held privately unless a public hearing is requested by the insurer, and all proceedings, hearing, notices, correspondence, reports, orders, records and other information in the possession of the commissioner or the department relating to the supervision of any insurer are confidential and shall not be subject to RSA 91-A, 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 may use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as part of the commissioner’s official duties.
II. The personnel of the department shall have access to these proceedings, hearings, notices, correspondence, reports, orders, records, or information as permitted by the commissioner. Neither the commissioner nor any person who receive documents, materials, or other information while acting under the authority of the commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to paragraph I.
III. The commissioner may share the notices, correspondence, reports, orders, records, or information with other state, federal, and international regulatory agencies, with the National Association of Insurance Commissioners (NAIC) and its affiliates and subsidiaries, and with state, federal, and international law enforcement authorities if the commissioner determines that the disclosure is necessary or proper for the enforcement of the laws of this or another state of the United States; provided, that the recipient agrees to maintain the confidentiality of the documents, material, or other information. No waiver of any applicable privilege or claim of confidentiality shall occur as a result of the sharing of documents, materials, or other information pursuant to this paragraph.
IV. This section shall not apply to proceedings under RSA 402-C or to hearings, notices, correspondence, reports, orders, records, or other information obtained upon the appointment of a receiver for the insurer by a court of competent jurisdiction.
402-L:5 Authority of Administrative Supervisor.
I. During the period of supervision, the commissioner, or designee, shall serve as the administrative supervisor. If the commissioner appoints a designee to serve as administrative supervisor, then such person shall have all of the powers of the commissioner granted under this section and shall be considered a state officer or official under RSA 99-D. The commissioner may impose operating restrictions or requirements on the insurer during the period of administrative supervision which are deemed necessary for the protection of policyholders or the general public. The commissioner may order the insurer to:
(a) Reduce the total amount of present and potential liability for policy benefits by reinsurance;
(b) Reduce, suspend, or limit the volume of business being accepted or renewed;
(c) Reduce general insurance and commission expenses by specified methods;
(d) Increase the insurer’s capital and surplus;
(e) Suspend or limit the declaration and payment of dividends by an insurer to its stockholders or to its policyholders;
(f) File reports in a form acceptable to the commissioner concerning the market value of an insurer’s assets;
(g) Limit or withdraw from certain investments or discontinue certain investment practices to the extent the commissioner deems necessary;
(h) Document the adequacy of premium rates in relation to the risks insured;
(i) File, in addition to regular annual statements, interim financial reports on the form adopted by the NAIC or in such format as adopted by the commissioner; or
(j) Cease from engaging in certain business practices which are illegal or which the administrative supervisor deems harmful to policyholders or the general public.
II. In addition to the provisions of paragraph I, the commissioner may prohibit the insurer from engaging in any of the following acts during the period of supervision without the prior approval of the administrative supervisor:
(a) Dispose of, convey, or encumber any of its assets or its business in force;
(b) Withdraw any funds from its bank accounts;
(c) Lend any of its funds;
(d) Invest any of its funds;
(e) Transfer any of its property;
(f) Incur any debt, obligation or liability;
(g) Merge or consolidate with any company;
(h) Approve new premiums or renew any policies;
(i) Enter into any new reinsurance contract or treaty;
(j) Terminate, surrender, forfeit, convert, or lapse any insurance policy, certificate or contract, except for nonpayment of premiums due;
(k) Release, pay or refund premium deposits, accrued cash or loan values, unearned premiums, or other reserves on any insurance policy, certificate or contract;
(l) Make any material change in management; or
(m) Increase salaries and benefits of officers or directors or the preferential payment of bonuses, dividends or other payments deemed preferential.
402-L:6 Extension of, or Early Release From, Supervision.
I. If placed under administrative supervision by an order issued pursuant to RSA 402-L:3, the commissioner shall release the insurer from the supervision order prior to the end of the specified supervision period upon finding that the abatement requirements listed in the order have been met.
II. If the commissioner determines that the conditions giving rise to the supervision still exist at the end of the supervision period specified in the order, the commissioner may seek consent from the insurer to amend the agreed order extending the supervision period.
402-L:7 Judicial Review. An insurer placed under administrative supervision by the commissioner may contest any action taken pursuant to the agreed supervision order at any time during the supervision by requesting review by the superior court for Merrimack county. The court shall review the action complained of in a closed hearing and render its decision at the earliest possible date thereafter. The court may stay any action of the commissioner, pending its review of such petition. Notwithstanding the foregoing, filing of a petition for review of such action shall not automatically stay the commissioner’s action, or any of the provisions of the supervision order.
402-L:8 Administrative Election of Proceedings. Nothing contained in this chapter shall preclude the commissioner from initiating any proceeding under RSA 402-C, including any judicial proceedings to place an insurer in conservation, rehabilitation, or liquidation proceedings or other delinquency proceedings, however designated under the laws of this state, regardless of whether the commissioner has previously initiated administrative supervision proceedings under this chapter against the insurer.
402-L:9 Rules. The commissioner may adopt rules, pursuant to RSA 541-A, as necessary for the purposes of this chapter.
402-L:10 Other Laws; Conflicts; Meetings Between the Commissioner and the Supervisor. The commissioner may meet with a supervisor appointed under this chapter and with the attorney or other representative of the supervisor, without the presence of any other person, at the time of any proceeding or during the pendency of any proceeding held under authority of this chapter to carry out the commissioner’s duties under this chapter or for the supervisor to carry out his or her duties under this chapter.
402-L:11 Immunity. There shall be no liability on the part of, and no cause of action of any nature shall arise against, the commissioner or the department or their employees, agents, consultants or counsel for any action taken by them in the performance of their powers and duties under this chapter.
2 Effective Date. This act shall take effect January 1, 2016.
SB 110-FN - FISCAL NOTE
AN ACT establishing the administrative supervision act.
The Judicial Branch states this bill, as introduced, may increase state expenditures by an indeterminable amount in FY 2016 and each year thereafter. There will be no fiscal impact on local expenditures or state, county, and local revenue.
The Judicial Branch states this bill add RSA 402-L regarding administrative supervision of insurers by the insurance commissioner. This bill provides for judicial review of actions of the insurance commissioner on petition of the insurer filed in the Merrimack County Superior Court. The Branch states this type of petition would be classified as a complex equity case. There is no method to determine how many petitions would be filed as a result of this bill to determine the fiscal impact on expenditures. However, the Judicial Branch has provided the potential costs associated with complex equity cases.
Complex Equity Case
*It should be noted average case cost estimates for FY 2016 and FY 2017 are based on data that is more than nine years old and does not reflect changes to the courts over that same period of time or the impact these changes may have on processing the various case types.
The Insurance Department states this bill should have no fiscal impact on the Department as it has the structure and budget in place to properly regulate and support any supervision efforts that might arise as result of this bill.