|
|
|
A BILL TO BE ENTITLED
|
|
AN ACT
|
|
relating to the standard valuation for life insurance, accident and |
|
health insurance, and annuities. |
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
SECTION 1. Section 425.052, Insurance Code, is amended by |
|
amending Subsection (a) and adding Subsection (c) to read as |
|
follows: |
|
(a) In this subchapter: |
|
(1) "Accident and health insurance" means contracts |
|
that incorporate morbidity risk and provide protection against |
|
economic loss resulting from accident, sickness, or medical |
|
conditions and as may be specified in the valuation manual. |
|
(2) "Appointed actuary" means a qualified actuary who |
|
is appointed in accordance with the valuation manual to prepare the |
|
actuarial opinion required by Section 425.054. |
|
(3) "Company" means an entity that has written, |
|
issued, or reinsured life insurance contracts, accident and health |
|
insurance contracts, or deposit-type contracts in this state and: |
|
(A) has at least one such policy in force or on |
|
claim; or |
|
(B) is required to hold a certificate of |
|
authority to write life insurance, accident and health insurance, |
|
or deposit-type contracts in this state. |
|
(4) "Deposit-type contract" means a contract that does |
|
not incorporate mortality or morbidity risk and as may be specified |
|
in the valuation manual. |
|
(5) "Life insurance" means contracts that incorporate |
|
mortality risk, including annuity and pure endowment contracts, and |
|
as may be specified in the valuation manual. |
|
(6) "Policyholder behavior" means any action a |
|
policyholder, a contract holder, or any other person with the right |
|
to elect options, such as a certificate holder, may take under a |
|
policy or contract subject to this subchapter, including lapse, |
|
withdrawal, transfer, deposit, premium payment, loan, |
|
annuitization, or benefit elections prescribed by the policy or |
|
contract but excluding events of mortality or morbidity that result |
|
in benefits prescribed in their essential aspects by the terms of |
|
the policy or contract. |
|
(7) "Qualified actuary" means an individual who is |
|
qualified to sign the applicable statement of actuarial opinion in |
|
accordance with the American Academy of Actuaries' qualification |
|
standards for actuaries signing such statements and who meets the |
|
requirements specified in the valuation manual. |
|
(8) "Reserves" [, "reserves"] means reserve |
|
liabilities. |
|
(9) "Tail risk" means a risk that occurs either where |
|
the frequency of low probability events is higher than expected |
|
under a normal probability distribution or where there are observed |
|
events of very significant size or magnitude. |
|
(10) "Valuation manual" means the manual of valuation |
|
instructions adopted by the commissioner by rule. |
|
(c) The definitions under Subsection (a) of "accident and |
|
health insurance," "appointed actuary," "company," "deposit-type |
|
contract," "life insurance," "policyholder behavior," "qualified |
|
actuary," and "tail risk" apply only on and after the operative date |
|
of the valuation manual. |
|
SECTION 2. The heading to Section 425.053, Insurance Code, |
|
is amended to read as follows: |
|
Sec. 425.053. ANNUAL VALUATION OF RESERVES BEFORE OPERATIVE |
|
DATE OF VALUATION MANUAL. |
|
SECTION 3. Section 425.053, Insurance Code, is amended by |
|
amending Subsection (a) and adding Subsections (d) and (e) to read |
|
as follows: |
|
(a) The department shall annually value or cause to be |
|
[have] valued the reserves for all outstanding life insurance |
|
policies and annuity and pure endowment contracts of each life |
|
insurance company engaged in business in this state issued on or |
|
after June 10, 1963, and before the operative date of the valuation |
|
manual. The department may certify the amount of those reserves, |
|
specifying the mortality table or tables, rate or rates of |
|
interest, and methods, including the net level premium method or |
|
another method, used in computing those reserves. |
|
(d) Except as otherwise provided by this subchapter, |
|
policies and contracts issued after the operative date of the |
|
valuation manual are governed by Section 425.0535. |
|
(e) The minimum standards for the valuation of policies and |
|
contracts issued on and after June 10, 1963, and before the |
|
operative date of the valuation manual are as provided by the law in |
|
effect immediately before that date, including the minimum |
|
standards provided by Sections 425.058 through 425.071 as |
|
applicable. Sections 425.072 through 425.077 do not apply to a |
|
policy or contract described by this subsection. |
|
SECTION 4. Subchapter B, Chapter 425, Insurance Code, is |
|
amended by adding Section 425.0535 to read as follows: |
|
Sec. 425.0535. POLICIES AND CONTRACTS ISSUED ON OR AFTER |
|
OPERATIVE DATE OF VALUATION MANUAL. (a) On or after the operative |
|
date of the valuation manual, the commissioner shall annually |
|
value, or cause to be valued, the reserves for all outstanding life |
|
insurance contracts, annuity and pure endowment contracts, |
|
accident and health contracts, and deposit-type contracts of each |
|
company issued in this state as provided by this section. |
|
(b) In lieu of the valuation of the reserves required of a |
|
foreign or alien company, the commissioner may accept a valuation |
|
made, or caused to be made, by the insurance supervisory official of |
|
another state if the valuation complies with the minimum standard |
|
provided by this subchapter. |
|
(c) Sections 425.072 through 425.077 apply to all policies |
|
and contracts issued on or after the operative date of the valuation |
|
manual. |
|
SECTION 5. The heading to Section 425.054, Insurance Code, |
|
is amended to read as follows: |
|
Sec. 425.054. ACTUARIAL OPINION OF RESERVES BEFORE |
|
OPERATIVE DATE OF VALUATION MANUAL [REQUIRED]. |
|
SECTION 6. Section 425.054, Insurance Code, is amended by |
|
amending Subsection (a) and adding Subsections (a-1), (j), (k), |
|
(l), (m), (n), (o), (p), (q), and (r) to read as follows: |
|
(a) This section applies only to an actuarial opinion of |
|
reserves required before the operative date of the valuation |
|
manual. |
|
(a-1) For purposes of this section, "qualified actuary" |
|
means: |
|
(1) a qualified actuary, as that term is defined by |
|
Section 802.002; or |
|
(2) a person who, before September 1, 1993, satisfied |
|
the requirements of the former State Board of Insurance to submit an |
|
opinion under former Section 2A(a)(1), Article 3.28. |
|
(j) Except as provided by Subsections (l), (n), (o), and |
|
(p), any document or other information in the possession or control |
|
of the department, including a memorandum in support of the opinion |
|
or other material provided by the company to the commissioner in |
|
connection with a memorandum, is: |
|
(1) confidential and not subject to disclosure under |
|
Chapter 552, Government Code; |
|
(2) privileged from subpoena or discovery in a private |
|
civil action; and |
|
(3) inadmissible as evidence in a private civil |
|
action. |
|
(k) The commissioner or any person who receives a document |
|
or other information described by Subsection (j) while acting under |
|
the authority of the commissioner may not testify and may not be |
|
compelled to testify in a private civil action concerning the |
|
content of the document or other information. |
|
(l) The commissioner may: |
|
(1) share documents or other information, including |
|
the confidential and privileged documents or information described |
|
by Subsection (j), with another state, federal, or international |
|
regulatory agency, with the National Association of Insurance |
|
Commissioners and its affiliates and subsidiaries, and with state, |
|
federal, and international law enforcement authorities, provided |
|
that the recipient agrees to maintain the confidentiality and |
|
privileged status of the document or information; |
|
(2) receive documents or other information, including |
|
confidential and privileged documents or information, from the |
|
National Association of Insurance Commissioners and its affiliates |
|
and subsidiaries, and from regulatory and law enforcement officials |
|
of other foreign or domestic jurisdictions, provided that the |
|
commissioner shall maintain as confidential or privileged any |
|
document or information received with notice or understanding that |
|
it is confidential or privileged under the laws of the jurisdiction |
|
that is the source of the document or information; and |
|
(3) enter into agreements governing sharing and use of |
|
documents and other information consistent with this section. |
|
(m) Disclosing information or providing a document to the |
|
commissioner under this section, or sharing information as |
|
authorized under this section, does not result in a waiver of any |
|
applicable privilege or claim of confidentiality that may apply to |
|
the document or information. |
|
(n) A memorandum in support of the opinion, and any other |
|
material provided by the company to the commissioner in connection |
|
with the memorandum, may be subject to subpoena for the purpose of |
|
defending an action seeking damages from the actuary submitting the |
|
memorandum by reason of an action required by this section or rules |
|
adopted under this section. |
|
(o) The memorandum or other material provided by the company |
|
to the commissioner in connection with the memorandum may otherwise |
|
be released by the commissioner with the written consent of the |
|
company, or to the American Academy of Actuaries on receipt of a |
|
request stating that the memorandum or other material is required |
|
for the purpose of professional disciplinary proceedings and |
|
setting forth procedures satisfactory to the commissioner for |
|
preserving the confidentiality of the memorandum or other material. |
|
(p) The memorandum ceases to be confidential if: |
|
(1) any portion of the memorandum is cited by the |
|
company in its marketing; |
|
(2) the memorandum is cited by the company before a |
|
government agency other than a state insurance department; or |
|
(3) the memorandum is released by the company to the |
|
news media. |
|
(q) This section applies to an actuarial opinion for |
|
policies and contracts issued before the operative date of the |
|
valuation manual. Actuarial opinions for policies and contracts |
|
issued on or after the operative date of the valuation manual are |
|
governed by Section 425.0545. |
|
(r) This section does not prohibit the commissioner from |
|
using information acquired under this section in the furtherance of |
|
a legal or regulatory action relating to the administration of this |
|
code. |
|
SECTION 7. Subchapter B, Chapter 425, Insurance Code, is |
|
amended by adding Section 425.0545 to read as follows: |
|
Sec. 425.0545. ACTUARIAL OPINION OF RESERVES AFTER |
|
OPERATIVE DATE OF VALUATION MANUAL. (a) A company that has |
|
outstanding life insurance contracts, accident and health |
|
insurance contracts, or deposit-type contracts in this state and is |
|
subject to regulation by the department shall annually submit the |
|
opinion of the appointed actuary as to whether the reserves and |
|
related actuarial items held in support of the policies and |
|
contracts are computed appropriately, are based on assumptions that |
|
satisfy contractual provisions, are consistent with prior reported |
|
amounts, and are in compliance with applicable laws of this state. |
|
A valuation under this section must comply with provisions of the |
|
valuation manual, including in regard to its scope. |
|
(b) Unless exempted by the valuation manual, a company |
|
described by Subsection (a) shall include with the opinion required |
|
by that subsection an opinion of the same appointed actuary |
|
concerning whether the reserves and related actuarial items held in |
|
support of the policies and contracts specified in the valuation |
|
manual, when considered in light of the assets held by the company |
|
with respect to the reserves and related actuarial items, including |
|
investment earnings on the assets and considerations anticipated to |
|
be received and retained under the policies and contracts, make |
|
adequate provision for the company's obligations under the policies |
|
and contracts, including benefits under and expenses associated |
|
with the policies and contracts. |
|
(c) The company shall submit a supporting memorandum in |
|
accordance with the valuation manual and in a form and manner |
|
determined by the commissioner by rule to support each actuarial |
|
opinion under this section. If the company fails to provide a |
|
supporting memorandum at the request of the commissioner within the |
|
time specified by the valuation manual, or the commissioner |
|
determines that the supporting memorandum provided by the company |
|
fails to meet the standards prescribed by the valuation manual or is |
|
otherwise unacceptable to the commissioner, the commissioner may |
|
employ or contract with a qualified actuary at the expense of the |
|
company to review the opinion and the basis for the opinion and |
|
prepare the supporting memorandum required by the commissioner. |
|
(d) Each opinion required by this section must: |
|
(1) be in the form and contain the substance that is |
|
specified by the valuation manual and is acceptable to the |
|
commissioner; |
|
(2) be submitted with the annual statement reflecting |
|
the valuation of reserves for each year ending on or after the |
|
operative date of the valuation manual; |
|
(3) apply to all policies and contracts subject to |
|
this section, plus other actuarial liabilities specified by the |
|
valuation manual; and |
|
(4) be based on standards adopted from time to time by |
|
the Actuarial Standards Board or its successor, and on any |
|
additional standards prescribed by the valuation manual. |
|
(e) In the case of an opinion required to be submitted by a |
|
foreign or alien company, the commissioner may accept the opinion |
|
filed by the company with the insurance supervisory official of |
|
another state if the commissioner determines that the opinion |
|
reasonably meets the requirements applicable to a company domiciled |
|
in this state. |
|
SECTION 8. Section 425.055(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) A memorandum that, in form and substance, complies with |
|
the commissioner's rules shall be prepared to support each |
|
actuarial opinion required by Section 425.054 or 425.0545. |
|
SECTION 9. Section 425.056(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) Except in cases of fraud or wilful misconduct or as |
|
provided by Subsection (b), a person who certifies an opinion under |
|
Section 425.054 or 425.0545 is not liable for damages to a person, |
|
other than the life insurance company covered by the opinion, for an |
|
act, error, omission, decision, or other conduct with respect to |
|
the person's opinion. |
|
SECTION 10. Section 425.057, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 425.057. DISCIPLINARY ACTION: COMPANY OR PERSON |
|
CERTIFYING OPINION. A company or person that certifies an opinion |
|
under Section 425.054 or 425.0545 and that violates Section |
|
425.054, 425.0545, or 425.055 or rules adopted under those sections |
|
is subject to disciplinary action under Chapter 82. |
|
SECTION 11. The heading to Section 425.058, Insurance Code, |
|
is amended to read as follows: |
|
Sec. 425.058. COMPUTATION [VALUATION] OF MINIMUM STANDARD |
|
[POLICY OR CONTRACT]: GENERAL RULE. |
|
SECTION 12. The heading to Section 425.059, Insurance Code, |
|
is amended to read as follows: |
|
Sec. 425.059. COMPUTATION [VALUATION] OF MINIMUM STANDARD |
|
FOR CERTAIN ANNUITIES AND PURE ENDOWMENT CONTRACTS. |
|
SECTION 13. The heading to Section 425.064, Insurance Code, |
|
is amended to read as follows: |
|
Sec. 425.064. COMMISSIONERS RESERVE VALUATION METHOD FOR |
|
LIFE INSURANCE AND ENDOWMENT BENEFITS. |
|
SECTION 14. The heading to Section 425.065, Insurance Code, |
|
is amended to read as follows: |
|
Sec. 425.065. COMMISSIONERS ANNUITY RESERVE VALUATION |
|
METHOD FOR ANNUITY AND PURE ENDOWMENT BENEFITS. |
|
SECTION 15. Subchapter B, Chapter 425, Insurance Code, is |
|
amended by adding Sections 425.072, 425.073, 425.074, 425.075, |
|
425.076, and 425.077 to read as follows: |
|
Sec. 425.072. MINIMUM STANDARD FOR ACCIDENT AND HEALTH |
|
INSURANCE CONTRACTS. (a) The standard prescribed by the valuation |
|
manual for accident and health insurance contracts issued on or |
|
after the operative date of the valuation manual is the minimum |
|
standard of valuation required under Section 425.0535. |
|
(b) For disability, accident and sickness, and accident and |
|
health insurance contracts issued before the operative date of the |
|
valuation manual, the minimum standard of valuation is the standard |
|
in existence before the operative date of the valuation manual. |
|
Sec. 425.073. VALUATION MANUAL FOR CERTAIN POLICIES. (a) |
|
Except as otherwise provided by this section, for policies issued |
|
on or after the operative date of the valuation manual, the standard |
|
prescribed by the valuation manual is the minimum standard of |
|
valuation required under Section 425.0535. |
|
(b) The commissioner by rule shall adopt a valuation manual |
|
and determine the operative date of the valuation manual. A |
|
valuation manual adopted by the commissioner under this section |
|
must be substantially similar to the valuation manual approved by |
|
the National Association of Insurance Commissioners. The operative |
|
date must be January 1 of the first calendar year immediately |
|
following a year in which, on or before July 1, the commissioner |
|
determines that: |
|
(1) the valuation manual has been adopted by the |
|
National Association of Insurance Commissioners by an affirmative |
|
vote of at least 42 members, or three-fourths of the members voting, |
|
whichever is greater; |
|
(2) the National Association of Insurance |
|
Commissioners Standard Model Valuation Law, as amended by the |
|
National Association of Insurance Commissioners in 2009, or |
|
legislation including substantially similar terms and provisions, |
|
has been enacted by states representing greater than 75 percent of |
|
the direct premiums written as reported in the following annual |
|
statements submitted for 2008: |
|
(A) life insurance and accident and health annual |
|
statements; |
|
(B) health annual statements; or |
|
(C) fraternal annual statements; and |
|
(3) the National Association of Insurance |
|
Commissioners Standard Model Valuation Law, as amended by the |
|
National Association of Insurance Commissioners in 2009, or |
|
legislation including substantially similar terms and provisions, |
|
has been enacted by at least 42 of the following 55 jurisdictions: |
|
(A) the 50 United States; |
|
(B) American Samoa; |
|
(C) the United States Virgin Islands; |
|
(D) the District of Columbia; |
|
(E) Guam; and |
|
(F) Puerto Rico. |
|
(c) After a valuation manual has been adopted by the |
|
commissioner by rule, any changes to the valuation manual must be |
|
adopted by rule and must be consistent with changes adopted by the |
|
National Association of Insurance Commissioners. Unless a change |
|
in the valuation specifies a later effective date, the effective |
|
date for changes to the valuation manual may not be earlier than |
|
January 1 of the year immediately following the date on which the |
|
commissioner determines that the changes to the valuation manual |
|
have been adopted by the National Association of Insurance |
|
Commissioners by an affirmative vote representing: |
|
(1) at least three-fourths of the members of the |
|
National Association of Insurance Commissioners voting, but not |
|
less than a majority of the total membership; and |
|
(2) members of the National Association of Insurance |
|
Commissioners representing jurisdictions totaling greater than 75 |
|
percent of the direct premiums written as reported in the annual |
|
statements submitted for 2008 as provided by Subsection (b)(2). |
|
(d) The valuation manual must specify: |
|
(1) the minimum valuation standards for and |
|
definitions of the policies or contracts subject to Section |
|
425.0535, including: |
|
(A) the commissioner's reserve valuation method |
|
for life insurance contracts subject to Section 425.0535; |
|
(B) the commissioner's annuity reserve |
|
valuation method for annuity contracts subject to Section 425.0535; |
|
and |
|
(C) the minimum reserves for all other policies |
|
or contracts subject to Section 425.0535; |
|
(2) the policies or contracts that are subject to the |
|
requirements of a principle-based valuation under Section 425.074 |
|
and the minimum valuation standards consistent with those |
|
requirements, including: |
|
(A) the requirements for the format of reports to |
|
the commissioner under Section 425.074(b)(3), which must include |
|
the information necessary to determine if a valuation is |
|
appropriate and in compliance with this subchapter; |
|
(B) the assumptions prescribed for risks over |
|
which the company does not have significant control or influence; |
|
and |
|
(C) the procedures for corporate governance and |
|
oversight of the actuarial function, and a process for appropriate |
|
waiver or modification of the procedures; |
|
(3) the policies that are not subject to a |
|
principle-based valuation under Section 425.074; |
|
(4) the data and form of data required under Section |
|
425.074, to whom the data must be submitted, and other desired |
|
requirements, including requirements concerning data analyses and |
|
reporting of analyses; and |
|
(5) other requirements, including requirements |
|
relating to reserve methods, risk measurement, generation of |
|
economic scenarios, assumptions, margins, use of company |
|
experience, disclosure, certification, reports, actuarial opinions |
|
and memorandums, transition rules, and internal controls. |
|
(e) With respect to policies that are not subject to a |
|
principle-based valuation under Section 425.074 as described by |
|
Subsection (d)(3), the minimum valuation standard must: |
|
(1) be consistent with the minimum valuation standard |
|
before the operative date of the valuation manual; or |
|
(2) develop reserves that quantify the benefits and |
|
guarantees, and the funding, associated with the contracts and |
|
their risks at a level of conservatism that reflects conditions |
|
that include unfavorable events that have a reasonable probability |
|
of occurring. |
|
(f) In the absence of a specific valuation requirement or if |
|
a specific valuation requirement in the valuation manual does not |
|
in the commissioner's opinion comply with this subchapter, the |
|
company shall, with respect to the requirement, comply with minimum |
|
valuation standards prescribed by the commissioner by rule. |
|
(g) The commissioner may employ or contract with a qualified |
|
actuary, at the expense of the company, to perform an actuarial |
|
examination of the company and provide an opinion concerning the |
|
appropriateness of any reserve assumption method used by the |
|
company, or to review and provide an opinion on a company's |
|
compliance with any requirement of this section. The commissioner |
|
may rely on the opinion, regarding provisions contained within this |
|
section, of a qualified actuary engaged by the insurance |
|
supervisory official of another state. |
|
(h) The commissioner may require a company to change an |
|
assumption or method as necessary in the commissioner's opinion to |
|
comply with a requirement of the valuation manual or this |
|
subchapter. |
|
(i) The commissioner may take other disciplinary action as |
|
permitted under Chapter 82. |
|
Sec. 425.074. PRINCIPLE-BASED VALUATION REQUIRED. (a) A |
|
company shall establish reserves using a principle-based valuation |
|
that meets the conditions for policies or contracts provided by the |
|
valuation manual. At a minimum, the valuation shall: |
|
(1) quantify the benefits and guarantees, and the |
|
funding, associated with the contracts and their risks at a level of |
|
conservatism that reflects conditions that include unfavorable |
|
events that have a reasonable probability of occurring during the |
|
terms of the contracts; |
|
(2) with respect to policies and contracts with |
|
significant tail risk, reflect conditions appropriately adverse to |
|
quantify the tail risk; |
|
(3) incorporate assumptions, risk analysis methods, |
|
and financial models and management techniques that are consistent |
|
with those used in the company's overall risk assessment process, |
|
while recognizing potential differences in financial reporting |
|
structures and any prescribed assumptions or methods; |
|
(4) incorporate assumptions: |
|
(A) prescribed by the valuation manual; or |
|
(B) established: |
|
(i) using the company's available |
|
experience, to the extent that data is relevant and statistically |
|
credible; or |
|
(ii) to the extent that the company data is |
|
not available, relevant, or statistically credible, using other |
|
relevant, statistically credible experience; and |
|
(5) provide margins for uncertainty including adverse |
|
deviation and estimation error, such that the greater the |
|
uncertainty the larger the margin and resulting reserve. |
|
(b) A company using a principle-based valuation for one or |
|
more policies or contracts subject to this section and as specified |
|
by the valuation manual shall: |
|
(1) establish procedures for corporate governance and |
|
oversight of the actuarial valuation function consistent with |
|
procedures specified by the valuation manual; |
|
(2) provide to the commissioner and the company's |
|
board of directors an annual certification of the effectiveness of |
|
the internal controls with respect to the principle-based |
|
valuation; and |
|
(3) develop, and file with the commissioner on |
|
request, a principle-based valuation report that complies with |
|
standards prescribed in the valuation manual. |
|
(c) A company's internal controls with respect to the |
|
principle-based valuation must be designed to ensure that all |
|
material risks inherent in the liabilities and associated assets |
|
subject to the valuation are included in the valuation, and that |
|
valuations are made in accordance with the valuation manual. The |
|
certification described by Subsection (b)(2) must be based on the |
|
controls in place as of the end of the preceding calendar year. |
|
(d) A principle-based valuation may include a prescribed |
|
formulaic reserve component. |
|
Sec. 425.075. EXPERIENCE REPORTING FOR POLICIES IN FORCE ON |
|
OR AFTER OPERATIVE DATE OF VALUATION MANUAL. A company shall submit |
|
mortality, morbidity, policyholder behavior, or expense experience |
|
and other data as prescribed in the valuation manual. |
|
Sec. 425.076. CONFIDENTIALITY. (a) This section applies |
|
to: |
|
(1) a memorandum in support of an opinion submitted |
|
under Section 425.0545; |
|
(2) any documents or other information, produced or |
|
obtained by or disclosed to the commissioner or any other person: |
|
(A) in connection with the memorandum; |
|
(B) in the course of an examination made under |
|
Section 425.073(g), except that if an examination report or other |
|
material prepared in connection with an examination made under |
|
Subchapter B, Chapter 401, is not held as privileged and |
|
confidential under Chapter 401, an examination report or other |
|
material prepared in connection with an examination made under |
|
Section 425.073(g) is not confidential to the same extent as if the |
|
examination report or other material had been prepared under |
|
Subchapter B, Chapter 401; |
|
(C) in support of, or in connection with, an |
|
annual certification by the company under Section 425.074(b)(2) |
|
evaluating the effectiveness of the company's internal controls |
|
with respect to a principle-based valuation; or |
|
(D) in the development of a principle-based |
|
valuation report developed under Section 425.074(b)(3); and |
|
(3) any documents or other information submitted by |
|
the company under Section 425.074, including experience data to the |
|
extent that the data contain information that could potentially |
|
identify a company or individual. |
|
(b) Except as provided by this section, a memorandum and any |
|
documents or other information described by Subsection (a) are: |
|
(1) confidential and not subject to disclosure under |
|
Chapter 552, Government Code; |
|
(2) privileged from subpoena or discovery in a private |
|
civil action; and |
|
(3) inadmissible as evidence in a private civil |
|
action. |
|
(c) This section does not prohibit the commissioner from |
|
using information acquired under this section in the furtherance of |
|
a legal or regulatory action relating to the administration of this |
|
code. |
|
(d) The commissioner or any person who receives a document |
|
or other information described by Subsection (a) while acting under |
|
the authority of the commissioner may not testify and may not be |
|
compelled to testify in a private civil action concerning the |
|
content of the document or other information. |
|
(e) Subject to Subsection (f), the commissioner may share |
|
information described by Subsection (a) with: |
|
(1) another state, federal, or international |
|
regulatory agency; |
|
(2) the National Association of Insurance |
|
Commissioners and its affiliates and subsidiaries; |
|
(3) in the case of information described by Subsection |
|
(a)(1) or (2)(D), the Actuarial Board for Counseling and Discipline |
|
or its successor on receipt of a request stating that the |
|
information is required for the purpose of professional |
|
disciplinary proceedings; and |
|
(4) state, federal, and international law enforcement |
|
officials. |
|
(f) With respect to Subsections (e)(1) and (2), the |
|
commissioner may not share documents or other information described |
|
by Subsection (a) unless the recipient agrees and has the legal |
|
authority to agree to maintain the confidentiality and privileged |
|
status of the documents or information in the same manner and to the |
|
same extent as is required for the commissioner. |
|
(g) The commissioner may receive documents and other |
|
information, including otherwise confidential and privileged |
|
documents or information, from the National Association of |
|
Insurance Commissioners and its affiliates and subsidiaries, from |
|
regulatory or law enforcement officials of other foreign or |
|
domestic jurisdictions, and from the Actuarial Board for Counseling |
|
and Discipline or its successor, and shall maintain as confidential |
|
or privileged any document or other information received with |
|
notice or the understanding that it is confidential or privileged |
|
under the laws of the jurisdiction that is the source of the |
|
document or other information. |
|
(h) The commissioner may enter agreements governing sharing |
|
and use of information consistent with this section. |
|
(i) Disclosing information or providing a document to the |
|
commissioner under this section, or sharing information as |
|
authorized under this section, does not result in a waiver of any |
|
applicable privilege or claim of confidentiality that may apply to |
|
the document or information. |
|
(j) A privilege established under the law of any state or |
|
jurisdiction that is substantially similar to the privilege |
|
established under this section is enforceable in any proceeding in, |
|
and in any court of, this state. |
|
(k) In this section, a reference to a regulatory agency, law |
|
enforcement agency, or the National Association of Insurance |
|
Commissioners includes an employee, agent, consultant, or |
|
contractor of the agency or association, as applicable. |
|
(l) Notwithstanding this section, any confidential |
|
information specified in Subsection (a) may be: |
|
(1) subject to subpoena for the purpose of defending |
|
an action seeking damages from the appointed actuary submitting the |
|
related memorandum in support of an opinion submitted under Section |
|
425.054 or 425.0545 or a principle-based valuation report developed |
|
under Section 425.074(b)(3) by reason of an action required by this |
|
subchapter or by rules adopted under this subchapter; and |
|
(2) released by the commissioner with the written |
|
consent of the company. |
|
(m) A memorandum in support of an opinion submitted under |
|
Section 425.054 or 425.0545 or a principle-based valuation report |
|
developed under Section 425.074(b)(3) ceases to be confidential if: |
|
(1) any portion of the memorandum or report is cited by |
|
the company in its marketing; |
|
(2) the memorandum or report is cited by the company |
|
before a government agency other than a state insurance department; |
|
or |
|
(3) the memorandum or report is released by the |
|
company to the news media. |
|
Sec. 425.077. SINGLE STATE EXEMPTION. (a) The |
|
commissioner may exempt specific product forms or product lines of |
|
a domestic company that is licensed and doing business only in this |
|
state from the requirements of Section 425.073 if: |
|
(1) the commissioner has issued an exemption in |
|
writing to the company and has not subsequently revoked the |
|
exemption in writing; and |
|
(2) the company computes reserves using assumptions |
|
and methods used before the operative date of the valuation manual |
|
in addition to any requirements established by the commissioner and |
|
adopted by rule. |
|
(b) Sections 425.054, 425.058, and 425.072 apply to a |
|
company granted an exemption under this section. For a company |
|
applying for this exemption, any reference to Section 425.073 found |
|
in Section 425.054, 425.058, or 425.072 does not apply. |
|
SECTION 16. The commissioner of insurance shall determine |
|
whether the National Association of Insurance Commissioners and a |
|
sufficient number of states and other jurisdictions have adopted a |
|
valuation manual as required by Section 425.073(b), Insurance Code, |
|
as added by this Act. As soon as practicable after the commissioner |
|
of insurance determines that the National Association of Insurance |
|
Commissioners and a sufficient number of states and other |
|
jurisdictions have adopted the valuation manual as required by that |
|
section, the commissioner of insurance shall adopt rules necessary |
|
to implement this Act. |
|
SECTION 17. This Act takes effect January 1, 2014. |