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A BILL TO BE ENTITLED
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AN ACT
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relating to the regulation of insurance holding company systems, |
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including internationally active insurance groups; authorizing a |
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fee. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Sections 823.011(a), (d), and (d-1), Insurance |
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Code, are amended to read as follows: |
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(a) This section applies only to information, including |
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documents and copies of documents, that is: |
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(1) reported or otherwise provided under Subchapter |
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I-1, B, or C or Section 823.201(d) or (e); |
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(2) disclosed to the commissioner under Section |
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823.010; or |
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(3) obtained by or disclosed to the commissioner or |
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another person in the course of an examination or investigation |
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under Subchapter H or Chapter 401. |
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(d) Except as provided by Subsection (e), if the recipient |
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of documents or other information to which this section applies |
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agrees in writing to maintain the confidential and privileged |
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status of the documents or other information, and verifies in |
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writing the legal authority to maintain the confidential and |
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privileged status of the documents or information, the commissioner |
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or another person may disclose the information to any of the |
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following entities functioning in an official capacity: |
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(1) a commissioner of insurance or an insurance |
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department of another state; |
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(2) an authorized law enforcement official; |
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(3) a district attorney of this state; |
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(4) the attorney general; |
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(5) a grand jury; |
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(6) members of a supervisory college described by |
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Section 823.0145; |
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(7) the National Association of Insurance |
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Commissioners and its affiliates and subsidiaries; or |
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(8) another state, federal, or international |
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regulatory agency. |
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(d-1) The commissioner may receive documents or |
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information, including otherwise confidential and privileged |
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documents or information, from the entities listed in Subsection |
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(d)[,] and shall maintain as confidential or privileged any |
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document or information received by the commissioner with notice or |
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an understanding that the document or information is confidential |
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or privileged under the laws of the jurisdiction of the entity that |
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provides the document or information. |
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SECTION 2. Section 823.054(b), Insurance Code, is amended |
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to read as follows: |
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(b) If the amount of a single transaction or the total |
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amount of all transactions involving sales, purchases, exchanges, |
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loans or other extensions of credit, or investments is more than |
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[the lesser of] one-half of one percent of an insurer's admitted |
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assets [or five percent of an insurer's surplus,] as of December 31 |
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of the year preceding the date of the transaction or transactions, |
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the transaction or transactions, respectively, are considered to be |
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material for purposes of this section. |
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SECTION 3. Chapter 823, Insurance Code, is amended by |
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adding Subchapter I-1 to read as follows: |
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SUBCHAPTER I-1. GROUP-WIDE SUPERVISION OF INTERNATIONALLY ACTIVE |
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INSURANCE GROUPS |
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Sec. 823.421. DEFINITIONS. In this subchapter: |
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(1) "Foreign regulatory official" means a |
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governmental official of another state or country who is authorized |
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to regulate an internationally active insurance group in accordance |
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with this subchapter. |
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(2) "Group-wide supervisor" means the regulatory |
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official designated by the commissioner to have sufficient |
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significant contacts with an internationally active insurance |
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group to conduct and coordinate group-wide supervision activities |
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for the internationally active insurance group under this |
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subchapter. |
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(3) "Internationally active insurance group" means an |
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insurance holding company system described by Section 823.422 and |
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includes an insurer registered under Subchapter B. |
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Sec. 823.422. CLASSIFICATION AS INTERNATIONALLY ACTIVE |
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INSURANCE GROUP. (a) For purposes of this subchapter and except as |
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provided by Subsection (c), an insurance holding company system is |
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an internationally active insurance group if the insurance holding |
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company system: |
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(1) writes premiums in at least three countries; |
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(2) writes at least 10 percent of the insurance |
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holding company system's total gross written premiums outside the |
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United States; and |
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(3) for the period described by Subsection (b): |
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(A) has average total assets of at least $50 |
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billion; or |
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(B) writes total gross premiums of an average of |
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at least $10 billion. |
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(b) The period applicable to Subsection (a)(3) is: |
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(1) the three most recent fiscal years of the |
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insurance holding company system that precede the fiscal year in |
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which the determination under this section is made; or |
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(2) if the insurance holding company system has been |
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in operation for less than the period described by Subdivision (1), |
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the period for which the insurance holding company system has been |
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in operation. |
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(c) The commissioner may waive a requirement described by |
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Subsection (a) in determining an insurance holding company system |
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to be an internationally active insurance group if the commissioner |
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determines that the insurance holding company system substantially |
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satisfies Subsection (a). |
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(d) The commissioner may publish on the department's |
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Internet website a list of insurance holding company systems |
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classified as internationally active insurance groups under this |
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section. |
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Sec. 823.423. DESIGNATION OF GROUP-WIDE SUPERVISOR. (a) |
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In cooperation with other state, federal, and international |
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regulatory agencies and in consultation with the internationally |
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active insurance group, the commissioner shall designate a single |
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group-wide supervisor for each group in accordance with this |
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subchapter. The commissioner may not designate a group-wide |
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supervisor before the period for additional information under |
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Section 823.425 has expired. |
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(b) The commissioner shall designate the commissioner or a |
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foreign regulatory official as the group-wide supervisor under |
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Subsection (a). |
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(c) At the request of an insurance holding company system |
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registered under Subchapter B that does not otherwise meet the |
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requirements of an internationally active insurance group under |
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Section 823.422, the commissioner may designate a group-wide |
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supervisor for the insurance holding company system in accordance |
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with this subchapter. |
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Sec. 823.424. INFORMATION FOR DESIGNATION. The |
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commissioner may order the production of information in accordance |
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with Subchapter H necessary to make a designation under Section |
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823.423 from an insurer registered under Subchapter B that is part |
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of the internationally active insurance group. |
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Sec. 823.425. NOTICE OF DESIGNATION; ADDITIONAL |
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INFORMATION FOR DESIGNATION. (a) In this section, "ultimate |
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controlling person" means the person in an internationally active |
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insurance group who is not controlled by another person. |
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(b) Before making a designation under Section 823.423, the |
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commissioner shall provide written notice that the commissioner is |
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making a designation under that section to: |
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(1) each insurer registered under Subchapter B that is |
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a member of the insurance holding company system to be designated as |
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an internationally active insurance group; and |
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(2) the ultimate controlling person of the insurance |
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holding company system. |
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(c) The insurance holding company system to be designated as |
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an internationally active insurance group shall provide any |
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additional information to the commissioner for a designation under |
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Section 823.423 not later than the 30th day after the date the group |
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receives the notice described by Subsection (b). |
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Sec. 823.426. DESIGNATION OF COMMISSIONER. (a) The |
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commissioner may designate the commissioner as the group-wide |
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supervisor for any internationally active insurance group under |
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Section 823.423. |
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(b) Except as provided by Section 823.427, the commissioner |
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shall designate the commissioner as the group-wide supervisor of an |
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internationally active insurance group under Section 823.423 if the |
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group conducts substantial insurance operations in this state. |
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Sec. 823.427. DESIGNATION OF FOREIGN REGULATORY OFFICIAL. |
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(a) The commissioner shall designate a foreign regulatory official |
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as the group-wide supervisor under Section 823.423 if the foreign |
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regulatory official acts as the group-wide supervisor. |
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(b) The commissioner may designate a foreign regulatory |
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official as the group-wide supervisor under Section 823.423 if: |
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(1) the foreign regulatory official consents to the |
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designation; and |
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(2) the internationally active insurance group: |
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(A) does not have substantial insurance |
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operations in this state; or |
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(B) has substantial insurance operations in this |
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state, but the commissioner has determined that the foreign |
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regulatory official is a more appropriate supervisor in accordance |
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with this section. |
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(c) In determining whether a foreign regulatory official is |
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a more appropriate group-wide supervisor under Subsection |
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(b)(2)(B), the commissioner shall consider: |
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(1) the place of domicile of the insurers within the |
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internationally active insurance group that hold the largest share |
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of the group's written premiums, assets, or liabilities; |
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(2) the place of domicile of the top-tiered insurers |
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in the insurance holding company system of the internationally |
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active insurance group; |
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(3) the location of the executive offices or largest |
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operational offices of the internationally active insurance group; |
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(4) whether a foreign regulatory official is acting or |
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is seeking to act as the group-wide supervisor under a regulatory |
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system that the commissioner determines to be: |
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(A) substantially similar to the system of |
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regulation provided under the laws of this state; or |
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(B) otherwise sufficient in terms of providing |
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for group-wide supervision, enterprise risk analysis, and |
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cooperation with other regulatory officials; and |
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(5) whether a foreign regulatory official acting or |
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seeking to act as the group-wide supervisor provides the |
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commissioner with reasonably reciprocal recognition and |
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cooperation. |
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Sec. 823.428. CHANGE OF DESIGNATION. The commissioner may |
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change the designation of a foreign regulatory official as the |
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group-wide supervisor under Section 823.423 in the event of a |
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material change that results in: |
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(1) the internationally active insurance group's |
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insurers domiciled in this state holding the largest share of the |
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group's premiums, assets, or liabilities; or |
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(2) this state being the place of domicile of the |
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top-tiered insurers in the insurance holding company system of an |
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internationally active insurance group. |
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Sec. 823.429. POWERS OF COMMISSIONER AS GROUP-WIDE |
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SUPERVISOR. (a) This section applies only to an internationally |
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active insurance group for which the commissioner is designated as |
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the group-wide supervisor. |
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(b) The commissioner may assess the enterprise risks within |
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the internationally active insurance group to ensure that: |
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(1) the material financial condition and liquidity |
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risks to the members of the group that are engaged in the business |
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of insurance are identified by management; and |
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(2) reasonable and effective mitigation measures are |
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in place. |
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(c) The commissioner may request from any member of the |
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internationally active insurance group information necessary and |
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appropriate to assess enterprise risk, including information about |
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the members of the group regarding: |
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(1) governance, risk assessment, and management; |
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(2) capital adequacy; and |
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(3) material intercompany transactions. |
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(d) The commissioner may coordinate and, through the |
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authority of the regulatory officials of the jurisdictions in which |
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members of the internationally active insurance group are |
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domiciled, compel development and implementation of reasonable |
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measures designed to ensure that the group is able to timely |
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recognize and mitigate enterprise risks to members of the group |
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that are engaged in the business of insurance. |
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(e) The commissioner may communicate with other state, |
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federal, and international regulatory agencies for members of the |
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internationally active insurance group and share relevant |
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information subject to Section 823.011, through supervisory |
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colleges described by Section 823.0145 or otherwise. |
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(f) The commissioner may enter into agreements, including |
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an agreement for resolving disputes with other regulatory |
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officials, with or obtain documentation related to the |
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commissioner's role as group-wide supervisor from: |
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(1) any insurer registered under Subchapter B; |
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(2) any member of the internationally active insurance |
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group; and |
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(3) any other state, federal, or international |
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agencies regulating members of the internationally active |
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insurance group. |
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(g) The commissioner may perform any other group-wide |
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supervision activity consistent with this subchapter or considered |
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necessary by the commissioner for the administration of this |
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subchapter. |
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(h) An agreement entered into or documentation obtained |
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under Subsection (f) may not be used as evidence in any proceeding |
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to show that any foreign insurer or person within an insurance |
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holding company system is doing business in this state or is |
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otherwise subject to this state's jurisdiction. |
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Sec. 823.430. POWERS OF COMMISSIONER WHEN FOREIGN |
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REGULATORY OFFICIAL IS GROUP-WIDE SUPERVISOR. (a) This section |
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applies only to an internationally active insurance group for which |
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a foreign regulatory official is designated as the group-wide |
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supervisor under Section 823.423. |
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(b) The commissioner may enter into agreements with or |
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obtain documentation from any insurer registered under Subchapter |
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B, any affiliate of the insurer, and other state, federal, and |
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international regulatory agencies for members of the |
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internationally active insurance group to obtain information |
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related to the foreign regulatory official's role as group-wide |
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supervisor. |
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(c) If the commissioner designates a foreign regulatory |
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official from a jurisdiction that is not accredited by the National |
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Association of Insurance Commissioners as the group-wide |
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supervisor under Section 823.423, the commissioner may reasonably |
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cooperate with regulatory actions taken by the supervisor, through |
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supervisory colleges described by Section 823.0145 or otherwise, |
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if: |
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(1) the commissioner's cooperation is in compliance |
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with the laws of this state; and |
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(2) where applicable, the foreign regulatory official |
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also recognizes and cooperates with the commissioner's regulatory |
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actions as a group-wide supervisor for other internationally active |
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insurance groups. |
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(d) Where recognition and cooperation under Subsection |
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(c)(2) is not reasonably reciprocal, the commissioner may refuse |
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recognition of and cooperation with the foreign regulatory |
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official's regulatory action. |
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Sec. 823.431. EXPENSES OF COMMISSIONER. A registered |
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insurer subject to this subchapter shall pay the reasonable |
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expenses of the commissioner's participation in the administration |
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of this subchapter, including the engagement of attorneys, |
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actuaries, and other professionals and reasonable travel expenses. |
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SECTION 4. (a) Section 823.011, Insurance Code, as amended |
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by this Act, applies only to information, including documents and |
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copies of documents, obtained by or reported, disclosed, or |
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otherwise provided to the commissioner of insurance on or after the |
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effective date of this Act. Information, including documents and |
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copies of documents, obtained by or reported, disclosed, or |
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otherwise provided to the commissioner of insurance before the |
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effective date of this Act is governed by the law in effect on the |
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date the transaction occurred, and the former law is continued in |
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effect for that purpose. |
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(b) Section 823.054, Insurance Code, as amended by this Act, |
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applies only to a transaction that occurs on or after the effective |
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date of this Act. A transaction that occurs before the effective |
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date of this Act is governed by the law in effect on the date the |
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transaction occurred, and the former law is continued in effect for |
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that purpose. |
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SECTION 5. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2017. |