1999 Legislation
Print Friendly

HOUSE BILL NO. 3 – Insurance,rpt reqmts, consistency


View Daily Data Tracking History

View Bill Text

View Statement of Purpose / Fiscal Impact

Text to be added within a bill has been marked with Bold and
Underline. Text to be removed has been marked with
Strikethrough and Italic. How these codes are actually displayed will
vary based on the browser software you are using.

This sentence is marked with bold and underline to show added text.

This sentence is marked with strikethrough and italic, indicating
text to be removed.

Daily Data Tracking History

H0003........................................................by MR. SPEAKER
                   Requested by Department of Insurance
INSURANCE - Amends existing law to provide consistency in reporting
requirements for insurers and to provide correct citations to other

01/11    House intro - 1st rdg - to printing
01/11    Rpt prt - to Bus
01/29    Rpt out - rec d/p - to 2nd rdg
02/01    2nd rdg - to 3rd rdg
02/02    3rd rdg - PASSED - 64-1-4
      AYES -- Alltus, Barraclough, Barrett, Bell, Boe, Bruneel, Callister,
      Campbell, Chase, Clark, Crow, Cuddy, Deal, Ellsworth, Field(13),
      Field(20), Gagner, Geddes, Gould, Hadley, Hammond, Hansen(23),
      Hansen(29), Henbest, Hornbeck, Jaquet, Jones, Judd, Kellogg, Kempton,
      Kendell, Kjellander, Kunz, Lake, Limbaugh, Loertscher, Mader, Marley,
      McKague, Meyer, Montgomery, Mortensen, Moyle, Pischner, Pomeroy,
      Reynolds, Ridinger, Ringo, Robison, Schaefer, Sellman, Smith,
      Stevenson, Stoicheff, Stone, Taylor, Tilman, Tippets, Trail, Watson,
      Wheeler, Williams, Zimmermann, Mr Speaker
      NAYS -- Sali
      Absent and excused -- Black, Denney, Linford, Wood
    Dist. 19, Seat A, Vacant
    Floor Sponsor - Hammond
    Title apvd - to Senate
02/03    Senate intro - 1st rdg - to Com/HuRes
03/03    Rpt out - rec d/p - to 2nd rdg
03/04    2nd rdg - to 3rd rdg
03/09    3rd rdg - PASSED - 33-0-2
      AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
      Crow, Danielson, Darrington, Davis, Deide, Dunklin, Frasure, Geddes,
      Hawkins, Ingram, Keough, King, Lee, McLaughlin, Noh, Richardson,
      Riggs, Risch, Sandy, Schroeder, Sorensen, Stegner, Stennett, Thorne,
      Twiggs, Wheeler, Whitworth
      Absent and excused--Ipsen, Parry
    Floor Sponsor - Davis
    Title apvd - to House
03/10    To enrol
03/11    Rpt enrol - Sp signed
03/12    Pres signed
03/15    To Governor
03/17    Governor signed
         Session Law Chapter 65
         Effective: 07/01/99

Bill Text


 ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-fifth Legislature                 First Regular Session - 1999

                             IN THE HOUSE OF REPRESENTATIVES

                                     HOUSE BILL NO. 3

                                      BY MR. SPEAKER
                          Requested by: Department of Insurance

 1                                        AN ACT

11    Be It Enacted by the Legislature of the State of Idaho:

12        SECTION 1.  That Section 41-268, Idaho Code, be, and the  same  is  hereby
13    amended to read as follows:

14        41-268.  ARSON,  FIRE  AND  FRAUD  PREVENTION ACCOUNT. (1) There is hereby
15    created an account in the agency asset fund in the state treasury, to be  des-
16    ignated  the  "arson, fire and fraud prevention account." The account shall be
17    used by the director, department of insurance, for enforcement  of  this  act,
18    investigation  of alleged cases of arson, fraud and related alleged violations
19    of the laws of this state, and prevention of fire, explosions and other condi-
20    tions necessary for the public safety, health, peace and welfare.
21        (2)  In addition to moneys, if any, appropriated to  the  account  by  the
22    legislature, the director shall deposit with the state treasurer for credit to
23    the arson, fire and fraud prevention account:
24        (a)  Penalties  collected  under  the  provisions  of  sections 41-261 and
25        41-263, Idaho Code;
26        (b)  Assessments and, in the case of surplus lines  insurers,  fees,  col-
27        lected from insurers as defined by section 41-103, Idaho Code;
28        (c)  Other moneys now or hereinafter in the state fire prevention account;
29        (d)  Other  moneys  or  revenues derived from whatever source for arson or
30        fraud investigation or fire prevention.
31        (3)  Not more often than annually, assessments against authorized insurers
32    and fees from surplus lines insurers, as a prerequisite to  eligibility  under
33    section 41-1217, Idaho Code, will be levied by the director, and insurers will
34    pay  the  assessments or fees levied within sixty (60) days but not later than
35     May   March  1 of each year or, in the  case  of  newly
36    applying  insurers,  upon  notification  of authorization, or of surplus lines
37    eligibility. Assessments and fees from surplus lines insurers, will be as fol-
38    lows:
39        (a)  Insurers writing coverages as defined in section 41-504, Idaho  Code,
40        "property  insurance," section 41-505, Idaho Code, "marine and transporta-
41        tion," section 41-506,  Idaho  Code,  "casualty  insurance,"  and  section
42        41-3101,  Idaho  Code, "domestic county mutual fire insurers, associations
43        or organizations," not less than one hundred dollars ($100) nor more  than


 1        five hundred dollars ($500) annually; and
 2        (b)  Insurers  including,  but  not  limited to, those defined in sections
 3        41-3201, 41-3403 and  41-3903,  Idaho  Code,  not  writing  coverages,  as
 4        defined  above  in subsection (3)(a), shall pay one-half (1/2) the assess-
 5        ment made under the preceding subsection but not less than  fifty  dollars
 6        ($50.00) nor more than two hundred fifty dollars ($250) annually.
 7        (4)  All claims against the account shall be examined, audited and allowed
 8    in the manner now or hereafter provided by law.
 9        (5)  All  moneys placed in the account are hereby perpetually appropriated
10    to the department of insurance for the purposes of the provisions of this sec-
11    tion.
12        (6)  Pending use for purposes of the provisions of this section, moneys in
13    the account shall be invested by the state treasurer in  the  same  manner  as
14    provided  under  section 67-1210, Idaho Code, with respect to other surplus or
15    idle moneys in the state treasury. Interest earned on the investments shall be
16    returned to the account.

17        SECTION 2.  That Section 41-307, Idaho Code, be, and the  same  is  hereby
18    amended to read as follows:

19        41-307.  AUTHORIZATION FOR INVESTMENT PURPOSES ONLY. A foreign insurer may
20    make investments in this state without certificate of authority as provided by
21    section  30-1-  106   1501 , Idaho Code. Such an insurer
22    shall not be subject to any other provision of this code.

23        SECTION 3.  That Section 41-332, Idaho Code, be, and the  same  is  hereby
24    amended to read as follows:

26    OF FOREIGN CORPORATIONS. A foreign insurer authorized to transact insurance in
27    this  state  and fully complying with this code shall be exempt from complying
28    with the provisions of sections 30-1- 106  1501  through
29    30-1- 124  1532 , Idaho Code.

30        SECTION 4.  That Section 41-342, Idaho Code, be, and the  same  is  hereby
31    amended to read as follows:

33    INSURER. (1) Any insurer which is organized under the laws of any other  state
34    and is admitted to do business in this state for the purpose of writing insur-
35    ance  may  become a domestic insurer by complying with all of the requirements
36    of law relative to the organization and licensing of a domestic insurer of the
37    same type and by designating its principal place of business  at  a  place  in
38    Idaho.  Such  a  domestic  insurer  shall  be  entitled  to  a  certificate of
39    redomestication and a certificate of authority to transact  business  in  this
40    state, and shall have the same rights and obligations as other domestic insur-
41    ers of this state.
42        (2)  Any domestic insurer may, upon the approval of the director, transfer
43    its  domicile to any other state in which it is admitted to transact the busi-
44    ness of insurance. Upon such a transfer, the  insurer  shall  cease  to  be  a
45    domestic  insurer.  If  the insurer is otherwise qualified, the director shall
46    admit the insurer to this state as  a  foreign  insurer.  The  director  shall
47    approve  any  such proposed transfer unless he determines that such a transfer
48    is not in the interest of the policyholders of  the  insurer  in  this  state.
49    After the director has approved the transfer, the director shall provide writ-


 1    ten  notice  to  the  secretary  of state that the insurer has transferred its
 2    domicile to another state, stating the effective date of the transfer and  the
 3    state  to  which the insurer has transferred its domicile. Upon receipt of the
 4    written notice from the director and the payment of the fee required  in  sec-
 5    tion  30-1-  128(n)   122 , Idaho Code, the secretary of
 6    state shall file the notice and, on the effective date of the transfer, termi-
 7    nate the existence of the insurance company as a domestic corporation.
 8        (3)  The certificate of authority,  appointment  of  statutory  agent  and
 9    licenses,  policy forms, rates, authorizations and other filings and approvals
10    in existence at the time an insurer admitted to  transact  insurance  in  this
11    state transfers its corporate domicile to this or any other state, continue in
12    effect upon the transfer of corporate domicile. All rates and outstanding pol-
13    icies  of  any transferring insurer shall remain in full force and effect  and
14    policies need not be endorsed as to the new domicile unless so ordered by  the
15    director.  Every  transferring  insurer shall either file new policy forms for
16    use in this state with the director on or before the  effective  date  of  the
17    transfer, or use existing policy forms in this state with appropriate endorse-
18    ments  as  allowed  by,  and  under  such conditions as may be approved by the
19    director. Every transferring insurer shall notify the director of the proposed
20    transfer, and shall promptly file any resulting amendments  to  its  corporate
21    documents required to be filed with the director.

22        SECTION  5.  That  Section  41-345, Idaho Code, be, and the same is hereby
23    amended to read as follows:

24        41-345.  REPORT. (1) Every insurer domiciled in this state  shall  file  a
25    report  with the director disclosing material acquisitions and dispositions of
26    assets or material nonrenewals, cancellations or revisions of  ceded  reinsur-
27    ance  agreements  unless such acquisitions and dispositions of assets or mate-
28    rial nonrenewals, cancellations or revisions of ceded  reinsurance  agreements
29    have  been  submitted to the director for review, approval or information pur-
30    poses pursuant to other provisions of the insurance code, laws, rules or other
31    requirements.
32        (2)  The report required in subsection (1) of this section is  due  within
33    fifteen  (15)  days  after  the  end of the calendar month in which any of the
34    foregoing transactions occur.
35        (3)  One (1) complete copy of the report, including any exhibits or  other
36    attachments filed as part thereof, shall be filed with:
37        (a)  The    Idaho  department of  insurance ;  
38        department of the insurer's state of domicile;  and
39        (b)  The national association of insurance commissioners.
40        (4)  All reports obtained by or disclosed to the director pursuant to sec-
41    tions 41-345 through 41-347, Idaho Code, shall be given confidential treatment
42    and shall not be subject to subpoena and shall  not  be  made  public  by  the
43    director,  the  national  association of insurance commissioners, or any other
44    person, except to insurance departments of other  states,  without  the  prior
45    written consent of the insurer to which it pertains unless the director, after
46    giving the insurer who would be affected thereby, notice and an opportunity to
47    be  heard,  determines that the interest of policyholders, shareholders or the
48    public will be served by the publication thereof, in which event the  director
49    may publish all or any part thereof in such manner as he may deem appropriate.

50        SECTION  6.  That  Section 41-2803, Idaho Code, be, and the same is hereby
51    amended to read as follows:


 1        41-2803.  APPLICABILITY OF GENERAL CORPORATION STATUTES. (1) The  applica-
 2    ble  statutes  of this state relating to the powers and procedures of domestic
 3    private corporations formed for profit shall apply to domestic stock  insurers
 4    and  to  domestic  mutual  insurers, except where in conflict with the express
 5    provisions of this code and the reasonable implications of such provisions.
 6        (2)  Domestic stock insurers and domestic mutual insurers are exempt  from
 7    the  provisions of section s 30-1-125 (annual report of domestic and for-
 8    eign corporations), 30-1-126 (filing of annual report of domestic and  foreign
 9    corporations),  and  30-1-130  (franchise  tax payable by domestic and foreign
10    corporations),   30-1-1622,  Idaho Code.

11        SECTION 7.  That Section 41-2852, Idaho Code, be, and the same  is  hereby
12    amended to read as follows:

13        41-2852.  IMPAIRMENT  OF  CAPITAL OR ASSETS. (1) If  a domestic stock
14    insurer's capital (as represented by the aggregate par value of its  outstand-
15    ing  capital stock) becomes impaired, or  the assets of a domestic 
16    mutual  insurer are less than its liabilities and the minimum amount  of
17      surplus    capital funds  required to be maintained by
18    it under  this  code   section 41-313, Idaho Code,   for
19    authority  to  transact  the kinds of insurance being transacted, the director
20    shall at once determine the amount of deficiency and  serve  notice  upon  the
21    insurer  to  cure  the  deficiency  and file proof thereof with him within the
22    period specified in the notice, which period shall be  not  less  than  thirty
23    (30)  nor  more than ninety (90) days from the date of the notice. Such notice
24    may be so served by delivery to the insurer, or  by  mailing  to  the  insurer
25    addressed to its registered office in this state.
26        (2)  The  deficiency  may be made good in cash or in assets eligible under
27    chapter 7 (investments) for the investment  of  the  insurer's  funds;  or  by
28    amendment of the insurer's certificate of authority to cover only such kind or
29    kinds  of  insurance  thereafter  for which the insurer has sufficient paid-in
30    capital stock (if a stock insurer) or surplus (if a mutual insurer) under this
31    code; or, if a stock insurer, by reduction of the  number  of  shares  of  the
32    insurer's  authorized capital stock or the par value thereof through amendment
33    of its articles of incorporation, to an amount of authorized and paid-in capi-
34    tal stock not below the minimum required for the kinds of insurance thereafter
35    to be transacted.
36        (3)  After any such reduction of  authorized  capital  stock  the  insurer
37    shall  require  the  surrender  to  it  of  outstanding  stock certificates in
38    exchange for new certificates to be issued in lieu  thereof  for  such  number
39    and/or  par value of shares as the respective stockholders are proportionately
40    entitled to receive.
41        (4)  If the deficiency is not made good and proof thereof filed  with  the
42    director  within  the period required by the notice as specified in subsection
43    (1) above, the insurer shall be deemed insolvent and the director shall insti-
44    tute delinquency proceedings against it under chapter 33 of this code.

45        SECTION 8.  That Section 41-3806, Idaho Code, be, and the same  is  hereby
46    amended to read as follows:

48    insurer which is authorized to do business in this state and which is a member
49    of an insurance holding company  system  shall  register  with  the  director;
50    except  a  foreign  insurer subject to registration requirements and standards


 1    adopted by statute or regulation in the jurisdiction of its domicile which are
 2    substantially similar to those contained in:
 3        (a)  Section 41-3806, Idaho Code;
 4        (b)  Sections 41-3807 (1), 41-3808 and 41-3809, Idaho Code; and
 5        (c)  Either section 41-3807 (2), Idaho Code, or a provision  such  as  the
 6        following:  Each  registered  insurer  shall  keep current the information
 7        required to be disclosed in its registration statement  by  reporting  all
 8        material  changes  or  additions within fifteen (15) days after the end of
 9        the month in which it learns of each change or addition.
10    Each insurer which is subject to registration under  the  provisions  of  this
11    section  shall  register  within fifteen (15) days after it becomes subject to
12    registration, and annually thereafter  within one  hundred  twenty  (120)
13    days  after  the end of the holding company's fiscal year   for the
14    year ended December 31 immediately preceding, on the  due  date  provided  for
15    filing  of audited financial reports or, if the insurer is not subject to fil-
16    ing of audited financial reports, on June 1 , unless the  director,  for
17    good  cause  shown,  extends  the  time for registration, and then within such
18    extended time. Nothing in this section shall  be  construed  to  prohibit  the
19    director  from requesting any authorized insurer, which is a member of a hold-
20    ing company system and not subject to registration  under  the  provisions  of
21    this  section,  for  a copy of the registration statement or other information
22    filed by such insurer with the insurance regulatory authority of its state  of
23    domicile. Upon request of the insurer or of the insurance regulatory authority
24    of  another jurisdiction in which the insurer is authorized to transact insur-
25    ance, the director at the insurer's expense shall furnish a copy of the regis-
26    tration statement or other information filed by a domestic  insurer  with  the
27    director pursuant to this chapter.
28        (2)  Every  insurer  subject  to  registration  shall  file a registration
29    statement, on a form provided by the director,  which  shall  contain  current
30    information about:
31        (a)  The  capital  structure,  general  financial condition, ownership and
32        management of the insurer and of any person controlling the insurer;
33        (b)  The identity and relationship of every member of the insurance  hold-
34        ing company system;
35        (c)  The  following  agreements  in force, and transactions currently out-
36        standing or which have occurred during the last calendar year between  the
37        insurer and its affiliates:
38             (i)    Loans and other investments, and purchases, sales or exchanges
39             of  securities  of  the affiliate by the insurer or of the insurer by
40             its affiliates;
41             (ii)   Purchases, sales, or exchanges of assets;
42             (iii)  Transactions not in the ordinary course of business;
43             (iv)   Guarantees or undertakings for the  benefit  of  an  affiliate
44             which result in an actual contingent exposure of the insurer's assets
45             to  liability,  other  than  insurance  contracts entered into in the
46             ordinary course of the insurer's business;
47             (v)    All management and  service  contracts  and  all  cost-sharing
48             arrangements;
49             (vi)   Reinsurance agreements;
50             (vii)  Dividends and other distributions to shareholders; and
51             (viii) Consolidated tax allocation agreements.
52        (d)  Any  pledge of the insurer's stock, including stock of any subsidiary
53        or controlling affiliate, for a loan made to any member of  the  insurance
54        holding company system; and
55        (e)  Other  matters  concerning  transactions  between the insurer and any


 1        affiliate as may be required by the director.
 2        (3)  All registration statements shall contain  a  summary  outlining  all
 3    items  in  the  current  registration  statement representing changes from the
 4    prior registration statement.
 5        (4)  No information need be disclosed on the registration statement  filed
 6    pursuant  to  this section if such information is not material to the purposes
 7    of this chapter. Unless the director by rule , regulation  or order
 8    provides otherwise,  sales,  purchases,  exchanges,  loans  or  extensions  of
 9    credit,  or investments, involving one-half of one  per cent  
10    percent  (.5%) or less of an insurer's admitted assets as of December 31
11    immediately preceding shall not be deemed material for purposes of  this  sec-
12    tion.
13        (5)  Subject to the provisions of section 41-3809, Idaho Code, each regis-
14    tered  insurer  shall report to the director all dividends and other distribu-
15    tions to shareholders within fifteen (15) business days following the declara-
16    tion thereof.
17        (6)  Any person within an insurance holding company system subject to reg-
18    istration shall be required to provide complete and accurate information to an
19    insurer, where such information is reasonably necessary to enable the  insurer
20    to comply with the provisions of this chapter.
21        (7)  The  director  shall  terminate the registration of any insurer which
22    demonstrates that it is no longer a member of  an  insurance  holding  company
23    system.
24        (8)  The director may require or allow two (2) or more affiliated insurers
25    subject  to  registration hereunder to file a consolidated registration state-
26    ment.
27        (9)  The director may allow any insurer, which is authorized to  do  busi-
28    ness  in  this state and which is part of an insurance holding company system,
29    to register on behalf of any affiliated insurer which is required to  register
30    under subsection (1) of this section, and to file all information and material
31    required to be filed under the provisions of this chapter.
32        (10) This  section shall not apply to any insurer, information or transac-
33    tion if and to the extent that the director by rule , regulation,  
34    or order shall exempt the same from the provisions of this section as not com-
35    prehended within the purposes thereof.
36        (11) Any  person  may  file  with the director a disclaimer of affiliation
37    with any authorized insurer or such a disclaimer may be filed by  the  insurer
38    or  any  member  of  an insurance holding company system. The disclaimer shall
39    fully disclose all material relationships and bases  for  affiliation  between
40    such person and the insurer as well as the bases for disclaiming such affilia-
41    tion.  After a disclaimer has been filed, the insurer shall be relieved of any
42    duty to register or report under this section  which  may  arise  out  of  the
43    insurer's  relationship  with such person unless and until the director disal-
44    lows the disclaimer. The director shall disallow a  disclaimer  only  after  a
45    hearing  thereon with notice to all parties in interest, and after making spe-
46    cific findings of fact to support such disallowance.
47        (12) The failure to file a registration statement or any  summary  of  the
48    registration statement thereto required in this section within the time speci-
49    fied for such filing shall be a violation of the provisions of this section.

Statement of Purpose / Fiscal Impact

                      STATEMENT  OF  PURPOSE
To amend Idaho Code, Section 41-3806(1), to provide for the filing
of the Insurance Holding Company Registration Statement on the same
date as the audited financial report, which is an exhibit required
of the Registration Statement.

To amend Idaho Code, Section 41-2852(1), to clarify the term
"insurer's capital" to correspond with the definition as used in
other areas of title 41.

To amend Idaho Code, Section 41-3485(3)(a), to clarify that the
insurance department referred to is the Idaho Department of

To amend Idaho Code, Section 41-268(3), to align the reporting
requirements for arson, fire and fraud prevention assessments with
those of the premium tax receipts.

To amend Idaho Code, Sections 41-307, 41-332 and 41-2803 to reflect
renumbered references to Idaho corporation law, title 30.
Name:          Robert Murphy
Agency:   Department of Insurance
Phone:         334-4250

Statement of Purpose/Fiscal Impact                            H