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H0112...........................................................by BUSINESS DOMESTIC RECIPROCAL INSURER - Amends existing law to delete language applicable to domestic reciprocal insurers which exclusively insure members who are governmental entities. 02/04 House intro - 1st rdg - to printing 02/07 Rpt prt - to Bus 02/16 Rpt out - rec d/p - to 2nd rdg 02/17 2nd rdg - to 3rd rdg 02/18 3rd rdg - PASSED - 63-0-7 AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer, Bedke, Bell, Bilbao, Black, Block, Boe, Bolz, Bradford, Cannon, Collins, Crow, Deal, Denney, Edmunson, Ellsworth, Eskridge, Field(18), Field(23), Garrett, Hart, Harwood, Henbest, Jaquet, Jones, Kemp, Lake, LeFavour, Loertscher, Martinez, Mathews, McGeachin, McKague, Miller, Mitchell, Moyle, Nielsen, Pasley-Stuart, Pence, Ring, Roberts, Rusche, Rydalch, Sali, Sayler, Schaefer, Shepherd(2), Shepherd(8), Shirley, Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Trail, Wills, Wood, Mr. Speaker NAYS -- None Absent and excused -- Chadderdon, Clark, Henderson, Nonini, Raybould, Ringo, Stevenson Floor Sponsor - Snodgrass Title apvd - to Senate 02/22 Senate intro - 1st rdg - to Com/HuRes 03/04 Rpt out - rec d/p - to 2nd rdg 03/07 2nd rdg - to 3rd rdg 03/11 3rd rdg - PASSED - 32-0-2, 1 vacancy AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett, Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis, Gannon, Geddes, Goedde, Jorgenson, Kelly, Keough, Langhorst, Little, Lodge, Malepeai, Marley, McGee, McKenzie, Pearce, Richardson, Schroeder, Stegner, Stennett, Werk, Williams NAYS -- None Absent and excused -- Hill, Sweet, (District 21 seat vacant) Floor Sponsor - Goedde Title apvd - to House 03/14 To enrol 03/15 Rpt enrol - Sp signed 03/16 Pres signed 03/17 To Governor 03/21 Governor signed Session Law Chapter 72 Effective: 07/01/05
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-eighth Legislature First Regular Session - 2005 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 112 BY BUSINESS COMMITTEE 1 AN ACT 2 RELATING TO RECIPROCAL INSURERS; AMENDING SECTIONS 41-2918 AND 41-2926, IDAHO 3 CODE, TO DELETE LANGUAGE APPLICABLE TO DOMESTIC RECIPROCAL INSURERS WHICH 4 EXCLUSIVELY INSURE MEMBERS WHO ARE GOVERNMENTAL ENTITIES. 5 Be It Enacted by the Legislature of the State of Idaho: 6 SECTION 1. That Section 41-2918, Idaho Code, be, and the same is hereby 7 amended to read as follows: 8 41-2918. FINANCIAL CONDITION -- METHOD OF DETERMINING. In determining the 9 financial condition of a reciprocal insurer the director shall apply the fol- 10 lowing rules: 11 (1) He shall charge as liabilities the same reserves as are required of 12 incorporated insurers issuing nonassessable policies on a reserve basis. 13 (2) The surplus deposits of subscribers shall be allowed as assets, 14 except that any premium deposits delinquent for ninety (90) days shall first 15 be charged against such surplus deposit. 16 (3) The surplus deposits of subscribers shall not be charged as a liabil- 17 ity. 18 (4) All premium deposits delinquent less than ninety (90) days shall be 19 allowed as assets. 20 (5) An assessment levied upon subscribers, and not collected, shall not 21 be allowed as an asset. 22 (6) The contingent liability of subscribers shall not be allowed as an 23 asset. 24 (7) The computation of reserves shall be based upon premium deposits 25 other than membership fees and without any deduction for expenses and the com- 26 pensation of the attorney. 27 (8) A domestic reciprocal insurer, which exclusively insures members who28 are governmental entities, as defined in subsections 1, 2 and 3 of section29 6-902, Idaho Code, shall establish a loss paying fund in an amount sufficient30 to meet the requirements of the reinsurer for the purpose of purchasing excess31 of aggregate reinsurance. A loss paying fund is defined for the purpose of32 this title as funds set aside or maintained for the purpose of paying claims,33 claims costs including adjustment costs, litigation fees and court costs and34 other related costs. Excess of aggregate reinsurance is defined for the pur-35 poses of this title as insurance coverage provided by a reinsurer wherein the36 reinsurer assumes the loss above the retentions or loss paying fund of the37 reinsured. Its purpose is to limit aggregate loss over a specified period of38 time.39 The excess of aggregate reinsurance shall carry at least a thirty (30) day40 written cancellation clause. If the reinsurer elects to cancel the excess of41 aggregate reinsurance contract, a copy of the cancellation notice must be for-42 warded immediately to the director of the department of insurance of the state43 of Idaho.2 1 SECTION 2. That Section 41-2926, Idaho Code, be, and the same is hereby 2 amended to read as follows: 3 41-2926. NONASSESSABLE POLICIES. (1) Nongovernmental entities. If a 4 reciprocal insurer has a surplus of assets over all liabilities at least equal 5 to the total surplus required in section 41-313, Idaho Code, as to such 6 insurer, upon application of the attorney and as approved by the subscribers' 7 advisory committee the director shall issue his certificate authorizing the 8 insurer to extinguish the contingent liability of subscribers under its poli- 9 cies then in force in this state, and to omit provisions imposing contingent 10 liability in all policies delivered or issued for delivery in this state for 11 so long as all such surplus remains unimpaired. 12 (2) Upon impairment of such surplus, the director shall forthwith revoke 13 the certificate. Such revocation shall not render subject to contingent lia- 14 bility any policy then in force and for the remainder of the period for which 15 the premium has theretofore been paid; but after such revocation no policy 16 shall be issued or renewed without providing for contingent assessment liabil- 17 ity of the subscriber. 18 (3) The director shall not authorize a domestic reciprocal insurer so to 19 extinguish the contingent liability of any of its subscribers or in any of its 20 policies to be issued, unless it qualifies to and does extinguish such liabil- 21 ity of all its subscribers and in all such policies for all kinds of insurance 22 transacted by it. Except, that if required by the laws of another state in 23 which the insurer is transacting insurance as an authorized insurer, the 24 insurer may issue policies providing for the contingent liability of such of 25 its subscribers as may acquire such policies in such state, and need not 26 extinguish the contingent liability applicable to policies theretofore in 27 force in such state. 28 (4) Governmental entities. If a domestic reciprocal insurer licensed to29 do business in this state as such and insuring only governmental entities of30 this state has a loss paying fund as required by section 41-2918(8), Idaho31 Code, the director shall issue his certificate authorizing the insurer to32 extinguish any contingent liability of the member under its policy or policies33 and to omit provisions imposing contingent liability in all policies delivered34 or issued for delivery in this state.
STATEMENT OF PURPOSE RS 14416 The subsection proposed for repeal by this legislation allowed a reciprocal insurer made up of only governmental entities to operate without meeting financial surplus requirements applicable to other types of insurers if the reciprocal insurer maintained reinsurance and a loss paying fund. In 1986, legislation was adopted that required all reciprocal insurers, including those made up exclusively of governmental entities, to meet financial surplus requirements. As a result of this change, the requirement for reinsurance and a loss paying fund is no longer necessary. FISCAL IMPACT None. CONTACT Name: Shad Priest Agency: Insurance, Dept. of Phone: 334-4214 Statement of Purpose/Fiscal Impact H 112