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H0119...........................................................by BUSINESS
INSURANCE DEPARTMENT - Repeals and amends existing law relating to the
Department of Insurance to provide further enforcement authority; to revise
a notice provision; to provide that the director may order an insurer to
desist a prohibited practice; to remove language referencing findings based
upon hearings; and to repeal language applicable to desist orders for
prohibited conduct.
02/04 House intro - 1st rdg - to printing
02/07 Rpt prt - to Bus
02/18 Rpt out - rec d/p - to 2nd rdg
02/21 2nd rdg - to 3rd rdg
02/23 3rd rdg - PASSED - 44-26-0
AYES -- Andrus, Barraclough, Bastian, Bell, Bilbao, Black, Block,
Boe, Bradford, Cannon, Chadderdon, Collins, Deal, Edmunson, Eskridge,
Field(18), Field(23), Garrett, Henbest, Henderson, Jaquet, Jones,
LeFavour, Martinez, Miller, Mitchell, Nonini, Pasley-Stuart, Pence,
Ring, Ringo, Rusche, Sayler, Shepherd(2), Shirley, Skippen,
Smith(30), Smith(24), Smylie, Snodgrass, Stevenson, Trail, Wills, Mr.
Speaker
NAYS -- Anderson, Barrett, Bayer, Bedke, Bolz, Clark, Crow, Denney,
Ellsworth, Hart, Harwood, Kemp, Lake, Loertscher, Mathews, McGeachin,
McKague, Moyle, Nielsen, Raybould, Roberts, Rydalch, Sali, Schaefer,
Shepherd(8), Wood
Absent and excused -- None
Floor Sponsor - Miller
Title apvd - to Senate
02/24 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 - Broadsword
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 78
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. 119
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO THE DEPARTMENT OF INSURANCE; AMENDING SECTION 41-213, IDAHO CODE,
3 TO PROVIDE FURTHER ENFORCEMENT AUTHORITY AND TO MAKE TECHNICAL CORREC-
4 TIONS; AMENDING SECTION 41-1237, IDAHO CODE, TO REVISE A NOTICE PROVISION,
5 TO PROVIDE THAT THE DIRECTOR MAY ORDER THE INSURER TO DESIST A PROHIBITED
6 PRACTICE, TO REMOVE LANGUAGE REFERENCING FINDINGS BASED UPON HEARINGS AND
7 TO MAKE TECHNICAL CORRECTIONS; REPEALING SECTION 41-1319, IDAHO CODE,
8 APPLICABLE TO DESIST ORDERS FOR PROHIBITED PRACTICES; AMENDING SECTION
9 41-1327, IDAHO CODE, TO REVISE A CODE REFERENCE AND TO MAKE TECHNICAL COR-
10 RECTIONS; AND AMENDING SECTION 41-4805, IDAHO CODE, TO REVISE A CODE REF-
11 ERENCE.
12 Be It Enacted by the Legislature of the State of Idaho:
13 SECTION 1. That Section 41-213, Idaho Code, be, and the same is hereby
14 amended to read as follows:
15 41-213. ENFORCEMENT. (1) The director may institute such suits or other
16 lawful proceedings as he may deem necessary for the enforcement of any provi-
17 sion of this title 41, Idaho Ccode. If the director believes that any person
18 has engaged in or is about to engage in any act or practice constituting a
19 violation of any provision of title 41, Idaho Code, any other law the director
20 has authority to enforce, or any rule or order of the director, the director
21 may, in accordance with the procedures set forth in title 41, Idaho Code, and
22 chapter 52, title 67, Idaho Code:
23 (a) Issue an order requiring the person to cease and desist from any pro-
24 hibited act or practice;
25 (b) Issue an order affecting a person's license for such reasons as set
26 forth in title 41, Idaho Code;
27 (c) Issue an order imposing an administrative penalty as provided in
28 title 41, Idaho Code; and
29 (d) Initiate any action in district court for the same relief or any
30 relief authorized by title 41, Idaho Code.
31 (2) If the director believes that any person is violating or about to
32 violate any provision of this title 41, Idaho Ccode, or any order or require-
33 ment of the director issued or promulgated pursuant to authority expressly
34 granted the director by any provision of this title 41, Idaho Ccode, or by
35 other law, the director may bring an action against such person in the name of
36 the people of the state of Idaho in a district court of this state to enjoin
37 such person from continuing such violation or doing any act in furtherance
38 thereof. In the action the court may enter such order or judgment granting
39 such preliminary or final injunction as the court determines to be proper.
40 (3) If the director has reason to believe that any person has violated
41 any provision of this title 41, Idaho Ccode, or any provision of other law as
42 applicable to insurance operations, for which criminal prosecution is provided
43 and would be in order, he shall give the information relative thereto to the
2
1 attorney general or county attorney having jurisdiction of any such violation.
2 The attorney general or county attorney shall promptly institute such action
3 or proceedings against such person as the information may require or justify.
4 (4) Whenever the director may deem it necessary, he shall employ counsel,
5 or call upon the attorney general of this state for legal counsel and such
6 assistance as may be necessary.
7 SECTION 2. That Section 41-1237, Idaho Code, be, and the same is hereby
8 amended to read as follows:
9 41-1237. MISREPRESENTATION -- ACTION AND PENALTIES. (1) If within thirty
10 twenty-one (3021) days following the giving of the notice provided for in sec-
11 tion 41-1236, of this act Idaho Code, the insurer has not ceased such dissemi-
12 nation, and if the director has reason to believe that such insurer is solic-
13 iting, issuing or delivering contracts of insurance to residents of this state
14 or collecting premiums on such contracts or performing any other transaction
15 in connection with such insurance, and that a proceeding by him in respect to
16 such matters would be to in the interest of the public, he shall take action
17 against such order the insurer under the provisions of section 41-1319 (to
18 desist order for the prohibited practices) of this code.
19 (2) If upon such hearing the director finds that the insurer has misrep-
20 resented as referred to in section 41-1236, of this act Idaho Code, he shall
21 by order on such hearing require the insurer to cease and desist from such
22 violation, and shall mail a copy of the order by registered or certified mail
23 to the insurer at its principal place of business last of record with the
24 director and to the insurance supervisory officer of the insurer's domiciliary
25 state or province. Each violation thereafter of such desist order shall sub-
26 ject the insurer to a penalty of two thousand dollars ($2,000), to be recov-
27 ered by a civil action brought against the insurer by the director. Service of
28 process upon the insurer in such action may be made upon the director pursuant
29 to section 41-1207, of this Idaho Ccode, or in any other lawful manner.
30 SECTION 3. That Section 41-1319, Idaho Code, be, and the same is hereby
31 repealed.
32 SECTION 4. That Section 41-1327, Idaho Code, be, and the same is hereby
33 amended to read as follows:
34 41-1327. VIOLATIONS -- PENALTY. Any person who violates any provision of
35 this chapter as to which a penalty is not expressly provided, or who violates
36 a cease and desist order issued by the director under section 41-1319213,
37 Idaho Code, after such order has become final, shall be subject to penalties
38 as prescribed by or referred to in section 41-117, Idaho Code (general pen-
39 alty).
40 SECTION 5. That Section 41-4805, Idaho Code, be, and the same is hereby
41 amended to read as follows:
42 41-4805. RISK RETENTION GROUPS NOT CHARTERED IN THIS STATE. Risk reten-
43 tion groups chartered in states other than this state and seeking to do busi-
44 ness as a risk retention group in this state must observe and abide by the
45 laws of this state as follows:
46 (1) Before transacting any insurance business or offering any insurance
47 policies in this state, a risk retention group shall submit to the director of
48 this state:
3
1 (a) A statement identifying the state or states in which the risk reten-
2 tion group is chartered and licensed as a liability insurance company, the
3 date of chartering, the risk retention group's principal place of busi-
4 ness, and such other information including information concerning its mem-
5 bership as the director of this state may require to verify that the risk
6 retention group is qualified as defined in subsection (11) of section
7 41-4803, Idaho Code;
8 (b) A copy of its plan of operations or feasibility study and revisions
9 of such plan or study submitted to its state of domicile; provided, how-
10 ever, that the provision relating to the submission of a plan of opera-
11 tion or feasibility study shall not apply with respect to any line or
12 classification of liability insurance which was defined in the product
13 liability risk retention act of 1981 before October 27, 1986, and was
14 offered before such date by any risk retention group which had been char-
15 tered and operating for not less than three (3) years before such date;
16 (c) A statement of registration which designates the director as its
17 agent for the purpose of receiving service of legal documents or process
18 against the risk retention group.
19 (2) Any risk retention group doing business in this state shall submit
20 the following financial information to the director:
21 (a) A copy of the group's financial statement submitted to its state of
22 domicile, which shall be certified by an independent public accountant and
23 contain a statement of opinion on loss and loss adjustment expense
24 reserves made by a member of the American academy of actuaries or a quali-
25 fied loss reserve specialist operating under criteria established by the
26 national association of insurance commissioners;
27 (b) A copy of each examination of the risk retention group as certified
28 by the director or public official conducting the examination;
29 (c) Upon request by the director, a copy of any audit performed with
30 respect to the risk retention group; and
31 (d) Such information as may be required to verify the group's continuing
32 qualification as a risk retention group as defined in subsection (11) of
33 section 41-4803, Idaho Code.
34 (3) All risk retention groups operating in this state, and all premiums
35 paid for any coverage within this state to any risk retention group, shall be
36 subject to the same premium tax provisions, including any interest, fines, and
37 penalties for nonpayment, as are applicable to foreign admitted insurers. To
38 the extent any agents or brokers are utilized, they shall report and pay the
39 taxes for the premiums for risks which they have placed with or on behalf of
40 any risk retention group not chartered in this state. To the extent any agents
41 or brokers are not utilized, or agents or brokers that are utilized fail to
42 pay said premium tax, each risk retention group shall pay the tax for risks
43 insured within the state. Further, each risk retention group shall report to
44 the director all premiums paid to it for risks insured within this state.
45 (4) Any risk retention groups and its agents and representatives are sub-
46 ject to and shall comply with the provisions of section 41-1329, Idaho Code
47 (unfair claim settlement practices).
48 (5) Any risk retention group formed in this state shall comply with and
49 be subject to chapter 13, title 41, Idaho Code (trade practices and frauds).
50 The director may issue orders enjoining prohibited practices in accordance
51 with section 41-1319213, Idaho Code, or section 41-1321, Idaho Code, or may
52 apply directly to the district court for Ada county, state of Idaho, for such
53 injunctive relief as he deems appropriate.
54 (6) Any risk retention group must submit to an examination by the direc-
55 tor of this state to allow him to determine the group's financial condition if
4
1 the director of the jurisdiction in which the group is chartered has not ini-
2 tiated an examination or does not initiate an examination within sixty (60)
3 days after a request by the director of this state. Any such examination
4 shall be coordinated to avoid unjustified repetition or duplication and shall
5 be conducted in an expeditious manner.
6 (7) Any policy issued by a risk retention group shall contain in 10 point
7 or larger type on the front page and the declaration page, the following
8 notice:
9 NOTICE
10 This policy has been issued by your risk retention group. Your
11 risk retention group may not be subject to all of the insurance laws
12 and regulations of your state. State insurance insolvency guaranty
13 funds are not available for your risk retention group.
14 (8) In addition to other restrictions that may be applicable, the follow-
15 ing acts by a risk retention group are hereby prohibited:
16 (a) The solicitation or sale of insurance by a risk retention group to
17 any person who is not eligible for membership in such group; and
18 (b) The solicitation or sale of insurance by, or operation of, a risk
19 retention group that is in a hazardous financial condition or is finan-
20 cially impaired.
21 (9) No risk retention group shall be allowed to do business in this state
22 if an insurance company is directly or indirectly a member or owner of such
23 risk retention group, other than in the case of a risk retention group whose
24 members are all insurance companies.
25 (10) No risk retention group may offer any insurance policy or insurance
26 coverage that has been declared unlawful by the Idaho supreme court or is in
27 conflict with chapter 5 or chapter 25, title 41, Idaho Code.
28 (11) A risk retention group not chartered in this state and doing business
29 in this state must comply with a lawful order issued in a voluntary dissolu-
30 tion proceeding or in a delinquency proceeding commenced by another state's
31 insurance director if there has been a finding of financial impairment after
32 an examination pursuant to subsection (6) of this section.
STATEMENT OF PURPOSE
RS 14435C1
This proposal amends existing law to specifically list the
Director's enforcement powers in a single code section, and to
clarify that enforcement orders issued by the Director are subject
to the procedural requirements for notice, hearings and appeals set
forth in the Idaho Administrative Procedures Act (chapter 52, title
67, Idaho Code). The Administrative Procedures Act and rules set
forth specific and detailed requirements governing administrative
procedures, and the Department is seeking to clarify that those
procedures apply to administrative enforcement actions taken by the
Department of Insurance. This proposal also repeals a code section
providing for cease and desist orders issued for violations of
Chapter 13 of Title 41, Idaho Code, and includes the power to issue
an administrative cease and desist order among the Director's
general enforcement powers. This change will make the Director's
power to issue a cease and desist order subject to the same
administrative procedure requirements as are other types of
administrative actions taken by the Director, and will also clarify
that the Director's power to order a party to desist from violating
the law is not limited to violations of Chapter 13 or other
provisions specifically referencing a cease and desist order. The
proposal also changes the time that an unauthorized insurer must
comply with a cease and desist order from 30 days to 21 days in
order to make this time period consistent with the general
requirements of chapter 2 and the Idaho Administrative Procedures
Act.
FISCAL IMPACT
None.
CONTACT
Name: Shad Priest
Agency: Insurance, Dept. of
Phone: 334-4214
Statement of Purpose/Fiscal Impact H 119