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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 thistitle 41, Idaho C code. 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 thistitle 41, Idaho C code, 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 thistitle 41, Idaho C code, 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 thistitle 41, Idaho C code, 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 thirty10 twenty-one ( 3021) days following the giving of the notice provided for in sec- 11 tion 41-1236, of this actIdaho 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 toin the interest of the public, he shall take action17 against suchorder the insurer under the provisions of section 41-1319 (to 18 desist order forthe prohibited practices ) of this code. 19 (2) If upon such hearingthe director finds that the insurer has misrep- 20 resented as referred to in section 41-1236, of this actIdaho 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 thisIdaho C code, 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