View Bill Status
View Bill Text
View Statement of Purpose / Fiscal Impact
H0088...........................................................by BUSINESS
DEPARTMENT OF INSURANCE - Amends existing law relating to the Department of
Insurance to incorporate a new trend test for risk-based capital levels of
property and casualty insurers.
02/01 House intro - 1st rdg - to printing
02/02 Rpt prt - to Bus
02/26 Rpt out - rec d/p - to 2nd rdg
02/27 2nd rdg - to 3rd rdg
02/28 3rd rdg - PASSED - 66-2-2
AYES -- Anderson, Andrus, Bayer, Bedke, Bell, Bilbao, Black, Block,
Bock, Boe, Bolz, Brackett, Bradford, Chadderdon, Chavez, Chew, Clark,
Collins, Crane, Durst, Edmunson, Eskridge, Hagedorn, Hart, Harwood,
Henbest, Henderson, Jaquet, Killen, King, Kren, Labrador, Lake,
LeFavour, Loertscher, Luker, Marriott, Mathews, McGeachin, Mortimer,
Moyle, Nielsen, Nonini, Pasley-Stuart, Patrick, Pence, Raybould,
Ring, Ringo, Ruchti, Rusche, Sayler, Schaefer, Shepherd(2),
Shepherd(8), Shirley, Shively, Smith(30), Smith(24), Snodgrass,
Stevenson, Thayn, Trail, Vander Woude, Wood(27), Mr. Speaker
NAYS -- Barrett, Wood(35)
Absent and excused -- Roberts, Wills
Floor Sponsor - Crane
Title apvd - to Senate
03/01 Senate intro - 1st rdg - to Com/HuRes
03/16 Rpt out - rec d/p - to 2nd rdg
03/19 2nd rdg - to 3rd rdg
03/22 3rd rdg - PASSED - 35-0-0
AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
Cameron, Coiner, Corder, Darrington, Davis, Fulcher, Gannon, Geddes,
Goedde, Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst,
Little, Lodge, Malepeai, McGee, McKague, McKenzie, Pearce,
Richardson, Schroeder, Siddoway, Stegner, Stennett, Werk
NAYS -- None
Absent and excused -- None
Floor Sponsor - Cameron
Title apvd - to House
03/23 To enrol - Rpt enrol - Sp signed - Pres signed
03/26 To Governor
03/30 Governor signed
Session Law Chapter 277
Effective: 07/01/07
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-ninth Legislature First Regular Session - 2007
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 88
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO THE DEPARTMENT OF INSURANCE; AMENDING SECTION 41-5403, IDAHO CODE,
3 TO INCORPORATE A NEW TREND TEST FOR RISK-BASED CAPITAL LEVELS OF PROPERTY
4 AND CASUALTY INSURERS.
5 Be It Enacted by the Legislature of the State of Idaho:
6 SECTION 1. That Section 41-5403, Idaho Code, be, and the same is hereby
7 amended to read as follows:
8 41-5403. COMPANY ACTION LEVEL EVENT. (1) "Company action level event"
9 means any of the following events:
10 (a) The filing of an RBC report by an insurer which indicates that:
11 (i) The insurer's total adjusted capital is greater than or equal
12 to its regulatory action level RBC but less than its company action
13 level RBC; or
14 (ii) If a life and/or health insurer, the insurer has total adjusted
15 capital which is greater than or equal to its company action level
16 RBC but less than the product of its authorized control level RBC and
17 2.5 and has a negative trend; or
18 (iii) If a property or casualty insurer, the insurer has total
19 adjusted capital which is greater than or equal to its company action
20 level RBC but less than the product of its authorized control level
21 RBC and 3.0 and triggers the trend test determined in accordance with
22 the trend test calculation included in the property and casualty RBC
23 instructions;
24 (b) The notification by the director to the insurer of an adjusted RBC
25 report that indicates an event in paragraph (a) of this subsection, pro-
26 vided the insurer does not challenge the adjusted RBC report under section
27 41-5407, Idaho Code; or
28 (c) If, pursuant to section 41-5407, Idaho Code, an insurer challenges an
29 adjusted RBC report that indicates the event in paragraph (a) of this sub-
30 section, the notification by the director to the insurer that the director
31 has, after a hearing, rejected the insurer's challenge.
32 (2) In the event of a company action level event, the insurer shall pre-
33 pare and submit to the director an RBC plan which shall:
34 (a) Identify the conditions which contribute to the company action level
35 event;
36 (b) Contain proposals of corrective actions which the insurer intends to
37 take and would be expected to result in the elimination of the company
38 action level event;
39 (c) Provide projections of the insurer's financial results in the current
40 year and at least the four (4) succeeding years, both in the absence of
41 proposed corrective actions and giving effect to the proposed corrective
42 actions, including projections of statutory operating income, net income,
43 capital and surplus. (The projections for both new and renewal business
2
1 might include separate projections for each major line of business and
2 separately identify each significant income, expense and benefit compo-
3 nent);
4 (d) Identify the key assumptions impacting the insurer's projections and
5 the sensitivity of the projections to the assumptions; and
6 (e) Identify the quality of, and problems associated with, the insurer's
7 business, including but not limited to, its assets, anticipated business
8 growth and associated surplus strain, extraordinary exposure to risk, mix
9 of business and use of reinsurance, if any, in each case.
10 (3) The RBC plan shall be submitted:
11 (a) Within forty-five (45) days of the company action level event; or
12 (b) If the insurer challenges an adjusted RBC report pursuant to section
13 41-5407, Idaho Code, within forty-five (45) days after notification to the
14 insurer that the director has, after a hearing, rejected the insurer's
15 challenge.
16 (4) Within sixty (60) days after the submission by an insurer of an RBC
17 plan to the director, the director shall notify the insurer whether the RBC
18 plan shall be implemented or is, in the judgment of the director, unsatisfac-
19 tory. If the director determines the RBC plan is unsatisfactory, the notifica-
20 tion to the insurer shall set forth the reasons for the determination, and may
21 set forth proposed revisions which will render the RBC plan satisfactory, in
22 the judgment of the director. Upon notification from the director, the insurer
23 shall prepare a revised RBC plan, which may incorporate by reference any revi-
24 sions proposed by the director, and shall submit the revised RBC plan to the
25 director:
26 (a) Within forty-five (45) days after the notification from the director;
27 or
28 (b) If the insurer challenges the notification from the director under
29 section 41-5407, Idaho Code, within forty-five (45) days after a notifica-
30 tion to the insurer that the director has, after a hearing, rejected the
31 insurer's challenge.
32 (5) In the event of a notification by the director to an insurer that the
33 insurer's RBC plan or revised RBC plan is unsatisfactory, the director may, at
34 the director's discretion, subject to the insurer's right to a hearing under
35 section 41-5407, Idaho Code, specify in the notification that the notification
36 constitutes a regulatory action level event.
37 (6) Every domestic insurer that files an RBC plan or revised RBC plan
38 with the director shall file a copy of the RBC plan or revised RBC plan with
39 the insurance director in any state in which the insurer is authorized to do
40 business if:
41 (a) Such state has an RBC provision substantially similar to section
42 41-5408(1), Idaho Code; and
43 (b) The insurance director of that state has notified the insurer of its
44 request for the filing in writing, in which case the insurer shall file a
45 copy of the RBC plan or revised RBC plan in that state no later than the
46 later of:
47 (i) Fifteen (15) days after the receipt of notice to file a copy of
48 its RBC plan or revised RBC plan with the state; or
49 (ii) The date on which the RBC plan or revised RBC plan is filed
50 under subsections (3) and (4) of this section.
STATEMENT OF PURPOSE
RS 16479
The Risk-Based Capital (RBC) for Insurers Act, originally
enacted in 1996, is based on a model law developed by the
National Association of Insurance Commissioners. The law
provides a method of establishing the minimum amount of capital
appropriate for an insurance company to support its overall
business operations taking into consideration the insurer’s size
and risk. It is used to identify a minimum capital requirement
for an insurer by looking at the degree of risk taken by the
insurer. Risk based capital standards provide an objective way
to identify insurers that show indications of a weak or
deteriorating financial condition.
This proposal amends the RBC Act to adopt a new RBC trend test
for property and casualty insurers similar to one that is
already in place for life and health insurers. The new trend
test was adopted by the National Association of Insurance
Commissioners for use by state insurance regulators in 2005.
FISCAL NOTE
No fiscal impact.
CONTACT
Name: Georgia Hill
Agency: Insurance, Dept. of
Phone: 334-4314
STATEMENT OF PURPOSE/FISCAL NOTE H 88