Bill Text: CA SB1216 | 2011-2012 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Reinsurance: professional reinsurers.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2012-09-07 - Chaptered by Secretary of State. Chapter 277, Statutes of 2012. [SB1216 Detail]

Download: California-2011-SB1216-Introduced.html

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BILL NUMBER: SB 1216	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Lowenthal

                        FEBRUARY 22, 2012

   An act to amend Section 922.6 of, and to add Section 717.5 to, the
Insurance Code, relating to reinsurance.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1216, as introduced, Lowenthal. Reinsurance: professional
reinsurers.
   Existing law prohibits the transaction of any class of insurance
in this state without first being admitted for that class of
insurance, and admission is secured by procuring a certificate of
authority from the Insurance Commissioner. Before granting a
certificate of authority to any applicant, the commissioner is
required to consider the qualifications of the applicant, including,
but not limited to, capital and surplus and lawfulness and quality of
investments.
   This bill would authorize the commissioner to grant a certificate
of authority to transact reinsurance, to an insurer admitted and
domiciled in this state, or an insurer applying to become admitted
and domiciled in this state, by determining that the insurer is
qualified to be designated as a professional reinsurer, as
prescribed, which includes, but is not limited to, the commissioner
determining that the insurer is principally engaged in the business
of reinsurance, that the insurer does not conduct significant amounts
of direct insurance as a percentage of its net premiums, and is not
engaged, on an ongoing basis, in the business of soliciting direct
insurance.
   Existing law requires insurers doing business in this state to
annually make and file with the commissioner financial statements.
Credit for reinsurance as an asset or a deduction from liability is
allowed a foreign ceding insurer, with exceptions, to the extent the
credit has been allowed by the ceding insurer's state of domicile if
the state of domicile is accredited by the National Association of
Insurance Commissioners (NAIC), or the credit or deduction from
liability would be allowed if the foreign ceding insurer were
domiciled in this state. Credit for reinsurance as an asset or a
deduction from liability may be disallowed if the commissioner finds
that the financial condition of the reinsurer, or the collateral or
other security provided by the reinsurer, does not satisfy the credit
for reinsurance requirements applicable to a ceding insurer
domiciled in this state.
   This bill would instead require that credit for reinsurance not be
denied a foreign ceding insurer to the extent that credit is
recognized by the ceding insurer's domestic state regulator, provided
that the domestic state is accredited by the NAIC, or the domestic
state regulator has financial solvency requirements similar to the
requirements necessary for NAIC accreditation.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 717.5 is added to the Insurance Code, to read:
   717.5.  (a) For purposes of Sections 700 and 717, the commissioner
may determine that an insurer admitted and domiciled in this state,
or an insurer applying to become admitted and domiciled in this
state, including an applicant pursuant to subdivision (a) of Section
709.5, is qualified to be designated as a professional reinsurer, if
the commissioner determines that the insurer is all of the following:

   (1) Principally engaged in the business of reinsurance.
   (2) Does not conduct significant amounts of direct insurance as
percentage of its net premiums.
   (3) Is not engaged, on an ongoing basis, in the business of
soliciting direct insurance.
   (b) The commissioner may consider any information relevant to this
determination. An insurer that holds, or is applying for
qualification as, a professional reinsurer, shall provide the
commissioner with information or documentation regarding the
determinations under this section, upon request. The commissioner may
prescribe terms and conditions applicable to the certificate of
authority, as appropriate under this section.
   (c) A domestic, professional reinsurer shall continue to be
qualified as long as it continues to meet the requirements set forth
in this section.
   (d) The commissioner may, after notice and an opportunity to be
heard, revoke a reinsurer's qualification, if the reinsurer no longer
qualifies under this section.
   (e) A domestic insurer that is qualified as a professional
reinsurer may include that designation in its name, solicitations,
and advertisements.
   (f) An insurer seeking qualifications under this section shall pay
a filing fee of two thousand five hundred dollars ($2,500), in
advance, to the commissioner.
   (g) The commissioner may adopt regulations in accordance with the
procedure provided in Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code or otherwise
prescribe requirements consistent with this section.
   (h) The commissioner may post prescribed requirements, consistent
with this section, on the department's Internet Web site.
  SEC. 2.  Section 922.6 of the Insurance Code is amended to read:

   922.6.  (a) Unless credit for reinsurance or deduction from
liability is disallowed pursuant to Section 922.3 or 923, credit for
reinsurance or deduction from liability shall be allowed a foreign
ceding insurer to the extent credit has been allowed by the ceding
insurer's state of domicile if either:
   (1) The state of domicile is accredited by the NAIC.
   (2) Credit or deduction from liability would be allowed under this
statute if the foreign ceding insurer were domiciled in this state.
   (b) Notwithstanding subdivision (a), credit for reinsurance or
deduction from liability may be disallowed upon a finding by the
commissioner that either the financial condition of the reinsurer, or
the collateral or other security provided by the reinsurer, does
not, in substance, satisfy the credit for reinsurance requirements
applicable to ceding insurers domiciled in this state. 
    922.6.    Credit for reinsurance shall not be denied
a foreign ceding insurer to the extent that credit is recognized by
the ceding insurer's domestic state regulator, provided that the
domestic state is accredited by the National Association of Insurance
Commissioners (NAIC), or the domestic state regulator has financial
solvency requirements substantially similar to the requirements
necessary for NAIC accreditation.