Bill Text: TX HB3460 | 2013-2014 | 83rd Legislature | Engrossed

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

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Bill Title: Relating to the requirement that certain information be reported to the Texas Department of Insurance and the confidentiality of that information.

Spectrum: Bipartisan Bill

Status: (Passed) 2013-06-14 - Effective immediately [HB3460 Detail]

Download: Texas-2013-HB3460-Engrossed.html

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83R21196 PMO-F
By: Eiland H.B. No. 3460

A BILL TO BE ENTITLED
AN ACT
relating to the requirement that certain information be reported to
the Texas Department of Insurance and the confidentiality of that
information.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 823.011, Insurance Code, is amended by
amending Subsections (a) and (d) and adding Subsection (d-1) to
read as follows:
(a) This section applies only to information, including
documents and copies of documents, that is:
(1) reported or otherwise provided under Subchapter B
or C or Section 823.201(d) or (e);
(2) disclosed to the commissioner under Section
823.010; or
(3) obtained by or disclosed to the commissioner or
another person in the course of an examination or investigation
under Subchapter H.
(d) Except as provided by Subsection (e), if the recipient
of documents or other information agrees in writing to maintain the
confidential and privileged status of the documents or other
information, and verifies in writing the legal authority to
maintain the confidential and privileged status of the documents or
information, the commissioner or another person may disclose the
information to any of the following entities functioning in an
official capacity:
(1) a commissioner of insurance or an insurance
department of another state;
(2) an authorized law enforcement official;
(3) a district attorney of this state;
(4) the attorney general;
(5) a grand jury;
(6) members of a supervisory college described by
Section 823.0145; [or]
(7) the National Association of Insurance
Commissioners and its affiliates and subsidiaries; or
(8) another state, federal, or international
regulatory agency.
(d-1) The commissioner may receive documents or
information, including otherwise confidential and privileged
documents or information from the entities listed in Subsection
(d), and shall maintain as confidential or privileged any document
or information received by the commissioner with notice or an
understanding that the document or information is confidential or
privileged under the laws of the jurisdiction of the entity that
provides the document or information.
SECTION 2. Section 823.052(c), Insurance Code, is amended
to read as follows:
(c) The registration statement must also contain
information about:
(1) each outstanding loan the insurer makes to an
affiliate of the insurer or an affiliate makes to the insurer;
(2) each purchase, sale, or exchange of securities or
other investment between the insurer and an affiliate of the
insurer;
(3) each purchase, sale, or exchange of assets between
the insurer and an affiliate of the insurer;
(4) each management and service contract or
cost-sharing arrangement between the insurer and an affiliate of
the insurer;
(5) each reinsurance agreement between the insurer and
an affiliate of the insurer that covers one or more lines of
insurance of the ceding company;
(6) each agreement between the insurer and an
affiliate of the insurer to consolidate federal income tax returns;
(7) each transaction between the insurer and an
affiliated financial institution;
(8) each transaction between the insurer and an
affiliate of the insurer that is not in the ordinary course of
business;
(9) each guarantee or undertaking, other than an
insurance contract entered into in the ordinary course of the
insurer's business, for the benefit of an affiliate of the insurer
that results in a contingent exposure of the insurer's assets to
liability;
(10) each dividend or distribution to the insurer's
shareholders;
(11) each transaction between the insurer and an
affiliate of the insurer not specified by this subsection that is
subject to Section [823.102,] 823.103[,] or 823.104;
(12) the corporate governance and internal control
responsibilities of the insurer's board of directors, including a
statement that:
(A) the insurer's senior management or officers
have approved and implemented, and continue to maintain and
monitor, corporate governance and internal control procedures; and
(B) the insurer's board of directors oversees
corporate governance and internal controls; and
(13) any other information that the commissioner
requires by rule.
SECTION 3. Section 823.053(e), Insurance Code, is amended
to read as follows:
(e) An insurer is not required to report under this section
a transaction that is approved under Section [823.102 or] 823.103.
That approval is considered to be an amendment of the registration
statement filed under Section 823.052 without being reported under
this section.
SECTION 4. Sections 823.103(a) and (b), Insurance Code, are
amended to read as follows:
(a) This section applies only to:
(1) a sale, purchase, exchange, loan or other
extension of credit, or investment between a domestic insurer and
any person in the insurer's insurance holding company system,
including an amendment or modification of an affiliate agreement
previously filed under this section, provided the transaction is
not less than:
(A) with respect to nonlife insurers, the lesser
of three [that involves more than the lesser of one-half of one]
percent of the insurer's admitted assets or 25 [five] percent of the
insurer's surplus as regards policyholders[,] as of December 31 of
the year preceding the year in which the transaction occurs; or
[and]
(B) with respect to life insurers, three percent
of the insurer's admitted assets as of December 31 of the year
preceding the year in which the transaction occurs [the approval of
which is not required under Section 823.102];
(2) a loan or other extension of credit to a person who
is not an affiliate if the insurer makes a loan or extension of
credit with the agreement or understanding that the proceeds of the
transaction, wholly or in substantial part, are to be used to make
loans or extensions of credit to, to purchase assets of, or to make
investment in, an affiliate of the insurer making the loan or
extension of credit, provided the transaction is not less than:
(A) with respect to nonlife insurers, the lesser
of three percent of the insurer's admitted assets or 25 percent of
the insurer's surplus as regards policyholders as of December 31 of
the year preceding the year in which the transaction occurs; or
(B) with respect to life insurers, three percent
of the insurer's admitted assets as of December 31 of the year
preceding the year in which the transaction occurs;
(3) a reinsurance agreement, including a reinsurance
treaty or pooling agreement, or an amendment or modification of an
agreement previously filed under this section, between a domestic
insurer and any person in the insurer's holding company system;
(4) [(3)] a rendering of services between a domestic
insurer and any person in the insurer's holding company system on a
regular or systematic basis, including a tax-allocation agreement,
or an amendment or modification of an agreement previously filed
under this section; or
(5) [(4)] any material transaction between a domestic
insurer and any person in the insurer's holding company system that
is specified by rule and that the commissioner determines may
adversely affect the interests of the insurer's policyholders or of
the public, including an amendment or modification of an agreement
previously filed under this section.
(b) Subsection (a)(3) [(a)(2)] includes a reinsurance
agreement that requires as consideration a transfer of assets from
an insurer to a nonaffiliate and in relation to which the insurer
and nonaffiliate agree that any part of the transferred assets are
to be transferred to one or more affiliates of the insurer.
SECTION 5. Section 823.104, Insurance Code, is amended to
read as follows:
Sec. 823.104. PROHIBITION OF ACTION TO AVOID APPLICATION OF
SUBCHAPTER. (a) A domestic insurer may not enter into transactions
with persons in the insurer's insurance holding company system if:
(1) the transactions are part of a plan or series of
similar transactions; and
(2) the purpose of entering into the transactions is
to avoid a threshold amount provided by Section [823.102 or]
823.103.
(b) If the commissioner determines that over any 12-month
period a domestic insurer enters into transactions that violate
Subsection (a), the commissioner may:
(1) consider the cumulative effect of the
transactions; and
(2) apply:
(A) Section [823.102 or] 823.103; or
(B) sanctions under this code.
SECTION 6. Section 823.105, Insurance Code, is amended to
read as follows:
Sec. 823.105. TYPE OF AUTHORITY PROVIDED. Nothing in
Section [823.102,] 823.103[,] or 823.104 authorizes a transaction
that would violate law that is applicable to an insurer that is not
subject to this subchapter.
SECTION 7. Section 823.102, Insurance Code, is repealed.
SECTION 8. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2013.