HB3999 - Relating to the transfer and statutory novation of insurance policies from a transferring insurer to an assuming insurer through an insurance business transfer plan; authorizing fees.

  89R1195 MEW-F     By: Cook H.B. No. 3999       A BILL TO BE ENTITLED   AN ACT   relating to the transfer and statutory novation of insurance   policies from a transferring insurer to an assuming insurer through   an insurance business transfer plan; authorizing fees.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subtitle A, Title 6, Insurance Code, is amended   by adding Chapter 806 to read as follows:   CHAPTER   806.     INSURANCE BUSINESS TRANSFERS   SUBCHAPTER   A.     GENERAL PROVISIONS           Sec. 806.001.  DEFINITIONS. In this chapter:                 (1)     "Affiliate" means a person that directly or   indirectly through one or more intermediaries controls, is   controlled by, or is under common control with a specified person.                 (2)     "Applicant" means an assuming insurer, a   transferring insurer, or a reinsurer applying under Subchapter B.                 (3)     "Assuming insurer" means an insurer domiciled in   this state that assumes or seeks to assume policies from a   transferring insurer under this chapter. An assuming insurer may   be a captive insurance company established under Chapter 964.                 (4)     "Implementation order" means an order issued by   the court under Section 806.104.                 (5)     "Insurance business transfer" means a transfer and   novation by a transferring insurer to an assuming insurer made   under this chapter.                 (6)     "Insurance business transfer plan" means the plan   submitted to the department to accomplish an insurance business   transfer, including any associated transfer of assets and rights   from or on behalf of the transferring insurer to the assuming   insurer.                 (7)     "Insurer" means an insurance or surety company,   including a reinsurance company. The term includes a corporation,   company, partnership, association, society, order, individual, or   aggregation of individuals engaging in or proposing or attempting   to engage in any kind of insurance or surety business, including the   exchanging of reciprocal or interinsurance contracts between   individuals, partnerships, and corporations.                 (8)     "Policy" means a policy, annuity contract,   certificate of insurance, or a contract of reinsurance under which   the insurer agrees to assume an obligation, risk, or both of the   policyholder or to make payments on behalf of, or to, the   policyholder or the policyholder's beneficiaries. The term   includes property, casualty, life, health, and any other line of   insurance the commissioner finds is suitable for an insurance   business transfer.                 (9)     "Policyholder" means an insured or a reinsured   under a policy that is part of the subject business.                 (10)     "Subject business" means the policy or policies   that are the subject of the insurance business transfer plan.                 (11)     "Transfer and novation" means the transfer of   insurance obligations, risks, or both of existing or in-force   policies from a transferring insurer to an assuming insurer that is   intended to effect a novation of the transferred policies that   results in the assuming insurer becoming directly liable to the   policyholders of the transferring insurer on the extinguishment of   the transferring insurer's insurance obligations, risks, or both   under the transferred policies.                 (12)     "Transferring insurer" means an insurer or   reinsurer that transfers and novates or seeks to transfer and   novate obligations, risks, or both under one or more policies to an   assuming insurer under an insurance business transfer plan.           Sec.   806.002.     CONSENT TO ONGOING COMMISSIONER OVERSIGHT.   An insurer subject to this chapter is considered to consent to the   jurisdiction of the commissioner with regard to ongoing oversight   of operations, management, and solvency relating to the transferred   business, including the authority of the commissioner to conduct   financial analysis and examinations.           Sec.   806.003.     AUTHORITY OF COURT. Notwithstanding any   other law, a court may issue an order, process, or judgment that is   necessary or appropriate to carry out this chapter. This chapter   may not be construed to preclude a court from, on the court's own   motion, taking any action or making any determination necessary or   appropriate to enforce or implement an order or rule of the court or   to prevent an abuse of power.           Sec.   806.004.     NOTICE REQUIREMENTS. (a)     When notice is   required to be given by the applicant under this chapter and except   as otherwise permitted or directed by a court or the commissioner,   the applicant shall provide the notice not later than the 45th day   after the date of the event that requires notice:                 (1)     to the chief insurance regulator in each   jurisdiction in which:                       (A)     the applicant holds or has ever held a   certificate of authority; and                       (B)     policies that are part of the subject   business were issued or policyholders currently reside;                 (2)     to the National Conference of Insurance Guaranty   Funds, the National Organization of Life and Health Insurance   Guaranty Associations, and each state insurance guaranty   association for a state in which:                       (A)     the applicant holds or has ever held a   certificate of authority; and                       (B)     policies that are part of the subject   business were issued or policyholders currently reside;                 (3)  to each reinsurer of the applicant:                       (A)     under the notice provisions of each   reinsurance agreement applicable to the policies that are part of   the subject business; or                       (B)     if a reinsurance agreement does not have a   notice provision, by an internationally recognized delivery   service;                 (4)     to each policyholder holding a policy that is part   of the subject business, at the policyholder's last known address   as indicated by the records of the applicant or to the address to   which premium notices or other policy documents are sent, and for a   notice of transfer, to the transferring insurer's agents or brokers   of record on the subject business; and                 (5)  by publication in:                       (A)     a newspaper of general circulation in the   state in which the applicant has the applicant's principal place of   business; and                       (B)     each publication required by the   commissioner.           (b)     If notice is provided in accordance with this section,   an intended recipient of the notice is considered to have received   the notice for purposes of this chapter, regardless of whether the   recipient received actual notice, and the intended recipient may   not raise notice to challenge an order issued under this chapter.           (c)     The commissioner shall provide the required notice in   accordance with this section on behalf of an applicant for which the   commissioner has been named as receiver.           (d)     Notice under this section may be provided by first-class   mail, facsimile, or electronic means.           Sec.   806.005.     RULEMAKING AUTHORITY. The commissioner may   adopt rules consistent with this chapter as necessary to implement   this chapter.           Sec.   806.006.     CONFIDENTIALITY. The status of any part of an   application for an insurance business transfer as confidential at   the time of application, including any documents, materials,   communications, or other information submitted to the commissioner   in contemplation of the application, is not affected by the process   provided by this chapter.   SUBCHAPTER   B.     INITIAL APPLICATION; COMMISSIONER REVIEW           Sec.   806.051.     COMMISSIONER AND COURT APPROVAL REQUIRED.   After obtaining an independent expert report under Section 806.052,   an applicant shall file an insurance business transfer plan with:                 (1)     the commissioner for review and approval under   this subchapter; and                 (2)     a court for approval under Subchapter C on   receiving the commissioner's approval.           Sec.   806.052.     INDEPENDENT EXPERT; REPORT. (a)     The   commissioner shall appoint an independent expert from a list of at   least two nominees, submitted jointly by the transferring insurer   and the assuming insurer, to assist the commissioner and the court   in connection with the commissioner's and the court's review of a   proposed insurance business transfer. The commissioner may, in the   commissioner's sole discretion, reject the nominees and appoint   another person as the independent expert.           (b)  The independent expert must be an impartial person who:                 (1)     has no financial interest in either the assuming   insurer or transferring insurer;                 (2)     has not been employed by or acted as an officer,   director, consultant, or other independent contractor for either   the assuming insurer or transferring insurer during the preceding   12 months;                 (3)     is not appointed by the commissioner to assist in   any capacity in an insurer rehabilitation or delinquency   proceeding;                 (4)     receives no compensation in connection with the   applicable transaction under this chapter, other than a fee based   on a fixed or hourly basis that is not contingent on the approval or   completion of the insurance business transfer; and                 (5)     provides proof of insurance coverage that is   satisfactory to the commissioner.           (c)     The independent expert shall submit a report to the   commissioner in the form and manner prescribed by the commissioner   regarding the proposed insurance business transfer. The report   must include:                 (1)     a summary of the terms of the insurance business   transfer plan to the extent relevant to the independent expert's   report;                 (2)  the scope of the independent expert's report;                 (3)     an analysis of the transferring insurer's   actuarial review of reserves for the subject business to determine   the reserve adequacy;              &#xA0 [Text truncated for display. Full text available on Congress.gov.]