SB0443

SENATE BILL 443

54th legislature - STATE OF NEW MEXICO - first session, 2019

INTRODUCED BY

John M. Sapien

AN ACT

RELATING TO INSURANCE; ENACTING THE OWN RISK AND SOLVENCY ASSESSMENT ACT; ESTABLISHING A RISK MANAGEMENT FRAMEWORK; REQUIRING INSURERS TO CONDUCT OWN RISK AND SOLVENCY ASSESSMENTS AND MAKE ANNUAL OWN RISK AND SOLVENCY ASSESSMENT SUMMARY REPORTS; ESTABLISHING PENALTIES; AMENDING A SECTION OF THE NEW MEXICO INSURANCE CODE TO ESTABLISH FILING FEES FOR OWN RISK AND SOLVENCY ASSESSMENT SUMMARY REPORTS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] SHORT TITLE.--Sections 1 through 9 of this act may be cited as the "Own Risk and Solvency Assessment Act"."

SECTION 2. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] DEFINITIONS.--As used in the Own Risk and Solvency Assessment Act:

A. "guidance manual" means the current version of the own risk and solvency assessment guidance manual developed and adopted by the national association of insurance commissioners and as amended from time to time; provided that a change in the guidance manual shall be effective on the January 1 following the calendar year in which the changes have been adopted by the national association of insurance commissioners;

B. "insurance group" means two or more affiliated persons, at least one of which is an insurer;

C. "insurer" means any person engaged as principal and as indemnitor, surety or contractor entering into contracts of insurance, except:

(1) any agency, authority or instrumentality of the United States, its possessions and territories, the Commonwealth of Puerto Rico or the District of Columbia; or

(2) any state or political subdivision of a state;

D. "own risk and solvency assessment" means a confidential internal assessment, appropriate to the nature, scale and complexity of an insurer or insurance group, conducted by that insurer or insurance group of the material and relevant risks associated with the insurer's or insurance group's current business plan and the sufficiency of capital resources to support those risks; and

E. "own risk and solvency assessment summary report" means a high-level summary of an insurer or insurance group's own risk and solvency assessment."

SECTION 3. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] RISK MANAGEMENT FRAMEWORK.--An insurer shall maintain a risk management framework to assist the insurer with identifying, assessing, monitoring, managing and reporting on its material and relevant risks. This requirement may be satisfied if the insurance group of which an insurer is a member maintains a risk management framework applicable to the operations of the insurer."

SECTION 4. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] OWN RISK AND SOLVENCY ASSESSMENT--REQUIREMENT.--Except as provided pursuant to Section 6 of the Own Risk and Solvency Assessment Act, an insurer, or the insurance group of which the insurer is a member, shall regularly conduct an own risk and solvency assessment consistent with a process comparable to the guidance manual. The own risk and solvency assessment shall be conducted no less than annually but also at any time when there are significant changes to the risk profile of the insurer or the insurance group of which the insurer is a member."

SECTION 5. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] OWN RISK AND SOLVENCY ASSESSMENT SUMMARY REPORT.--

A. Pursuant to Chapter 59A, Article 4 NMSA 1978, an insurer shall submit to the superintendent an own risk and solvency assessment summary report or any combination of reports that together contain the information described in the guidance manual applicable to the insurer and the insurance group, if any, of which it is a member. The own risk and solvency assessment summary report, if requested, shall be due thirty days after the completion of the insurer's most recent own risk and solvency assessment that has been performed in accordance with the insurer's or the insurance group's internal strategic planning process. Upon the superintendent's request, the insurer shall advise the superintendent of the date, annual or otherwise, that the insurer or the insurance group conducts its internal strategic planning process. Notwithstanding any request from the superintendent, if the insurer is a member of an insurance group, the insurer shall submit the own risk and solvency assessment summary report or own risk and solvency assessment summary reports required by this subsection if the superintendent is the lead state commissioner of the insurance group as determined by the procedures within the financial analysis handbook adopted by the national association of insurance commissioners.

B. Each own risk and solvency assessment summary report shall include a signature of the insurer or insurance group's chief risk officer or other executive having responsibility for the oversight of the insurer's enterprise risk management process attesting to the best of the signator's belief and knowledge that the insurer applies the enterprise risk management process described in the own risk and solvency assessment summary report and that a copy of the own risk and solvency assessment summary report has been provided to the insurer's board of directors or the appropriate committee thereof.

C. An insurer may comply with the provisions of Subsection A of this section by providing the most recent and substantially similar own risk and solvency assessment summary report or own risk and solvency assessment summary reports provided by the insurer or another member of the insurance group of which the insurer is a member to the commissioner of another state or to a supervisor or regulator of a foreign jurisdiction, if that report provides information that is comparable to the information described in the guidance manual. Any such report in a language other than English shall be accompanied by a translation of that report into the English language."

SECTION 6. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] EXEMPTION.--

A. An insurer shall be exempt from the provisions of the Own Risk and Solvency Assessment Act if:

(1) the insurer has an annual direct written and unaffiliated assumed premium, including international direct and assumed premiums but excluding premiums reinsured with the federal crop insurance corporation and national flood insurance program, of less than five hundred million dollars ($500,000,000); and

(2) the insurance group of which the insurer is a member has an annual direct written and unaffiliated assumed premium, including international direct and assumed premiums but excluding premiums reinsured with the federal crop insurance corporation and national flood insurance program, of less than one billion dollars ($1,000,000,000).

B. If an insurer qualifies for exemption pursuant to Paragraph (1) of Subsection A of this section, but the insurance group of which it is a member does not qualify for exemption pursuant to Paragraph (2) of Subsection A of this section, the own risk and solvency assessment summary report that may be required pursuant to Section 5 of the Own Risk and Solvency Assessment Act shall include every insurer within the insurance group. This requirement may be satisfied by the submission of more than one own risk and solvency assessment summary report for any combination of insurers; provided that any combination of reports includes every insurer within the insurance group.

C. If an insurer does not qualify for exemption pursuant to the provisions of Paragraph (1) of Subsection A of this section, but the insurance group of which it is a member qualifies for exemption pursuant to Paragraph (2) of Subsection A of this section, the only own risk and solvency assessment summary report that may be required pursuant to Section 5 of the Own Risk and Solvency Assessment Act shall be the report applicable to that insurer.

D. An insurer that does not qualify for exemption pursuant to Subsection A of this section may apply to the superintendent for a waiver from the requirements of the Own Risk and Solvency Assessment Act based upon unique circumstances. In deciding whether to grant the insurer's request for a waiver, the superintendent may consider the type and volume of business written, ownership and organizational structure and any other factor the superintendent considers relevant to the insurer or insurance group of which it is a member. If the insurer is part of an insurance group with insurers domiciled in more than one state, the superintendent shall coordinate with the lead state commissioner and with the other domiciliary commissioners in considering whether to grant the insurer's request for a waiver.

E. Notwithstanding the exemptions stated in this section, the superintendent may require that an insurer maintain a risk management framework, conduct an own risk and solvency assessment and file an own risk and solvency assessment summary report pursuant to Section 5 of the Own Risk and Solvency Assessment Act:

(1) based on unique circumstances, including the type and volume of business written, ownership and organizational structure, federal agency requests and international supervisor requests; and

(2) if the insurer has risk-based capital for a company action level event pursuant to the Risk-Based Capital Act or otherwise exhibits qualities of a troubled insurer as determined by the superintendent.

F. If an insurer that qualifies for an exemption pursuant to Subsection A of this section subsequently no longer qualifies for that exemption due to changes in premium as reflected in the insurer's most recent annual statement or in the most recent annual statements of the insurers within the insurance group of which it is a member, the insurer shall have one year following the year the threshold is exceeded to comply with the requirements of the Own Risk and Solvency Assessment Act."

SECTION 7. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] OWN RISK AND SOLVENCY ASSESSMENT SUMMARY REPORTS--CONTENTS.--

A. An own risk and solvency assessment summary report shall be prepared consistent with the guidance manual, subject to the requirements of Subsection B of this section. Documentation and supporting information shall be maintained and made available upon examination or upon request of the superintendent.

B. The review of the own risk and solvency assessment summary report, and any additional requests for information, shall be made using similar procedures currently used in the analysis and examination of multistate or global insurers and insurance groups."

SECTION 8. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] CONFIDENTIALITY.--

A. Documents, materials or other information, including the own risk and solvency assessment summary report, in the possession or control of the superintendent that are obtained by, created by or disclosed to the superintendent pursuant to the Own Risk and Solvency Assessment Act shall be kept pursuant to the provisions of Chapter 59A, Article 4 NMSA 1978. The superintendent is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the superintendent's official duties. The superintendent may not otherwise make the documents, materials or other information public without prior written notice to the insurer.

B. In order to assist in the performance of the superintendent's regulatory duties, the superintendent:

(1) may, upon request, share documents, materials or other information related to an own risk and solvency assessment, including the confidential documents, materials or information pursuant to Section 5 of the Own Risk and Solvency Assessment Act and including proprietary and trade-secret documents and materials, with other state, federal and international financial regulatory agencies, with the national association of insurance commissioners and with any third-party consultants designated by the superintendent; provided that the recipient agrees in writing to maintain the confidential status of the documents, materials or other information related to an own risk and solvency assessment and has verified in writing the legal authority to maintain confidentiality;

(2) may receive documents, materials or other information related to an own risk and solvency assessment, including confidential documents, materials or information and including proprietary and trade-secret information or documents, from regulatory officials of other foreign or domestic jurisdictions and from the national association of insurance commissioners, and shall maintain as confidential any documents, materials or information received with notice or the understanding that it is confidential under the laws of the jurisdiction that is the source of the document, material or information; and

(3) shall enter into a written agreement with the national association of insurance commissioners or a third-party consultant governing sharing and use of information provided pursuant to the Own Risk and Solvency Assessment Act consistent with this subsection that shall:

(a) specify procedures and protocols regarding the confidentiality and security of information shared with the national association of insurance commissioners or a third-party consultant pursuant to the Own Risk and Solvency Assessment Act, including procedures and protocols for sharing by the national association of insurance commissioners with other state regulators from states in which the insurance group has domiciled insurers. The agreement shall provide that the recipient agrees in writing to maintain the confidential status of the documents, materials or other information related to an own risk and solvency assessment and has verified in writing the legal authority to maintain confidentiality;

(b) specify that ownership of information shared with the national association of insurance commissioners or a third-party consultant pursuant to the Own Risk and Solvency Assessment Act remains with the superintendent and that the national association of insurance commissioners' or a third-party consultant's use of the information is subject to the direction of the superintendent;

(c) prohibit the national association of insurance commissioners or third-party consultant from storing the information shared pursuant to the Own Risk and Solvency Assessment Act in a permanent database after the underlying analysis is completed;

(d) require prompt notice to be given to an insurer whose confidential information in the possession of the national association of insurance commissioners or a third-party consultant pursuant to the Own Risk and Solvency Assessment Act when subject to a request or subpoena;

(e) require the national association of insurance commissioners or a third-party consultant to consent to intervention by an insurer in any judicial or administrative action in which the national association of insurance commissioners or a third-party consultant may be required to disclose confidential information about the insurer that has been shared with the national association of insurance commissioners or a third-party consultant pursuant to the Own Risk and Solvency Assessment Act; and

(f) in the case of an agreement involving a third-party consultant, provide for the insurer's written consent.

C. The sharing of information and documents by the superintendent pursuant to the Own Risk and Solvency Assessment Act shall not constitute a delegation of regulatory authority or rulemaking, and the superintendent is solely responsible for the administration, execution and enforcement of the provisions of the Own Risk and Solvency Assessment Act.

D. No waiver of any applicable privilege or claim of confidentiality of documents, proprietary and trade-secret materials or other information related to an own risk and solvency assessment shall occur as a result of disclosure of that related information, materials or documents to the superintendent under this section or as a result of sharing as authorized in the Own Risk and Solvency Assessment Act."

SECTION 9. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] SANCTIONS.--Any insurer failing, without just cause, to timely file the own risk and solvency assessment summary report as required in the Own Risk and Solvency Assessment Act shall be required, after notice and hearing, to pay a penalty of one thousand dollars ($1,000) for each day's delay to be recovered by the superintendent, and the penalty so recovered shall be paid into the general fund. The maximum penalty under this section is one hundred thousand dollars ($100,000). The superintendent may reduce the penalty if the insurer demonstrates to the superintendent that the imposition of the penalty would constitute a financial hardship to the insurer."

SECTION 10. Section 59A-6-1 NMSA 1978 (being Laws 1984, Chapter 127, Section 101, as amended) is amended to read:

"59A-6-1. FEE SCHEDULE.--The superintendent shall collect the following fees:

A. insurer's certificate of authority -

(1) filing application for certificate of authority, and issuance of certificate of authority, including filing of all charter documents, financial statements, service of process, power of attorney, examination reports and other documents included with and part of the application. .$1,000.00

(2) annual continuation of certificate of authority, per kind of insurance. . . . . . . . . . . . .200.00

(3) reinstatement of certificate of authority (Section 59A-5-23 NMSA 1978). . . . . . . . . . . . . . .150.00

(4) amendment to certificate of authority. . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .200.00

B. charter documents - filing amendment to any charter document (as defined in Section 59A-5-3 NMSA 1978)10.00

C. annual statement of insurer, filing. . . .200.00

D. own risk and solvency assessment summary report filing. . . . . . . . . . . . . . . . . . . . . . . . . .200.00

[D.] E. service of process, acceptance by superintendent and issuance of certificate of service. . .10.00

[E.] F. producer licenses and appointments -

(1) filing application for original producer license and issuance of license. . . . . . . . . . . . . .30.00

(2) biennial continuation of license. . .60.00

(3) appointment of producer -

(a) filing appointment, per kind of insurance, each insurer. . . . . . . . . . . . . . . . . .20.00

(b) annual continuation of appointment, per kind of insurance, each insurer. . . . . . . . . . . .20.00

(4) temporary license filing

application. . . . . . . . . . . . . . . . . . . . . . . .30.00

[F.] G. agency business entity license and affiliations -

(1) filing application for original agency business entity license and issuance of license. . . . . .30.00

(2) biennial continuation of license. . .60.00

(3) filing of individual affiliation . . 20.00

(4) annual continuation of individual affiliation. . . . . . . . . . . . . . . . . . . . . . . .20.00

[G.] H. insurance vending machine license -

(1) filing application for original license and issuance of license, each machine. . . . . . . . . . .25.00

(2) biennial continuation of license, each machine. . . . . . . . . . . . . . . . . . . . . . . . . .50.00

[H.] I. examination for license, application for examination conducted directly by the superintendent, each grouping of kinds of insurance to be covered by the examination as provided by the superintendent's rules, and payable as to each instance of examination. . . . . . . . . . . . . . . 75.00

[I.] J. surplus lines insurer - filing application for qualification as eligible surplus lines insurer. . 1,000.00

[J.] K. surplus lines broker license -

(1) filing application for original license and issuance of license. . . . . . . . . . . . . . . . . 100.00

(2) biennial continuation of license. . 200.00

[K.] L. surplus lines brokerage business entity license and affiliations -

(1) filing application for original surplus lines brokerage business entity license and issuance of license . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100.00

(2) filing of individual affiliation. . .20.00

(3) annual continuation of individual affiliation. . . . . . . . . . . . . . . . . . . . . . . .20.00

[L.] M. adjuster license -

(1) filing application for original license and issuance of license. . . . . . . . . . . . . . . . . .30.00

(2) biennial continuation of

license. . . . . . . . . . . . . . . . . . . . . . . . . .60.00

[M.] N. insurance consultant license -

(1) filing application for original license and issuance of license. . . . . . . . . . . . . . . . . .50.00

(2) application examination. . . . . . . 75.00

(3) biennial continuation of license. . 100.00

[N.] O. viatical settlements license -

(1) providers -

(a) filing application for original license and issuance of license. . . . . . . . . . . . 1,000.00

(b) biennial continuation of license. .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .400.00

(2) brokers -

(a) filing application for original license and issuance of license. . . . . . . . . . . . . 100.00

(b) biennial continuation of

license. . . . . . . . . . . . . . . . . . . . . . . . . 200.00

(3) brokerages -

(a) filing application for original business entity license and issuance of license. . . . . 100.00

(b) biennial continuation of

license. . . . . . . . . . . . . . . . . . . . . . . . . 200.00

affiliation. . . . . . . . . . . . . . . . . . . . . . . .20.00

(d) annual continuation of individual affiliation. . . . . . . . . . . . . . . . . . . . . . . .20.00

[O.] P. advisory organization license -

(1) filing application for license and issuance of license. . . . . . . . . . . . . . . . . . . 100.00

(2) annual continuation of

license. . . . . . . . . . . . . . . . . . . . . . . . . 100.00

[P.] Q. nonprofit health care plans -

(1) filing application for preliminary permit and issuance of permit. . . . . . . . . . . . . . . . . .100.00

(2) certificate of authority, application, issuance, continuation, reinstatement, charter documents - same as for insurers

(3) annual statement, filing. . . . . . 200.00

[Q.] R. prepaid dental plans -

(1) certificate of authority, application, issuance, continuation, reinstatement, charter documents - same as for insurers

(2) annual report, filing. . . . . . . .200.00

[R.] S. prearranged funeral insurance - application for certificate of authority, issuance, continuation, reinstatement, charter documents, filing annual statement, licensing of sales representatives - same as for insurers

[S.] T. premium finance companies -

(1) filing application for original license and issuance of license. . . . . . . . . . . . . . . . . 100.00

(2) annual renewal of license. . . . . .100.00

[T.] U. motor clubs -

(1) certificate of authority -

(a) filing application for original certificate of authority and issuance of certificate of authority. . . . . . . . . . . . . . . . . . . . . . . . 200.00

(b) annual continuation of certificate of authority. . . . . . . . . . . . . . . . . . . . . . .100.00

(2) sales representatives -

(a) filing application for registration or license and issuance of registration or license, each representative. . . . . . . . . . . . . . . . . . . . . . 30.00

(b) biennial continuation of registration or license, each representative. . . . . . . 60.00

[U.] V. bail bondsmen -

(1) filing application for original license as bail bondsman or solicitor, and issuance of license. . . .30.00

(2) examination for license, each instance of examination. . . . . . . . . . . . . . . . . . . . . . . .50.00

(3) biennial continuation of license. . .60.00

[V.] W. required filing of forms or rates - by all lines of business other than property or casualty -

(1) rates. . . . . . . . . . . . . . . . 50.00

(2) major form - each new policy and each package submission, which can include multiple policy forms, application forms, rider forms, endorsement forms or amendment forms. . . . . . . . . . . . . . . . . . . . . . . . . . .30.00

(3) incidental forms and rates - forms filed for informational purposes; riders, applications, endorsements and amendments filed individually; rate service organization reference filings; rates filed for informational

purposes. . . . . . . . . . . . . . . . . . . . . . . . . 15.00

[W.] X. health maintenance organizations -

(1) filing an application for a certificate of authority. . . . . . . . . . . . . . . . . . . . . . . 1,000.00

(2) annual continuation of certificate of authority. . . . . . . . . . . . . . . . . . . . . . . . 200.00

(3) filing each annual report. . . . . .200.00

(4) filing an amendment to organizational documents requiring approval. . . . . . . . . . . . . . .200.00

(5) filing informational amendments. . . 50.00

[X.] Y. purchasing groups and foreign risk retention groups -

(1) original registration. . . . . . . .500.00

(2) annual continuation of registration. . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .200.00

(3) producer fees - same as for authorized insurers

[Y.] Z. third party administrators -

(1) filing application for original business entity insurance administrator license. . . . . . . . . .100.00

(2) biennial continuation or renewal

of license. . . . . . . . . . . . . . . . . . . . . . . .200.00

(3) examination for license, each

examination. . . . . . . . . . . . . . . . . . . . . . . .75.00

(4) filing of annual report. . . . . . . 50.00

[Z.] AA. miscellaneous fees -

(1) duplicate license. . . . . . . . . . 30.00

(2) name change. . . . . . . . . . . . . 30.00

(3) for each signature and seal of superintendent affixed to any instrument. . . . . . . . . 10.00

[AA.] BB. pharmacy benefits managers -

(1) filing an application for a

license. . . . . . . . . . . . . . . . . . . . . . . . 1,000.00

(2) annual continuation of license, each

year continued. . . . . . . . . . . . . . . . . . . . . .500.00

(3) filing each annual report. . . . . .200.00

(4) filing an amendment to organizational

documents requiring approval. . . . . . . . . . . . . . .200.00

(5) filing informational amendments. . .100.00

[BB.] CC. independent review organizations

(1) filing an application for a license. . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .250.00

(2) biennial continuation of license. . 100.00

[CC.] DD. continuing education providers

(1) filing an application for a course of instruction. . . . . . . . . . . . . . . . . . . . . . . .80.00

(2) biennial continuation of course of instruction. . . . . . . . . . . . . . . . . . . . . . . 40.00.

An insurer shall be subject to additional fees or charges, termed retaliatory or reciprocal requirements, whenever form or rate-filing fees in excess of those imposed by state law are charged to insurers in New Mexico doing business in another state or whenever a condition precedent to the right to issue policies in another state is imposed by the laws of that state over and above the conditions imposed upon insurers by the laws of New Mexico; in those cases, the same form or rate-filing fees may be imposed upon an insurer from another state transacting or applying to transact business in New Mexico so long as the higher fees remain in force in the other state. If an insurer does not comply with the additional retaliatory or reciprocal requirement charges imposed under this subsection, the superintendent may refuse to grant or may withdraw approval of the tendered form or rate filing.

All fees are earned when paid and are not refundable."

- 22 -