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AN ACT
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relating to the requirement that certain information be reported to |
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the Texas Department of Insurance and the confidentiality of that |
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information. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 823.011, Insurance Code, is amended by |
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amending Subsections (a) and (d) and adding Subsection (d-1) to |
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read as follows: |
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(a) This section applies only to information, including |
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documents and copies of documents, that is: |
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(1) reported or otherwise provided under Subchapter B |
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or C or Section 823.201(d) or (e); |
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(2) disclosed to the commissioner under Section |
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823.010; or |
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(3) obtained by or disclosed to the commissioner or |
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another person in the course of an examination or investigation |
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under Subchapter H. |
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(d) Except as provided by Subsection (e), if the recipient |
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of documents or other information agrees in writing to maintain the |
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confidential and privileged status of the documents or other |
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information, and verifies in writing the legal authority to |
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maintain the confidential and privileged status of the documents or |
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information, the commissioner or another person may disclose the |
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information to any of the following entities functioning in an |
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official capacity: |
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(1) a commissioner of insurance or an insurance |
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department of another state; |
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(2) an authorized law enforcement official; |
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(3) a district attorney of this state; |
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(4) the attorney general; |
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(5) a grand jury; |
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(6) members of a supervisory college described by |
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Section 823.0145; [or] |
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(7) the National Association of Insurance |
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Commissioners and its affiliates and subsidiaries; or |
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(8) another state, federal, or international |
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regulatory agency. |
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(d-1) The commissioner may receive documents or |
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information, including otherwise confidential and privileged |
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documents or information from the entities listed in Subsection |
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(d), and shall maintain as confidential or privileged any document |
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or information received by the commissioner with notice or an |
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understanding that the document or information is confidential or |
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privileged under the laws of the jurisdiction of the entity that |
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provides the document or information. |
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SECTION 2. Section 823.052(c), Insurance Code, is amended |
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to read as follows: |
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(c) The registration statement must also contain |
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information about: |
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(1) each outstanding loan the insurer makes to an |
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affiliate of the insurer or an affiliate makes to the insurer; |
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(2) each purchase, sale, or exchange of securities or |
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other investment between the insurer and an affiliate of the |
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insurer; |
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(3) each purchase, sale, or exchange of assets between |
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the insurer and an affiliate of the insurer; |
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(4) each management and service contract or |
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cost-sharing arrangement between the insurer and an affiliate of |
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the insurer; |
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(5) each reinsurance agreement between the insurer and |
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an affiliate of the insurer that covers one or more lines of |
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insurance of the ceding company; |
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(6) each agreement between the insurer and an |
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affiliate of the insurer to consolidate federal income tax returns; |
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(7) each transaction between the insurer and an |
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affiliated financial institution; |
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(8) each transaction between the insurer and an |
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affiliate of the insurer that is not in the ordinary course of |
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business; |
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(9) each guarantee or undertaking, other than an |
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insurance contract entered into in the ordinary course of the |
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insurer's business, for the benefit of an affiliate of the insurer |
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that results in a contingent exposure of the insurer's assets to |
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liability; |
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(10) each dividend or distribution to the insurer's |
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shareholders; |
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(11) each transaction between the insurer and an |
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affiliate of the insurer not specified by this subsection that is |
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subject to Section [823.102,] 823.103[,] or 823.104; |
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(12) the corporate governance and internal control |
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responsibilities of the insurer's board of directors, including a |
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statement that: |
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(A) the insurer's senior management or officers |
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have approved and implemented, and continue to maintain and |
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monitor, corporate governance and internal control procedures; and |
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(B) the insurer's board of directors oversees |
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corporate governance and internal controls; and |
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(13) any other information that the commissioner |
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requires by rule. |
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SECTION 3. Section 823.053(e), Insurance Code, is amended |
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to read as follows: |
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(e) An insurer is not required to report under this section |
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a transaction that is approved under Section [823.102 or] 823.103. |
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That approval is considered to be an amendment of the registration |
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statement filed under Section 823.052 without being reported under |
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this section. |
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SECTION 4. Sections 823.103(a) and (b), Insurance Code, are |
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amended to read as follows: |
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(a) This section applies only to: |
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(1) a sale, purchase, exchange, loan or other |
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extension of credit, or investment between a domestic insurer and |
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any person in the insurer's insurance holding company system, |
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including an amendment or modification of an affiliate agreement |
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previously filed under this section, provided the transaction is |
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not less than: |
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(A) with respect to nonlife insurers, the lesser |
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of three [that involves more than the lesser of one-half of one] |
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percent of the insurer's admitted assets or 25 [five] percent of the |
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insurer's surplus as regards policyholders[,] as of December 31 of |
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the year preceding the year in which the transaction occurs; or |
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[and] |
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(B) with respect to life insurers, three percent |
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of the insurer's admitted assets as of December 31 of the year |
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preceding the year in which the transaction occurs [the approval of
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which is not required under Section 823.102]; |
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(2) a loan or other extension of credit to a person who |
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is not an affiliate if the insurer makes a loan or extension of |
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credit with the agreement or understanding that the proceeds of the |
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transaction, wholly or in substantial part, are to be used to make |
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loans or extensions of credit to, to purchase assets of, or to make |
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investment in, an affiliate of the insurer making the loan or |
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extension of credit, provided the transaction is not less than: |
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(A) with respect to nonlife insurers, the lesser |
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of three percent of the insurer's admitted assets or 25 percent of |
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the insurer's surplus as regards policyholders as of December 31 of |
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the year preceding the year in which the transaction occurs; or |
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(B) with respect to life insurers, three percent |
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of the insurer's admitted assets as of December 31 of the year |
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preceding the year in which the transaction occurs; |
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(3) a reinsurance agreement, including a reinsurance |
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treaty or pooling agreement, or an amendment or modification of an |
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agreement previously filed under this section, between a domestic |
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insurer and any person in the insurer's holding company system; |
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(4) [(3)] a rendering of services between a domestic |
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insurer and any person in the insurer's holding company system on a |
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regular or systematic basis, including a tax-allocation agreement, |
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or an amendment or modification of an agreement previously filed |
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under this section; or |
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(5) [(4)] any material transaction between a domestic |
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insurer and any person in the insurer's holding company system that |
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is specified by rule and that the commissioner determines may |
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adversely affect the interests of the insurer's policyholders or of |
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the public, including an amendment or modification of an agreement |
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previously filed under this section. |
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(b) Subsection (a)(3) [(a)(2)] includes a reinsurance |
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agreement that requires as consideration a transfer of assets from |
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an insurer to a nonaffiliate and in relation to which the insurer |
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and nonaffiliate agree that any part of the transferred assets are |
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to be transferred to one or more affiliates of the insurer. |
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SECTION 5. Section 823.104, Insurance Code, is amended to |
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read as follows: |
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Sec. 823.104. PROHIBITION OF ACTION TO AVOID APPLICATION OF |
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SUBCHAPTER. (a) A domestic insurer may not enter into transactions |
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with persons in the insurer's insurance holding company system if: |
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(1) the transactions are part of a plan or series of |
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similar transactions; and |
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(2) the purpose of entering into the transactions is |
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to avoid a threshold amount provided by Section [823.102 or] |
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823.103. |
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(b) If the commissioner determines that over any 12-month |
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period a domestic insurer enters into transactions that violate |
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Subsection (a), the commissioner may: |
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(1) consider the cumulative effect of the |
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transactions; and |
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(2) apply: |
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(A) Section [823.102 or] 823.103; or |
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(B) sanctions under this code. |
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SECTION 6. Section 823.105, Insurance Code, is amended to |
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read as follows: |
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Sec. 823.105. TYPE OF AUTHORITY PROVIDED. Nothing in |
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Section [823.102,] 823.103[,] or 823.104 authorizes a transaction |
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that would violate law that is applicable to an insurer that is not |
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subject to this subchapter. |
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SECTION 7. Section 823.102, Insurance Code, is repealed. |
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SECTION 8. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2013. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I certify that H.B. No. 3460 was passed by the House on May 3, |
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2013, by the following vote: Yeas 144, Nays 1, 1 present, not |
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voting. |
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______________________________ |
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Chief Clerk of the House |
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I certify that H.B. No. 3460 was passed by the Senate on May |
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22, 2013, by the following vote: Yeas 31, Nays 0. |
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______________________________ |
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Secretary of the Senate |
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APPROVED: _____________________ |
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Date |
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_____________________ |
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Governor |