No. SB 234
Filed under Insurance.
Insurers’ Financial Transactions; Requiring certain insurers to annually provide specified information to the Office of Insurance Regulation; requiring the office to contract annually with a specified entity to conduct a review of certain transactions; prohibiting an insurer from engaging in certain transactions with affiliates; prohibiting an insurer from declaring or paying dividends to shareholders or issuing executive bonuses under certain circumstances, etc.
Plain English Summary
AI-GENERATEDInsurers that pay fees to affiliates must now report annually, not just when asked. The report needs a cost analysis, a market-rate comparison, and the dollar and percentage total of what was paid.
If affiliate fees exceed 20 percent of an insurer's premiums, it must certify why that is necessary and disclose the dividends and executive compensation paid out that same period, and post all of it publicly on its own website.
Insurers are now barred from structuring affiliate deals to make their finances look better than they are, including fee forgiveness or circular transactions meant to mask the insurer's true condition.
An insurer that is in hazardous financial condition, or one whose finances have been materially hurt by high affiliate fees or expenses, may not pay shareholder dividends or issue executive bonuses.
AIInsurers that pay fees to affiliates must now file detailed information with the office every year on their own, replacing a rule that only required disclosure when the office specifically asked for it.
AIInsurers must submit a benchmarking study showing that what they pay an affiliate is comparable to what independent, unaffiliated vendors would charge for the same service, not just an internal cost breakdown.
AIOnce affiliate fees and commissions exceed 20 percent of an insurer's gross written premiums, the insurer must certify that the amount is necessary and give specific reasons, rather than simply reporting a total.
AIWhenever affiliate fees cross the 20 percent threshold, the insurer must also disclose the dividends and officer and director compensation it paid during that same reporting period.
AIInsurers must publish the affiliate and managing-general-agent fee information they report to the office on their own websites every year, and that information cannot be withheld as a trade secret.
AIAn insurer may not engage in any transaction or series of transactions with an affiliate that has the purpose or effect of making its financial condition look different from what it actually is.
AIAn insurer in hazardous financial condition, or one whose own financial statements show its finances have been materially hurt by high affiliate fees, may not declare dividends or pay executive bonuses.
AIThe office must contract every year with an independent expert entity to review affiliate and managing-general-agent transactions and report back which ones are not fair and reasonable.