California’s SB 1448, which was passed by both houses of the Legislature and is expected to be signed by the governor, would conform California’s Insurance Holding Company System Regulatory Act to the amended National Association of Insurance Commissioners (“NAIC”) Insurance Holding Company System Regulatory Act (Model 440) and Regulation (Model 450) adopted by the NAIC in December 2010. The amendments would provide the Insurance Commissioner with greater authority to evaluate the risks that non-insurance entities pose to an insurer within the holding company system. Some of the key amendments include provisions that would:
- require the ultimate controlling person of every insurer subject to registration to file an annual enterprise risk report;
- authorize the Insurance Commissioner to hold a public hearing after a Form A is filed (the person filing the Form A would be allowed to present evidence and to offer written and oral arguments);
- require any controlling person of a domestic insurer seeking to divest its controlling interest in the domestic insurer to file a notice of divestiture at least 30 days prior to the cessation of control; and
- authorize the Insurance Commissioner to participate in a supervisory college for any domestic insurer that is part of an insurance holding company system with international operations in order to determine compliance with the relevant provisions of the law.
California will become the tenth state to have adopted the amended NAIC Insurance Holding Company System Regulatory Act and Regulation. The nine states that have already adopted the amended NAIC Insurance Holding Company System Regulatory Act and Regulation are: Connecticut, Indiana, Kentucky, Louisiana, Nebraska, Pennsylvania, Rhode Island, Texas, and West Virginia.