CHAPTER Ins 2900
HAZARDOUS FINANCIAL CONDITIONS, LICENSED COMPANIES
Statutory
Authority: RSA 400-A:15, I.
PART Ins 2901
REGULATION OF COMPANIES DEEMED TO BE IN HAZARDOUS FINANCIAL CONDITION
(a) The purpose of this chapter is to set forth
the standards which the commissioner may use for identifying insurers found to
be in such condition as to render the continuance of their business hazardous
to their policyholders, creditors, or the general public.
(b) This chapter shall not be interpreted to
limit the powers granted the commissioner by any laws or parts of laws of this
state, nor shall this chapter be interpreted to supersede any laws or parts of
laws of this state.
Source. #5475, eff 9-21-92; ss by #5655, eff 7-1-93;
ss by #7034, INTERIM, eff 7-1-99, EXPIRED: 10-29-99; ss by #7111, eff 10-29-99;
ss by #8919, eff 7-1-07; ss by #9934, eff 6-1-11; ss by #12748, eff 6-1-19
Ins
2901.02 Standards. The following
standards, either singly or a combination of two or more, may be considered by
the commissioner to determine whether the continued operation of any insurer
transacting an insurance business in this state might be deemed to be hazardous
to its policyholders, creditors, or the general public. The commissioner may consider:
(a) Adverse findings reported in financial
condition and market conduct examination reports, audit reports, and actuarial
opinions, reports, or summaries;
(b)
The National Association of Insurance Commissioners (NAIC) Insurance
Regulatory Information System and its other financial analysis solvency tools
and reports;
(c)
Whether the insurer has made adequate provision, according to presently
accepted actuarial standards of practice, for the anticipated cash flows
required by the contractual obligations and related expenses of the insurer,
when considered in light of the assets held by the insurer with respect to such
reserves and related actuarial items including, but not limited to, the
investment earnings on such assets, and the considerations anticipated to be
received and retained under such policies and contracts;
(d)
The ability of an assuming reinsurer to perform and whether the
insurer's reinsurance program provides sufficient protection for the insurer's
remaining surplus after taking into account the insurer's cash flow and the
classes of business written as well as the financial condition of the assuming
reinsurer;
(e)
Whether the insurer's operating loss in the last 12 month period or any
shorter period of time, including but not limited to net capital gain or loss,
change in non-admitted assets, and cash dividends paid to shareholders, is
greater than 50 percent of the insurer's remaining surplus as regards
policyholders in excess of the minimum required;
(f)
Whether the insurer's operating loss in the last 12 month period or any
shorter period of time, excluding net capital gains, is greater than 20 percent
of the insurer's remaining surplus as regards policyholders in excess of the
minimum required;
(g)
Whether a reinsurer, obligor, or any entity within the insurer's
insurance holding company system is insolvent, threatened with insolvency, or
delinquent in payment of its monetary or other obligations, and which in the
opinion of the commissioner may affect the solvency of the insurer;
(h)
Contingent liabilities, pledges, or guarantees which either individually
or collectively involve a total amount which in the opinion of the commissioner
may affect the solvency of the insurer;
(i) Whether any
"controlling person" of an insurer is delinquent in the transmitting
to, or payment of, net premiums to the insurer;
(j)
The age and collectability of receivables;
(k) Whether the management of an insurer,
including officers, directors, or any other person who directly or indirectly
controls the operation of the insurer, fails to possess and demonstrate the
competence, fitness, and reputation deemed necessary to serve the insurer in
such position;
(l)
Whether the management of an insurer has failed to respond to inquiries
relative to the condition of the insurer or has furnished false and misleading
information concerning an inquiry;
(m)
Whether the insurer has failed to meet financial and holding company
filing requirements in the absence of a reason satisfactory to the
commissioner;
(n)
Whether management of an insurer either has filed any false or
misleading sworn financial statement, or has released any false or misleading
financial statement to lending institutions or to the general public, or has
made a false or misleading entry, or has omitted an entry of material amount in
the books of the insurer;
(o)
Whether the insurer has grown so rapidly and to such an extent that it
lacks adequate financial and administrative capacity to meets its obligations
in a timely manner;
(p)
Whether the insurer has experienced or will experience in the
foreseeable future cash flow or liquidity problems;
(q)
Whether management has established reserves that do not comply with
minimum standards established by state insurance laws, regulations, statutory
accounting standards, sound actuarial principles, and standards of practice;
(r)
Whether management persistently engages in material under reserving that
results in adverse development;
(s)
Whether transactions among affiliates, subsidiaries or controlling
persons for which the insurer receives assets or capital gains, or both, do not
provide sufficient value, liquidity, or diversity to assure the insurer's
ability to meet its outstanding obligations as they mature; and
(t)
Any other finding determined by the commissioner to be hazardous to the
insurer's policyholders, creditors, or general public.
Source. #5475, eff 9-21-92; ss by #5655, eff 7-1-93;
ss by #7034, INTERIM, eff 7-1-99, EXPIRED: 10-29-99; ss by #7111, eff 10-29-99;
ss by #8919, eff 7-1-07; ss by #9934, eff 6-1-11; ss by #12748, eff 6-1-19
Ins 2901.03 Commissioner's
Authority.
(a)
For the purposes of making a determination of an insurer's financial
condition under this chapter, the commissioner may:
(1) Disregard any credit or amount receivable
resulting from transactions with a reinsurer that is insolvent, impaired, or
otherwise subject to a delinquency proceeding;
(2)
Make appropriate adjustments including disallowance to asset values attributable
to investments in or transactions with parents, subsidiaries, or affiliates
consistent with the NAIC Accounting Practices and Procedures Manual, state
laws, and regulations;
(3) Refuse to
recognize the stated value of accounts receivable if the ability to collect
receivables is highly speculative in view of the age of the account or the
financial condition of the debtor; and
(4) Increase the insurer's liability in an amount
equal to any contingent liability, pledge, or guarantee not otherwise included
if there is a substantial risk that the insurer will be called upon to meet the
obligation undertaken within the next 12 month period.
(b) If the commissioner determines that the
continued operation of the insurer licensed to transact business in this state
may be hazardous to the policyholders, creditors, or the general public, then
the commissioner may, upon a determination, issue an order requiring the
insurer to:
(1) Reduce the total amount of present and
potential liability for policy benefits by reinsurance;
(2) Reduce, suspend, or limit the volume of
business being accepted or renewed;
(3) Reduce general insurance and commission
expenses by specified methods;
(4) Increase the insurer's capital and surplus;
(5) Suspend or limit the declaration and payment
of dividend by an insurer to its stockholders or to its policyholders;
(6) File reports in a form acceptable to the
commissioner concerning the market value of an insurer's assets;
(7) Limit or withdraw from certain investments or
discontinue certain investment practices to the extent the commissioner deems
necessary;
(8) Document the adequacy of premium rates in
relation to the risks insured;
(9) File, in addition to regular annual
statements, interim financial reports pursuant to RSA 400-A:36, III;
(10) Correct corporate governance practice
deficiencies, and adopt and utilize governance practices acceptable to the
commissioner;
(11) Provide a business plan to the commissioner
in order to continue to transact business in the state; and
(12) Notwithstanding any other provision of law
limiting the frequency or amount of premium rate adjustments, adjust rates for
any non-life insurance product written by the insurer that the commissioner
considers necessary to improve the financial condition of the insurer.
If the insurer is a foreign insurer
the commissioner's order may be limited to the extent provided by statute.
(c)
An insurer subject to an order under (b) above may request a hearing to
review that order. The notice of hearing
shall be served upon the insurer pursuant to RSA 400-A:18. The notice of hearing shall state the time
and place of hearing, and the conduct, condition or ground upon which the
commissioner based the order. Unless
mutually agreed between the commissioner and the insurer, the hearing shall
occur not less than 10 days nor more than 30 days after notice is served and
shall be conducted at the insurance department.
The commissioner shall hold all hearings under this subsection
privately, unless the insurer requests a public hearing in which case the
hearing shall be public.
Source. #5475, eff 9-21-92; ss by #5655, eff 7-1-93;
ss by #7034, INTERIM, eff 7-1-99, EXPIRED: 10-29-99; ss by #7111, eff 10-29-99;
ss by #8919, eff 7-1-07; ss by #9934, eff 6-1-11; ss by #12748, eff 6-1-19
Ins 2901.04 Judicial
Review. Any order or decision
of the commissioner shall be subject to review in accordance with RSA 541 at
the instance of any party to the proceedings whose interests are substantially
affected.
Source.
#8919, eff 7-1-07; ss by #9934, eff 6-1-11; ss by #12748, eff 6-1-19
Ins 2901.05 Waiver of Rules.
(a)
The commissioner, upon the commissioner’s own initiative or upon request
by an insurer, shall waive any requirement of this chapter if such waiver does
not contradict the objective or intent of the rule and:
(1) Applying the rule provision would cause
confusion or would be misleading to consumers;
(2) The rule provision is in whole or in part
inapplicable to the given circumstances;
(3)
There are specific circumstances unique
to the situation such that strict compliance with the rule would be onerous
without promoting the objective or intent of the rule provision; or
(4) Any other similar extenuating circumstances
exist such that application of an alternative standard or procedure better
promotes the objective or intent of the rule provision.
(b)
No requirement prescribed by statute shall be waived unless expressly
authorized by law.
(c)
Any person or entity seeking a waiver shall make a request in writing.
(d)
A request for a waiver shall specify the basis for the waiver and
proposed alternative, if any.
Source. #12748, eff 6-1-19
APPENDIX
Rule |
Specific
State Statute the Rule Implements
|
|
|
Ins
2901.01 |
RSA
400-A:15, I; RSA 400-A:36-a; RSA 400-A:37; RSA 401-B; RSA 402-C; RSA 403-C |
Ins
2901.02 |
RSA
400-A:15, I; RSA 400-A:36-a; RSA 400-A:37; RSA 401-B; RSA 402-C; RSA 403-C |
Ins
2901.03 |
RSA
400-A:15, I; RSA 400-A:18; RSA 400-A:19; RSA 400-A:36-a; RSA 400-A:37; |
Ins
2901.04 |
RSA
400-A:15, I; RSA 400-A:17; RSA 400-A:18; RSA 400-A:19; RSA 401-B:15; RSA 541 |
Ins
2901.05 |
RSA
400-A:15, I; RSA 541-A:22, IV |