Bill Text For SB0738 - Committee Substitute

 1|                          STATE OF OKLAHOMA                            |
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 2|             1st Session of the 58th Legislature (2021)                |
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 3|COMMITTEE SUBSTITUTE                                                   |
  |FOR ENGROSSED                                                          |
 4|SENATE BILL NO. 738                  By: Montgomery of the Senate      |
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 5|                                         and                           |
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 6|                                         McEntire of the House         |
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 9|                        COMMITTEE SUBSTITUTE                           |
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10|       An Act relating to insurance; amending 36 O.S. 2011,            |
  |       Section 607.1, as last amended by Section 2, Chapter            |
11|       73, O.S.L. 2016 (36 O.S. Supp. 2020, Section 607.1),            |
  |       which relates to insurers; modifying conditions that            |
12|       consider an entity an insurer; requiring notice and             |
  |       filing for asserted insolvent insurers; directing               |
13|       compliance with the Insurance Commissioner's                    |
  |       requirements; authorizing supervision of insurer;               |
14|       imposing fine; authorizing promulgation of rules; and           |
  |       providing an effective date.                                    |
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17|BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:                  |
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18|    SECTION 1.     AMENDATORY     36 O.S. 2011, Section 607.1, as      |
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19|last amended by Section 2, Chapter 73, O.S.L. 2016 (36 O.S. Supp.      |
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20|2020, Section 607.1), is amended to read as follows:                   |
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21|    Section 607.1  A.  An entity organized pursuant to the             |
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22|Interlocal Cooperation Act (an "Interlocal Entity") for the purpose    |
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23|of transacting insurance, except those Interlocal Entities created     |
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24|pursuant to the terms of The Governmental Tort Claims Act, that        |
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   Req. No. 8084                                                   Page 1
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 1|insures an Oklahoma educational institution shall be considered an     |
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 2|insurer at such time that the entity has within a twelve-month         |
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 3|period received aggregate premiums of One Million Dollars              |
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 4|($1,000,000.00) for all kinds of insurance that the entity             |
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 5|transacts.  Such an entity shall be eligible to qualify for and hold   |
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 6|a certificate of authority to transact insurance in this state.        |
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 7|    B.  Notwithstanding the provisions of subsection A of this         |
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 8|section, any Any entity organized pursuant to the Interlocal           |
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 9|Cooperation Act that insures an Oklahoma educational institution and   |
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10|has within a twelve-month period received premiums or contributions    |
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11|of any amount for any kind of insurance that the Interlocal Entity     |
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12|transacts shall have an annual audit by an independent certified       |
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13|public accountant and shall file an audited financial report by an     |
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14|independent certified public accountant with the Insurance             |
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15|Commissioner within one hundred eighty (180) days immediately          |
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16|following the close of the Interlocal Entity's fiscal year.  The       |
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17|annual audited financial report shall be presented in conformity       |
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18|with accounting principles generally accepted in the United States     |
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19|of America and include:                                                |
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20|    1.  The report of an independent certified public accountant in    |
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21|accordance with accounting principles generally accepted in the        |
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22|United States of America;                                              |
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23|    2.  A balance sheet reporting assets, liabilities and equity;      |
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24|    3.  A statement of operations;                                     |
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   Req. No. 8084                                                   Page 2
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 1|    4.  A statement of cash flows;                                     |
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 2|    5.  A statement of changes in assets, liabilities and equity;      |
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 3|    6.  Footnotes to financial statements; and                         |
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 4|    7.  An unqualified opinion from the certified public accountant    |
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 5|that the audited financial report represents a fair presentation of    |
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 6|the Interlocal Entity's financial position in conformity with          |
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 7|accounting principles generally accepted in the United States of       |
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 8|America.                                                               |
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 9|    C.  Any entity subject to the provisions of subsection B of this   |
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10|section, except those entities which purchase full insurance           |
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11|coverage as determined by the Commissioner, shall file with the        |
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12|Insurance Commissioner an actuarial opinion prepared by a qualified    |
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13|actuary within one hundred eighty (180) days immediately following     |
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14|the close of the Interlocal Entity's fiscal year.  The actuarial       |
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15|opinion should certify the amount and adequacy of the Interlocal       |
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16|Entity's reserves for loss and loss adjustment expenses, including     |
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17|amounts for Incurred But Not Reported (IBNR) Claims, and the           |
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18|adequacy of the Interlocal Entity's premiums.  The actuarial opinion   |
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19|shall be consistent with the appropriate Actuarial Standards of        |
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20|Practice (ASOP) as promulgated by the Actuarial Standards Board.       |
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21|    As used in this section, "qualified actuary" means an individual   |
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22|who is a member of the American Academy of Actuaries and who has met   |
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23|the Qualification Standards for Actuaries Issuing Statements of        |
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   Req. No. 8084                                                   Page 3
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 1|Actuarial Opinions in the United States promulgated by the American    |
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 2|Academy of Actuaries.                                                  |
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 3|    D.  Extensions of the filing date may be granted by the            |
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 4|Commissioner for thirty-day periods upon a showing by the Interlocal   |
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 5|Entity and its independent certified public accountant or qualified    |
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 6|actuary of the reasons for requesting an extension and determination   |
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 7|by the Commissioner of good cause for an extension.  The request for   |
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 8|extension must be submitted in writing not less than ten (10) days     |
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 9|prior to the due date in sufficient detail to permit the               |
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10|Commissioner to make an informed decision with respect to the          |
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11|requested extension.                                                   |
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12|    E.  The Commissioner may assess a fine for failure to file the     |
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13|required annual audit or actuarial opinion in an amount of not more    |
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14|than Five Hundred Dollars ($500.00) per day.                           |
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15|    F.  The audited financial reports and actuarial opinions           |
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16|required herein are subject to public inspection pursuant to the       |
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17|Oklahoma Open Records Act.                                             |
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18|    G.  The Insurance Commissioner shall, if there is substantial      |
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19|reason to believe that any insurer subject to this section is          |
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20|insolvent, or if any such insurer's condition is such as to render     |
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21|the continuance of its business hazardous to the public or to          |
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22|holders of its policies or certificates of insurance, or it has        |
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23|exceeded its powers, or it has failed to comply with the law, or if    |
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24|such insurer gives its consent:                                        |
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   Req. No. 8084                                                   Page 4
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 1|    1.  Notify the insurer and its participating members of the        |
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 2|Commissioner's determination;                                          |
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 3|    2.  Require the insurer to file with the Insurance Commissioner    |
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 4|a written plan of action to abate the Commissioner's determination     |
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 5|within thirty (30) days of notification; and                           |
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 6|    3.  If the Commissioner makes a further determination to           |
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 7|supervise, notify the insurer that it is under supervision pursuant    |
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 8|to this section.                                                       |
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 9|    H.  An insurer subject to subsection G of this section shall       |
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10|comply with the lawful requirements of the Commissioner and, if        |
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11|placed under supervision, shall have ninety (90) days from the date    |
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12|of notice within which to comply with the requirements of the          |
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13|Commissioner unless the Commissioner designates a lesser or greater    |
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14|period of time or unless the Commissioner determines at any time       |
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15|during or after the ninety-day period of time that judicial or         |
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16|administrative proceedings should be initiated to place such insurer   |
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17|in conservation, rehabilitation or liquidation proceedings or other    |
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18|delinquency proceedings, pursuant to Sections 1801 through 1920 of     |
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19|this title.  If such insurer does not comply with such requirements,   |
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20|such supervision may continue until such requirements are remedied     |
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21|or until the Commissioner approves or completes pursuit of             |
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22|additional options as provided in the Insurance Code.                  |
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23|    I.  The Commissioner may assess a fine for failure to timely       |
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24|file a written plan of action required under subsection G of this      |
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   Req. No. 8084                                                   Page 5
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 1|section in an amount of not more than Five Hundred Dollars ($500.00)   |
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 2|per day.                                                               |
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 3|    J.  The Insurance Commissioner may promulgate rules to implement   |
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 4|the provisions of this section.                                        |
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 5|    SECTION 2.  This act shall become effective November 1, 2021.      |
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 7|    58-1-8084      AMM    04/07/21                                     |
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   Req. No. 8084                                                   Page 6
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