HB614 Alabama 2013 Session

Summary

Primary Sponsor

Mike Hill

Republican

Session

Regular Session 2013

Title

Insurance Department, insurance holding companies, regulation further provided for, purpose to conform with National Association of Insurance Commissioners, model act, Secs. 10A-20-6.16, 27-21A-23, 27-29-1 to 27-29-7, inclusive, 27-29-10, 27-34-54 am'd.; Secs. 27-29-3.1, 27-29-6.1, 27-29-11.1 added

Summary

HB614 would align Alabama's Insurance Holding Company regulations with the NAIC model, expand regulator oversight of enterprise risk across holding company systems, tighten acquisition and dividend rules, and add penalties and receiver rights.

What This Bill Does

It requires a system-wide enterprise risk assessment that includes non-insurance affiliates and allows the Insurance Commissioner to participate in supervisory colleges for insurers with international operations. It enables consolidated public hearings for proposed acquisitions involving Alabama-domiciled insurers when approvals from other states are needed, requires pre-acquisition notice in certain cases, and gives the Commissioner power to disapprove acquisitions or impose conditions. It tightens rules for extraordinary dividends, increases penalties for violations, and creates new recovery rights for receivers to claw back certain distributions. It also expands reporting, registration, and examination powers and adds enhanced information sharing with other regulators.

Who It Affects

• Insurers domiciled in Alabama that are members of an insurance holding company system would face new enterprise risk requirements, expanded reporting, dividend restrictions, and potential penalties for noncompliance.
• Officers, directors, and employees of these insurers and their holding companies would be subject to higher penalties, civil forfeitures, and possible criminal penalties for willful violations.
• Ultimate controlling persons and parent corporations in holding company systems could be liable for recovery of certain distributions and would face enhanced regulatory scrutiny in acquisitions and governance.
• Policyholders, creditors, and the public would benefit from stronger oversight of enterprise risk, capital adequacy, and protections in corporate transactions.
• Receivers appointed to liquidate or rehabilitate insurers would gain new recovery rights against controlling entities for distributions or related payments made before liquidation.
• Regulators and the public would see expanded information sharing, cross-state supervisory colleges, and coordinated investigations.

Key Provisions

• Aligns Alabama's Insurance Holding Company System Regulation with the latest NAIC Model Act, adding enterprise risk assessment across the whole holding company system, including non-insurance affiliates.
• Permits the commissioner to participate in supervisory colleges for domestic insurers that are part of international holding companies to ensure compliance.
• Allows public hearings for proposed acquisitions to be held on a consolidated basis with other state regulators when multi-state approvals are involved; requires pre-acquisition notification and gives the commissioner authority to disapprove transactions or impose conditions.
• Redefines extraordinary dividends as the lesser of 10 percent of the insurer's surplus or the calendar year's net gains, and requires notice and potential disapproval before those payments.
• Imposes stronger penalties for violations, including daily fines for failure to file registrations, civil forfeitures for officers/directors, and criminal penalties for willful falsification or deceit.
• Creates recovery rights for receivers to recover certain distributions paid to parent companies or controlling persons in the year prior to liquidation or rehabilitation, with specified limits and exceptions.
• Expands registration and reporting requirements, including annual enterprise risk reports by ultimate controlling persons and detailed information about affiliates, transactions, and governance.
• Strengthens regulation of affiliate transactions, requiring fair terms, proper allocation of expenses, and notification to the commissioner for significant affiliate arrangements and changes.
• Enhances examination powers, allowing the commissioner to order examinations of insurers and affiliates on a consolidated basis and to use consultants, with costs charged to the insurer.
• Establishes definitions and procedures for acquisitions (27-29-3.1 and 27-29-11.1) and expands authority to review and regulate changes in control, including pre-acquisition notifications and waiting periods.
• Permits information sharing with NAIC and other regulators under strict confidentiality rules, and requires written agreements to govern sharing and use of confidential information.
• Section 4 clarifies that the bill is exempt from local expenditure requirements under Amendment 621 and specifies that the act defines new or amended crimes rather than creating new local expenditures.
• Effective date: the act would become effective on January 1 following its passage and approval.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Insurance