HB56 Alabama 2014 Session

Summary

Primary Sponsor

Mike Hill

Republican

Session

Regular Session 2014

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

HB56 would overhaul Alabama's Insurance Holding Company System Regulation to align with the NAIC model, adding enterprise risk assessment, stronger pre-acquisition oversight, consolidated hearings, and enhanced penalties and oversight.

What This Bill Does

If passed, HB56 would require insurers that are part of holding company systems to register with the state and report enterprise-wide risk; it would give the Insurance Commissioner new powers to review and potentially block acquisitions, including pre-acquisition notices and consolidated hearings with other states; it would tighten rules around extraordinary dividends and affiliate transactions and increase penalties for violations; and it would authorize the Commissioner to participate in supervisory colleges for insurers with international operations and establish new recovery rights for receivers in liquidation.

Who It Affects

• Domestic insurers that are members of an Insurance Holding Company System would face new registration, reporting, enterprise risk assessment, governance oversight, and potential penalties, as well as heightened scrutiny of acquisitions and dividend payments.
• Insurance holding companies and their affiliates (including parent companies and non-insurance entities) would face expanded reporting requirements, pre-acquisition notification duties, enforcement powers, potential liability for distributions, and participation in supervisory activities.

Key Provisions

• Adds enterprise risk assessment for the entire insurance holding company system, including non-insurance affiliates.
• Requires pre-acquisition notification to the Commissioner and allows the Commissioner to disapprove acquisitions; may allow consolidated hearings with other state regulators.
• Defines extraordinary dividends as the lesser of 10 percent of surplus or the calendar year's net gain; requires 30-day notice to the Commissioner and reporting before payment.
• Authorizes the Commissioner to participate in supervisory colleges for domestic insurers with international operations to ensure compliance.
• Increases penalties for violations, including daily fines up to 1,000, civil forfeitures up to 10,000 per violation, and criminal penalties up to five years or 50,000, plus penalties for false statements.
• Provides recovery rights for a receiver to recover distributions paid to parent or affiliate within the year preceding liquidation, with limitations and joint/several liability where applicable.
• Expands insurer registration requirements, including information on affiliates, transactions, governance, and an annual enterprise risk report; allows consolidated filings when appropriate.
• Adds new definitions ( Acquisition and Involved Insurer) and creates new sections (27-29-3.1, 27-29-6.1, 27-29-11.1) to implement these provisions.
• Exempts the bill from local expenditure requirements under Amendment 621 due to the creation or modification of crimes, with a noted exception.
• Takes effect on January 1 following enactment.

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