HB78 Alabama 2022 Session

Summary

Primary Sponsor

Kerry Rich

Republican

Session

Regular Session 2022

Title

Insurance Dept., life and annuity policies, standard nonforfeiture law for individual deferred annuities, group capital calculation and stress test, providing for holding companies, duties to Commission and lead state commissioner, small company alternative valuation provision, exemptions, exemption premium based on valuation manual of NAIC, Commissioner of Insurance may regulate by rule, Secs. 27-15-28.2, 27-29-1, 27-29-3, 27-29-4, 27-29-7, 27-36A-20 am'd.

Description

Under existing law, the standard nonforfeiture law for individual deferred annuities requires a minimum interest rate on individual deferred annuities of one percent.

This bill would set the minimum interest rate for individual deferred annuities at 15 basis points (0.15%).

This bill would exempt contingent deferred annuities from the standard nonforfeiture law for individual deferred annuities and authorize the Commissioner of Insurance to prescribe by rule the nonforfeiture benefits for contingent deferred annuities.

Under existing law, the Commissioner of Insurance regulates insurance holding company systems pursuant to the Insurance Holding Company System Regulatory Act. The members of an insurance holding company system are required to meet certain capital and liquidity requirements to protect the solvency of the insurers within the holding company. Based on reporting to the commissioner, the commissioner performs group analysis of an insurance holding company, but without the benefit of a consolidated statutory accounting system and financial statements.

This bill would provide for a group capital calculation and related reporting requirements to the Commissioner of Insurance regarding an insurance holding company. The group capital calculation would include a group capital ratio.

This bill would further provide for a liquidity stress test of an insurance holding company. The ultimate controlling person of every insurer subject to holding company registration, if determined to meet certain conditions, would be required to file the results of a specific year's liquidity stress test to the lead state insurance commissioner to assist in the group regulation of the insurance holding company.

This bill would further provide for the confidentiality of information in the possession of the Commissioner of Insurance and third party consultants designated by the commissioner relating to insurance holding company regulation and would include the group capital calculation and resulting group capital ratio and the liquidity stress test and its results and supporting documentation as filed with the commissioner within the confidentiality provisions.

Also under existing law, the Standard Valuation Law requires the Commissioner of Insurance to annually value the reserves for outstanding life insurance policies and annuity and endowment contracts of life insurance companies doing business in this state. The law provides for an alternative valuation for small companies that meet certain conditions, including certain dollar figures of premiums.

This bill would revise the conditions for the Commissioner of Insurance to use the small company alternative valuation provisions for the valuation of the reserves of certain small companies meeting certain requirements.

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Subjects

Insurance