Z-0445.2  _______________________________________________

 

                         SENATE BILL 5430

          _______________________________________________

 

State of Washington      54th Legislature     1995 Regular Session

 

By Senators Prentice and Hale; by request of Insurance Commissioner

 

Read first time 01/23/95.  Referred to Committee on Financial Institutions & Housing.

 

Regulating the capital and surplus requirements of insurance companies.



    AN ACT Relating to the capital and surplus requirements of insurance companies; amending RCW 48.05.340; and adding new sections to chapter 48.05 RCW.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

 

    NEW SECTION.  Sec. 1.  As used in sections 1 through 13 of this act, these terms have the following meanings:

    (1) "RBC" means risk-based capital.

    (2) "NAIC" means the national association of insurance commissioners.

    (3) "Domestic insurer" means any insurance company domiciled in this state.

    (4) "Foreign or alien insurer" means any insurance company that is licensed to do business in this state under this chapter but is not domiciled in this state.

    (5) "Life and disability insurer" means any insurance company authorized to write only life insurance, disability insurance, or both, as defined in chapter 48.11 RCW.

    (6) "Property and casualty insurer" means any insurance company authorized to write only property insurance, marine and transportation insurance, general casualty insurance, vehicle insurance, or any combination thereof, including disability insurance, as defined in chapter 48.11 RCW.

    (7) "Corrective order" means an order issued by the commissioner specifying corrective actions that the commissioner has determined are required.

    (8) "Negative trend" means, with respect to a life insurer, a disability insurer, or a life and disability insurer, the negative trend over a period of time, as determined in accordance with the trend test calculation included in the RBC instructions.

    (9) "Adjusted RBC report" means an RBC report that has been adjusted by the commissioner in accordance with section 2(5) of this act.

    (10) "RBC instructions" means the RBC report including risk-based capital instructions adopted by the NAIC.

    (11) "RBC level" means an insurer's company action level RBC, regulatory action level RBC, authorized control level RBC, or mandatory control level RBC where:

    (a) "Company action level RBC" means, with respect to any insurer, the product of 2.0 and its authorized control level RBC;

    (b) "Regulatory action level RBC" means the product 1.5 and its authorized control level RBC;

    (c) "Authorized control level RBC" means the number determined under the risk-based capital formula in accordance with the RBC instructions; and

    (d) "Mandatory control level RBC" means the product of .70 and the authorized control level RBC.

    (12) "RBC plan" means a comprehensive financial plan containing the elements specified in section 3(2) of this act.  If the commissioner rejects the RBC plan, and it is revised by the insurer, with or without the commissioner's recommendation, the plan shall be called the "revised RBC plan."

    (13) "RBC report" means the report required in section 2 of this act.

    (14) "Total adjusted capital" means the sum of:

    (a) An insurer's statutory capital and surplus as determined in accordance with statutory accounting applicable to the annual financial statements required to be filed under RCW 48.05.250; and

    (b) Other items, if any, as the RBC instructions may provide.

 

    NEW SECTION.  Sec. 2.  (1) Every domestic insurer shall, on or prior to the filing date, which is hereby established as March 1, prepare and submit to the commissioner a report of its RBC levels as of the end of the calendar year just ended, in a form and containing that information required by the RBC instructions.  In addition, every domestic insurer shall file its RBC report:

    (a) With the NAIC in accordance with the RBC instructions; and

    (b) With the insurance commissioner in any state in which the insurer is authorized to do business, if the insurance commissioner has notified the insurer of its request in writing, in which case the insurer shall file its RBC report not later than the later of:

    (i) Fifteen days from the receipt of notice to file its RBC report with that state; or

    (ii) The filing date.

    (2) A life and disability insurer's RBC shall be determined in accordance with the formula set forth in the RBC instructions.  The formula shall take into account and may adjust for the covariance between:

    (a) The risk with respect to the insurer's assets;

    (b) The risk of adverse insurance experience with respect to the insurer's liabilities and obligations;

    (c) The interest rate risk with respect to the insurer's business; and

    (d) All other business risks and other relevant risks as are set forth in the RBC instructions; determined in each case by applying the factors in the manner set forth in the RBC instructions.

    (3) A property and casualty insurer's RBC shall be determined in accordance with the formula set forth in the RBC instructions.  The formula shall take into account and may adjust for the covariance between:

    (a) Asset risk;

    (b) Credit risk;

    (c) Underwriting risk; and

    (d) All other business risks and other relevant risks as are set forth in the RBC instructions; determined in each case by applying the factors in the manner set forth in the RBC instructions.

    (4) An excess of capital over the amount produced by the RBC requirements and the formulas, schedules, and instructions under sections 1 through 13 of this act is desirable in the business of insurance.  Accordingly, insurers should seek to maintain capital above the RBC levels required.  Additional capital is used and useful in the insurance business and helps to secure an insurer against various risks inherent in, or affecting, the business of insurance and not accounted for or only partially measured by the RBC requirements.

    (5) If a domestic insurer files an RBC report that in the judgment of the commissioner is inaccurate, then the commissioner shall adjust the RBC report to correct the inaccuracy and shall notify the insurer of the adjustment.  The notice shall contain a statement of the reason for the adjustment.

 

    NEW SECTION.  Sec. 3.  (1) "Company action level event" means any of the following events:

    (a) The filing of an RBC report by an insurer indicating that:

    (i) The insurer's total adjusted capital is greater than or equal to its regulatory action level RBC, but less than its company action level RBC; or

    (ii) If a life and disability insurer, the insurer has total adjusted capital that is greater than or equal to its company action level RBC, but less than the product of its authorized control level RBC and 2.5 and has a negative trend;

    (b) The notification by the commissioner to the insurer of an adjusted RBC report that indicates an event in (a) of this subsection, provided the insurer does not challenge the adjusted RBC report under section 7 of this act; or

    (c) If, under section 7 of this act, an insurer challenges an adjusted RBC report that indicates an event in (a) of this subsection, the notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge.

    (2) In the event of a company action level event, the insurer shall prepare and submit to the commissioner an RBC plan that:

    (a) Identifies the conditions that contribute to the company action level event;

    (b) Contains proposals of corrective actions that the insurer intends to take and would be expected to result in the elimination of the company action level event;

    (c) Provides projections of the insurer's financial results in the current year and at least the four succeeding years, both in the absence of proposed corrective actions and giving effect to the proposed corrective actions, including projections of statutory operating income, net income, capital, and surplus.  The projections for both new and renewal business might include separate projections for each major line of business and separately identify each significant income, expense, and benefit component;

    (d) Identifies the key assumptions impacting the insurer's projections and the sensitivity of the projections to the assumptions; and

    (e) Identifies the quality of, and problems associated with, the insurer's business, including but not limited to its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business, and use of reinsurance, if any, in each case.

    (3) The RBC plan shall be submitted:

    (a) Within forty-five days of the company action level event; or

    (b) If the insurer challenges an adjusted RBC report under section 7 of this act, within forty-five days after notification to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge.

    (4) Within sixty days after the submission by an insurer of an RBC plan to the commissioner, the commissioner shall notify the insurer whether the RBC plan may be implemented or is, in the judgment of the commissioner, unsatisfactory.  If the commissioner determines the RBC plan is unsatisfactory, the notification to the insurer shall set forth the reasons for the determination, and may set forth proposed revisions that will render the RBC plan satisfactory.  Upon notification from the commissioner, the insurer shall prepare a revised RBC plan, that may incorporate by reference any revisions proposed by the commissioner, and shall submit the revised RBC plan to the commissioner:

    (a) Within forty-five days after the notification from the commissioner; or

    (b) If the insurer challenges the notification from the commissioner under section 7 of this act, within forty-five days after a notification to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge.

    (5) In the event of a notification by the commissioner to an insurer that the insurer's RBC plan or revised RBC plan is unsatisfactory, the commissioner may, subject to the insurer's rights to a hearing under section 7 of this act, specify in the notification that the notification constitutes a regulatory action level event.

    (6) Every domestic insurer that files an RBC plan or revised RBC plan with the commissioner shall file a copy of the RBC plan or revised RBC plan with the insurance commissioner in any state in which the insurer is authorized to do business if:

    (a) The state has an RBC provision substantially similar to section 8(1) of this act; and

    (b) The insurance commissioner of that state has notified the insurer of its request for the filing in writing, in which case the insurer shall file a copy of the RBC plan or revised RBC plan in that state no later than the later of:

    (i) Fifteen days after the receipt of notice to file a copy of its RBC plan or revised plan with the state; or

    (ii) The date on which the RBC plan or revised RBC plan is filed under subsections (3) and (4) of this section.

 

    NEW SECTION.  Sec. 4.  (1) "Regulatory action level event" means, with respect to any insurer, any of the following events:

    (a) The filing of an RBC report by the insurer indicating that the insurer's total adjusted capital is greater than or equal to its authorized control level RBC but less than its regulatory action level RBC;

    (b) The notification by the commissioner to an insurer of an adjusted RBC report that indicates the event in (a) of this subsection, provided the insurer does not challenge the adjusted RBC report under section 7 of this act;

    (c) If, under section 7 of this act, the insurer challenges an adjusted RBC report that indicates the event in (a) of this subsection, the notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge;

    (d) The failure of the insurer to file an RBC report by the filing date, unless the insurer has provided an explanation for such failure that is satisfactory to the commissioner and has cured the failure within ten days after the filing date;

    (e) The failure of the insurer to submit an RBC plan to the commissioner within the time period set forth in section 3(3) of this act;

    (f) Notification by the commissioner to the insurer that:

    (i) The RBC plan or revised RBC plan submitted by the insurer is, in the judgment of the commissioner, unsatisfactory; and

    (ii) The notification constitutes a regulatory action level event with respect to the insurer, provided the insurer has not challenged the determination under section 7 of this act;

    (g) If, under section 7 of this act, the insurer challenges a determination by the commissioner under (f) of this subsection, the notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the challenge;

    (h) Notification by the commissioner to the insurer that the insurer has failed to adhere to its RBC plan or revised RBC plan, but only if the failure has a substantial adverse effect on the ability of the insurer to eliminate the company action level event in accordance with its RBC plan or revised RBC plan and the commissioner has so stated in the notification, provided the insurer has not challenged the determination under section 7 of this act; or

    (i) If, under section 7 of this act, the insurer challenges a determination by the commissioner under (h) of this subsection, the notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the challenge.

    (2) In the event of a regulatory action level event the commissioner shall:

    (a) Require the insurer to prepare and submit an RBC plan or, if applicable, a revised RBC plan;

    (b) Perform the examination or analysis the commissioner deems necessary of the assets, liabilities, and operations of the insurer including a review of its RBC plan or revised RBC plan; and

    (c) Subsequent to the examination or analysis, issue an order specifying those corrective actions the commissioner determines are required.

    (3) In determining corrective actions, the commissioner may take into account those factors deemed relevant with respect to the insurer based upon the commissioner's examination or analysis of the assets, liabilities, and operations of the insurer, including, but not limited to, the results of any sensitivity tests undertaken under the RBC instructions.  The RBC plan or revised RBC plan shall be submitted:

    (a) Within forty-five days after the occurrence of the regulatory action level event;

    (b) If the insurer challenges an adjusted RBC report under section 7 of this act, and the challenge is not frivolous in the judgment of the commissioner, within forty-five days after the notification to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge; or

    (c) If the insurer challenges a revised RBC plan under section 7 of this act, and the challenge is not frivolous in the judgment of the commissioner, within forty-five days after the notification to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge.

    (4) The commissioner may retain actuaries and investment experts and other consultants as may be necessary in the judgment of the commissioner to review the insurer's RBC plan or revised RBC plan, examine or analyze the assets, liabilities, and operations of the insurer and formulate the corrective order with respect to the insurer.  The fees, costs, and expenses relating to consultants shall be borne by the affected insurer or other party as directed by the commissioner.

 

    NEW SECTION.  Sec. 5.  (1) "Authorized control level event" means any of the following events:

    (a) The filing of an RBC report by the insurer indicating that the insurer's total adjusted capital is greater than or equal to its mandatory control level RBC but less than its authorized control level RBC;

    (b) The notification by the commissioner to the insurer of an adjusted RBC report that indicates the event in (a) of this subsection, provided the insurer does not challenge the adjusted RBC report under section 7 of this act;

    (c) If, under section 7 of this act, the insurer challenges an adjusted RBC report that indicates the event in (a) of this subsection, notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge;

    (d) The failure of the insurer to respond, in a manner satisfactory to the commissioner, to a corrective order, provided the insurer has not challenged the corrective order under section 7 of this act; or

    (e) If the insurer has challenged a corrective order under section 7 of this act and the commissioner has, after a hearing, rejected the challenge or modified the corrective order, the failure of the insurer to respond, in a manner satisfactory to the commissioner, to the corrective order subsequent to rejection or modification by the commissioner.

    (2) In the event of an authorized control level event with respect to an insurer, the commissioner shall:

    (a) Take those actions required under section 4 of this act regarding an insurer with respect to which a regulatory action level event has occurred; or

    (b) If the commissioner deems it to be in the best interests of the policyholders and creditors of the insurer and of the public, take those actions necessary to cause the insurer to be placed under regulatory control under chapter 48.31 RCW.  In the event the commissioner takes these actions, the authorized control level event is sufficient grounds for the commissioner to take action under chapter 48.31 RCW, and the commissioner has the rights, powers, and duties with respect to the insurer as are set forth in chapter 48.31 RCW.  In the event the commissioner takes actions under this subsection pursuant to an adjusted RBC report, the insurer is entitled to those protections afforded to insurers under RCW 48.31.121 pertaining to summary proceedings.

 

    NEW SECTION.  Sec. 6.  (1) "Mandatory control level event" means any of the following events:

    (a) The filing of an RBC report indicating that the insurer's total adjusted capital is less than its mandatory control level RBC;

    (b) Notification by the commissioner to the insurer of an adjusted RBC report that indicates the event in (a) of this subsection, provided the insurer does not challenge the adjusted RBC report under section 7 of this act; or

    (c) If, under section 7 of this act, the insurer challenges an adjusted RBC report that indicates the event in (a) of this subsection, notification by the commissioner to the insurer that the commissioner has, after a hearing, rejected the insurer's challenge.

    (2) In the event of a mandatory control level event:

    (a) With respect to a life and disability insurer, the commissioner shall take those actions necessary to place the insurer under regulatory control under chapter 48.31 RCW.  In that event, the mandatory control level event is sufficient grounds for the commissioner to take action under chapter 48.31 RCW, and the commissioner has the rights, powers, and duties with respect to the insurer as are set forth in chapter 48.31 RCW.  If the commissioner takes actions pursuant to an adjusted RBC report, the insurer is entitled to the protections of RCW 48.31.121 pertaining to summary proceedings.  However, the commissioner may forego action for up to ninety days after the mandatory control level event if the commissioner finds there is a reasonable expectation that the mandatory control level event may be eliminated within the ninety-day period.

    (b) With respect to a property and casualty insurer, the commissioner shall take those actions necessary to place the insurer under regulatory control under chapter 48.31 RCW, or, in the case of an insurer that is writing no business and that is running-off its existing business, may allow the insurer to continue its run-off under the supervision of the commissioner.  In either event,the mandatory control level event is sufficient grounds for the commissioner to take action under chapter 48.31 RCW and the commissioner has the rights, powers, and duties with respect to the insurer as are set forth in chapter 48.31 RCW.  If the commissioner takes actions pursuant to an adjusted RBC report, the insurer is entitled to the protections of RCW 48.31.121 pertaining to summary proceedings.  However, the commissioner may forego action for up to ninety days after the mandatory control level event if the commissioner finds there is a reasonable expectation that the mandatory control level event may be eliminated within the ninety-day period.

 

    NEW SECTION.  Sec. 7.  (1) Upon notification to an insurer by the commissioner of any of the following, the insurer shall have the right to a hearing, in accordance with chapters 48.04 and 34.05 RCW, at which the insurer may challenge any determination or action by the commissioner:

    (a) Of an adjusted RBC report; or

    (b)(i) That the insurer's RBC plan or revised RBC plan is unsatisfactory; and

    (ii) The notification constitutes a regulatory action level event with respect to such insurer; or

    (c) That the insurer has failed to adhere to its RBC plan or revised RBC plan and that such failure has a substantial adverse effect on the ability of the insurer to eliminate the company action level event with respect to the insurer in accordance with its RBC plan or revised RBC plan; or

    (d) Of a corrective order with respect to the insurer.

    (2) The insurer shall notify the commissioner of its request for a hearing within five days after the notification by the commissioner under this section.  Upon receipt of the insurer's request for a hearing, the commissioner shall set a date for the hearing.  The date shall be no less than ten nor more than thirty days after the date of the insurer's request.

 

    NEW SECTION.  Sec. 8.  (1) All RBC reports, to the extent the information is not required to be set forth in a publicly available annual statement schedule, and RBC plans, including the results or report of any examination or analysis of an insurer and any corrective order issued by the commissioner, with respect to any domestic insurer or foreign insurer that are filed with the commissioner constitute information that might be damaging to the insurer if made available to its competitors, and therefore shall be kept confidential by the commissioner.  This information shall not be made public or be subject to subpoena, other than by the commissioner and then only for the purpose of enforcement actions taken by the commissioner.

    (2) The comparison of an insurer's total adjusted capital to any of its RBC levels is a regulatory tool that may indicate the need for possible corrective action with respect to the insurer, and is not a means to rank insurers generally.  Therefore, except as otherwise required under the provisions of sections 1 through 13 of this act, the making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio or television station, or in any other way, an advertisement, announcement, or statement containing an assertion, representation, or statement with regard to the RBC levels of any insurer, or of any component derived in the calculation, by any insurer, agent, broker, or other person engaged in any manner in the insurance business would be misleading and is therefore prohibited.  However, if any materially false statement with respect to the comparison regarding an insurer's total adjusted capital to its RBC levels, or any of them, or an inappropriate comparison of any other amount to the insurer's RBC levels is published in any written publication and the insurer is able to demonstrate to the commissioner with substantial proof the falsity of such statement, or the inappropriateness, as the case may be, then the insurer may publish an announcement in a written publication if the sole purpose of the announcement is to rebut the materially false statement.

    (3) The RBC instructions, RBC reports, adjusted RBC reports, RBC plans, and revised RBC plans are solely for use by the commissioner in monitoring the solvency of insurers and the need for possible corrective action with respect to insurers and shall not be used by the commissioner for ratemaking nor considered or introduced as evidence in any rate proceeding nor used by the commissioner to calculate or derive any elements of an appropriate premium level or rate of return for any line of insurance that an insurer or any affiliate is authorized to write.

 

    NEW SECTION.  Sec. 9.  (1) The provisions of sections 1 through 13 of this act are supplemental to any other provisions of the laws of this state, and shall not preclude or limit any other powers or duties of the commissioner under those laws, including, but not limited to, chapter 48.31 RCW.

    (2) The commissioner may exempt any domestic property and casualty insurer from sections 1 through 13 of this act, if the insurer:

    (a) Writes direct business only in this state;

    (b) Writes direct annual premiums of two million dollars or less; and

    (c) Assumes no reinsurance in excess of five percent of direct premiums written.

 

    NEW SECTION.  Sec. 10.  (1) Any foreign or alien insurer shall, upon the written request of the commissioner, submit to the commissioner an RBC report as of the end of the calendar year just ended by the later of:

    (a) The date an RBC report would be required to be filed by a domestic insurer under section 2 of this act; or

    (b) Fifteen days after the request is received by the foreign or alien insurer.  Any foreign or alien insurer shall, at the written request of the commissioner, promptly submit to the commissioner a copy of any RBC plan that is filed with the insurance commissioner of any other state.

    (2) In the event of a company action level event, regulatory action level event, or authorized control level event with respect to any foreign or alien insurer as determined under the RBC statute applicable in the state of domicile of the insurer or, if no RBC statute is in force in that state, under the provisions of sections 1 through 13 of this act, if the insurance commissioner of the state of domicile of the foreign or alien insurer fails to require the foreign or alien insurer to file an RBC plan in the manner specified under that state's RBC statute, the commissioner may require the foreign or alien insurer to file an RBC plan.  In this event, the failure of the foreign or alien insurer to file an RBC plan is grounds to order the insurer to cease and desist from writing new insurance business in this state.

    (3) In the event of a mandatory control level event with respect to any foreign or alien insurer, if no domiciliary receiver has been appointed with respect to the foreign or alien insurer under the rehabilitation and liquidation statute applicable in the state of domicile of the foreign or alien insurer, the commissioner may apply for an order under RCW 48.31.080 or 48.31.090 to conserve the assets within this state of foreign or alien insurers, and the occurrence of the mandatory control level event is considered adequate grounds for the application.

 

    NEW SECTION.  Sec. 11.  There is no liability on the part of, and no cause of action may arise against, the commissioner or insurance department or its employees or agents for any action taken by them in the performance of their powers and duties under sections 1 through 13 of this act.

 

    NEW SECTION.  Sec. 12.  All notices by the commissioner to an insurer that may result in regulatory action are effective upon dispatch if transmitted by registered or certified mail, or in the case of any other transmission are effective upon the insurer's receipt of the notice.

 

    NEW SECTION.  Sec. 13.  For RBC reports required by property and casualty insurers for 1995, the following requirements apply in lieu of sections 3 through 6 of this act:

    (1) In the event of a company action level event with respect to a domestic insurer, the commissioner shall take no regulatory action.

    (2) In the event of a regulatory action level event under section 4(1) (a), (b), or (c) of this act the commissioner shall take the actions required under section 3 of this act.

    (3) In the event of a regulatory action level event under section 4(1) (d), (e), (f), (g), (h), or (i) of this act or an authorized control level event, the commissioner shall take the actions required under section 4 of this act.

    (4) In the event of a mandatory control level event with respect to an insurer, the commissioner shall take the actions required under section 5 of this act.

 

    Sec. 14.  RCW 48.05.340 and 1994 c 171 s 1 are each amended to read as follows:

    (1) Subject to RCW 48.05.350 and 48.05.360 to qualify for authority to transact any one kind of insurance as defined in chapter 48.11 RCW or combination of kinds of insurance as shown below, a foreign or alien insurer, whether stock or mutual, or a domestic insurer hereafter formed shall possess unimpaired paid-in capital stock, if a stock insurer, or unimpaired surplus if a mutual insurer, and additional funds in surplus, as follows, and shall thereafter maintain unimpaired a combined total of:  (a) The paid-in capital stock if a stock insurer or surplus if a mutual insurer, plus (b) such additional funds in surplus equal to the total of the following initial requirements:

 

                                   Paid-in capital

    Kind or kinds                   stock or             Additional

    of insurance                   basic surplus            surplus 

Life .............................        $2,000,000     $2,000,000

Disability........................      2,000,000         2,000,000

Life and disability ..............      2,400,000         2,400,000

Property..........................      2,000,000         2,000,000

Marine & transportation  .............                   2,000,000........................ 2,000,000

General casualty...................... 2,400,000         2,400,000

Vehicle...........................      2,000,000         2,000,000

Surety............................      2,000,000         2,000,000

Any two of the following

    kinds of insurance:

    Property,  marine &

    transportation, general

    casualty, vehicle,

    surety, disability..................... 3,000,000    3,000,000

Multiple lines (all insurances

    except life and title

    insurance) ............................ 3,000,000    3,000,000

Title (in  accordance with the

    provisions of chapter 48.29 RCW)

 

    (2) Capital and surplus requirements are based upon all the kinds of insurance transacted by the insurer wherever it may operate or propose to operate, whether or not only a portion of such kinds are to be transacted in this state.

    (3) Until December 31, 1996, a foreign or alien insurer holding a certificate of authority to transact insurance in this state immediately prior to June 9, 1994, may continue to be authorized to transact the same kinds of insurance as long as it is otherwise qualified for such authority.  A domestic insurer holding a certificate of authority to transact insurance in this state immediately prior to June 9, 1994, may continue to be authorized to transact the same kinds of insurance as long as it is otherwise qualified for such an authority and thereafter maintains unimpaired the amount of paid-in capital stock, if a stock insurer, or basic surplus, if a mutual or reciprocal insurer, and special or additional surplus as required of it under laws in force immediately prior to June 9, 1994.

    (((4) The commissioner may, by rule, require insurers to maintain additional capital and surplus based upon the type, volume, and nature of insurance business transacted consistent with the methods then adopted by the National Association of Insurance Commissioners for determining the appropriate amount of additional capital and surplus to be required.  In the absence of an applicable rule, the commissioner may, after a hearing or with the consent of the insurer, require an insurer to have and maintain a larger amount of capital or surplus than prescribed under this section or the rules under this section, based upon the volume and kinds of insurance transacted by the insurer and on the principles of risk-based capital as determined by the National Association of Insurance Commissioners.  This subsection applies only to insurers authorized to write life insurance, disability insurance, or both.))

 

    NEW SECTION.  Sec. 15.  If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

 

    NEW SECTION.  Sec. 16.  Sections 1 through 13 of this act are each added to chapter 48.05 RCW.

 


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