§8303. Company action level event

Link to law: http://legislature.vermont.gov/statutes/section/08/159/08303
Published: 2015

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Title

08

:
Banking and Insurance






Chapter

159

:
RISK BASED CAPITAL FOR INSURERS











 

§

8303. Company action level event

(a)

"Company action level event" means any of the following events:

(1) The filing

of a risk based capital report by an insurer which indicates that:

(A) the

insurer's total adjusted capital is greater than or equal to its regulatory

action level risk based capital but less than its company action level risk

based capital;

(B) if a life or

health insurer or a fraternal benefit society, the insurer or society has total

adjusted capital which is greater than or equal to its company action level

risk based capital but less than the product of its authorized control level

risk based capital and 3.0 and has a negative trend; or

(C) if a

property and casualty insurer, the insurer has total adjusted capital which is

greater than or equal to its company action level risk based capital but less

than the product of its authorized control level risk based capital and 3.0 and

triggers the trend test determined in accordance with the trend test

calculation included in the property and casualty risk based capital

instructions.

(2) The

notification by the Commissioner to the insurer of an adjusted risk based

capital report that indicates an event in subdivision (1) of this subsection,

provided the insurer does not challenge the adjusted risk based capital report

under section 8307 of this title.

(3) If, under

section 8307 of this title, an insurer challenges an adjusted risk based

capital report that indicates the event in subdivision (1) of this subsection,

the notification by the Commissioner to the insurer that the Commissioner has,

after a hearing, rejected the insurer's challenge.

(b) An insurer

shall prepare and submit to the Commissioner a risk based capital plan within

45 days of filing a risk based capital report or within 45 days of a final

adjusted risk based capital report showing a company action level event. The

risk based capital plan shall be a comprehensive financial plan and shall:

(1) identify the

conditions in the insurer which contribute to the company action level event;

(2) contain

proposals of corrective actions which the insurer intends to take that would

result in the elimination of the company action level event;

(3) provide

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 should include separate projections for each

major line of business and separately identify each significant income,

expense, and benefit component;

(4) identify the

key assumptions impacting the insurer's projections and the sensitivity of the

projections to the assumptions; and

(5) identify the

quality of, and problems associated with, the insurer's business, including its

assets, anticipated business growth and associated surplus strain,

extraordinary exposure to risk, mix of business, and use of reinsurance.

(c) The

Commissioner shall notify the insurer whether the proposed risk based capital

plan is approved within 60 days of its submission. If the Commissioner

disapproves the plan, the notice shall set forth the reasons for the

disapproval and may notify the insurer of revisions which will render the risk

based capital plan satisfactory to the Commissioner. Upon notice that a

proposed plan is disapproved, the insurer shall prepare and submit a revised

risk based capital plan within 45 days of the Commissioner's notice of

disapproval or, if the Commissioner's notice of disapproval is appealed under

section 8307 of this title, within 45 days of a Commissioner's determination

adverse to the insurer.

(d) In the event

of a notification by the Commissioner to an insurer that the insurer's risk

based capital plan or revised risk based capital plan is unsatisfactory, the

Commissioner may at the Commissioner's discretion, subject to the insurer's

right to a hearing under section 8307 of this title, specify in the

notification that the notification constitutes a regulatory action level event.

(e) Each

domestic insurer required to file a risk based capital plan or revised risk

based capital plan under this section shall file a copy of the plan with the

insurance commissioner in any state in which the insurer is authorized to do

business if:

(1) such state

has a provision that is substantially similar to section 8308 of this title;

and

(2) the

insurance commissioner of that state has notified the insurer of its request

for the filing in writing. Plans required to be filed under this subdivision

shall be filed no later than the later of:

(A) 15 days

after notice to file a copy of its risk based capital plan or revised risk

based capital plan with the state; or

(B) the date on

which the risk based capital plan or revised risk based capital plan is

required to be filed under section 8304 of this title. (Added 1993, No. 235

(Adj. Sess.), § 8, eff. June 21, 1994; amended 2009, No. 137 (Adj. Sess.), §

15; 2013, No. 29, § 38, eff. May 13, 2013.)
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