Regular Session 2021-2022 Senate Bill 1222 P.N. 1646

PRINTER'S NO. 1646

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

1222

Session of

2022

INTRODUCED BY DiSANTO, STREET, PHILLIPS-HILL, CAPPELLETTI,

PITTMAN, FONTANA AND KANE, MAY 16, 2022

REFERRED TO BANKING AND INSURANCE, MAY 16, 2022

AN ACT

Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An

act relating to insurance; amending, revising, and

consolidating the law providing for the incorporation of

insurance companies, and the regulation, supervision, and

protection of home and foreign insurance companies, Lloyds

associations, reciprocal and inter-insurance exchanges, and

fire insurance rating bureaus, and the regulation and

supervision of insurance carried by such companies,

associations, and exchanges, including insurance carried by

the State Workmen's Insurance Fund; providing penalties; and

repealing existing laws," in insurance holding companies,

further providing for definitions, for acquisition of control

of or merger or consolidation with domestic insurer and for

registration of insurers, providing for group capital

calculation exemptions, further providing for standards and

management of an insurer within an insurance holding company

system, for group-wide supervision for international

insurance groups and for confidential treatment and providing

for compliance with group capital calculation and liquidity

stress test requirements.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Section 1401 of the act of May 17, 1921 (P.L.682,

No.284), known as The Insurance Company Law of 1921, is amended

by adding definitions to read:

Section 1401. Definitions.--As used in this article, and for

the purposes of this article only, the following words and

phrases shall have the meanings given to them in this section:

* * *

"Group-wide supervisor." The regulatory official authorized

to engage in conducting and coordinating group-wide supervision

activities who is determined or acknowledged by the department

under section 1406.2 to have sufficient significant contacts

with an internationally active insurance group.

* * *

"Internationally active insurance group." An insurance

holding company system that:

(1) Includes an insurer registered under section 1404.

(2) Meets each of the following criteria:

(i) Has premiums written in at least three countries.

(ii) Has as the percentage of the gross premiums written

outside the United States at least ten per centum (10%) of the

insurance holding company system's total gross written premiums.

(iii) Based on a three-year rolling average, has total

assets of at least fifty billion dollars ($50,000,000,000) or

total gross written premiums of at least ten billion dollars

($10,000,000,000).

"Lead state." The state responsible for coordination and

communication among state regulators regarding oversight of an

insurance group, as determined by the department in consultation

with other regulators with domestic insurers in the insurance

group.

* * *

"NAIC liquidity stress test framework." A separate NAIC

publication that includes the following information as adopted

by the NAIC and as amended by the NAIC from time to time in

accordance with the procedures adopted by the NAIC:

20220SB1222PN1646 - 2 -

(1) A history of the NAIC's development of regulatory

liquidation stress testing.

(2) The scope criteria applicable for a specific data year.

(3) The liquidity stress test instructions and reporting

templates for a specific data year.

(4) The scope criteria, instructions and reporting

templates.

* * *

"Scope criteria." As detailed in the NAIC liquidity stress

test framework, the designated exposure bases, along with

minimum magnitudes, for the specified data year which are used

to establish a preliminary list of insurers considered scoped

into the NAIC liquidity stress test framework for that data

year.

* * *

Section 2. Sections 1402(b)(11.1) and 1404(a)(1), (d) and

(k.1) of the act are amended to read:

Section 1402. Acquisition of Control of or Merger or

Consolidation with Domestic Insurer.--* * *

(b) The statement to be filed with the department under this

section shall be made under oath or affirmation and shall

contain the following information:

* * *

(11.1) An agreement by the person required to file the

statement referred to in subsection (a) that it will provide the

annual enterprise risk report specified in section [1404(k.1)]

1404(k.1)(1) as long as control exists.

* * *

Section 1404. Registration of Insurers.--(a) (1) Every

insurer which is authorized to do business in this Commonwealth

20220SB1222PN1646 - 3 -

and which is a member of an insurance holding company system

shall register with the department, except a foreign insurer

subject to registration requirements and standards adopted by

statute or regulation in the jurisdiction of its domicile which

are substantially similar to those contained in this section and

section 1405(a)(1) and (2), (b) and [(d)] (d)(1). Each

registered insurer shall keep current the information required

to be disclosed in its registration statement by reporting all

material changes or additions within fifteen (15) days after the

end of the month in which it learns of each such change or

addition.

* * *

(d) (1) No information need be disclosed on the

registration statement filed pursuant to subsection (b) if such

information is not material for the purposes of this section.

(2) Unless the department by regulation or order provides

otherwise, sales, purchases, exchanges, loans or extensions of

credit, investments or guarantees involving one-half of one per

centum (0.5%) or less of an insurer's admitted assets as of the

thirty-first day of December next preceding shall not be deemed

material for purposes of this section.

(3) Paragraph (2) does not apply to the group capital

calculation or the liquidity stress test framework.

* * *

(k.1) (1) The ultimate controlling person of every insurer

subject to registration shall also file an annual enterprise

risk report. The report must, to the best of the ultimate

controlling person's knowledge and belief, identify the material

risks within the insurance holding company system that could

pose enterprise risk to the insurer. The report must be filed

20220SB1222PN1646 - 4 -

with the lead state regulator of the insurance holding company

system as determined by the procedures within the Financial

Analysis Handbook adopted by the NAIC. Beginning in 2014, and

every year thereafter, the report shall be filed by March 31 for

the previous calendar year.

(2) Except as provided in paragraph (3), the ultimate

controlling person of every insurer subject to registration

shall concurrently file with the registration an annual group

capital calculation report as directed by the lead state

regulator of the insurance holding company system. The report

shall be completed in accordance with the NAIC group capital

calculation instructions, which may permit the lead state

regulator to allow a controlling person that is not the ultimate

controlling person to file the group capital calculation. The

report shall be filed with the lead state regulator of the

insurance holding company system as directed by the commissioner

in accordance with the procedures outlined in the Financial

Analysis Handbook adopted by the NAIC.

(3) The following insurance holding company systems are not

required to file the group capital calculation:

(i) An insurance holding company system that has only one

insurer within the insurance holding company system structure,

only writes business in a domestic state and is only licensed in

a domestic state and assumes no business from any other insurer.

(ii) An insurance holding company system that is required to

perform a group capital calculation specified by the Federal

Reserve Board. The commissioner shall request the calculation

from the Federal Reserve Board under the terms of information

sharing agreements in effect. If the Federal Reserve Board

cannot share the calculation with the commissioner, the

20220SB1222PN1646 - 5 -

insurance holding company system is not exempt from the group

capital calculation filing.

(iii) An insurance holding company system whose group-wide

supervisor is located within a reciprocal jurisdiction as

defined in section 319.3(k) that recognizes the United States'

state regulatory approach to group supervision and group

capital.

(iv) An insurance holding company system:

(A) That provides information to the lead state regulator

that meets the requirements for accreditation under the NAIC

financial standards and accreditation program, either directly

or indirectly through the group-wide supervisor, who has

determined the information is satisfactory to allow the lead

state regulator to comply with the NAIC group supervision

approach, as detailed in the NAIC Financial Analysis Handbook.

(B) Whose group-wide supervisor, located outside the United

States and not in a reciprocal jurisdiction as defined in

section 319.3(k), recognizes and accepts the group capital

calculation as the worldwide group capital assessment for United

States insurance groups who operate in that reciprocal

jurisdiction.

(4) Notwithstanding paragraph (3)(iii) and (iv), the

commissioner, as the lead state regulator, shall require the

group capital calculation for United States based operations of

any non-United-States-based insurance holding company system

where, after necessary consultation with other supervisors or

officials, the group capital calculation is deemed appropriate

by the lead state regulator for prudential oversight and

solvency monitoring purposes or for ensuring the competitiveness

of the insurance marketplace.

20220SB1222PN1646 - 6 -

(5) In addition to and notwithstanding the entities

described in paragraph (3), the commissioner, as the lead state

regulator, has the discretion to exempt the ultimate controlling

person from filing the annual group capital calculation or

accept a limited group capital filing or report in accordance

with criteria specified in section 1404.1.

(6) If the commissioner, as the lead state regulator,

determines that an insurance holding company system no longer

meets one or more of the requirements of paragraph (3), the

insurance holding company system shall file the group capital

calculation at the next annual filing date unless given an

extension by the lead state regulator based on reasonable

grounds shown.

(7) The ultimate controlling person of an insurer subject to

registration and also scoped into the NAIC liquidity stress test

framework shall file the results of a specific year's liquidity

stress test with the lead state regulator of the insurance

holding company system in accordance with the procedures in the

NAIC Financial Analysis Handbook and the following standards:

(i) With regard to the development of the NAIC liquidity

stress test framework, the following standards are recognized:

(A) The NAIC liquidity stress test framework includes scope

criteria applicable to a specific data year.

(B) The scope criteria are reviewed at least annually by the

NAIC Financial Stability Task Force or its successor.

or to the data year for which the scope criteria are to be

measured shall be effective on January 1 of the year following

the calendar year when the changes are adopted.

(D) Insurers meeting at least one threshold of the scope

20220SB1222PN1646 - 7 -

criteria are considered scoped into the NAIC liquidity stress

test framework for the specified data year unless the lead state

regulator, in consultation with the NAIC Financial Stability

Task Force or its successor, determines the insurer should not

be scoped into the NAIC liquidity stress test framework for that

data year.

(E) Insurers that do not trigger at least one threshold of

the scope criteria are considered scoped out of the NAIC

liquidity stress test framework for the specified data year,

unless the lead state regulator, in consultation with the NAIC

Financial Stability Task Force or its successor, determines the

insurer should be scoped into the NAIC liquidity stress test

framework for that data year.

(ii) The performance of, and filing of the results from, a

specific year's NAIC liquidity stress test shall comply with the

NAIC liquidity stress test framework's instructions and

reporting templates for that year and, if applicable, with any

determinations by the lead state regulator and the NAIC

Financial Stability Task Force or its successor, provided within

the NAIC liquidity stress test framework.

* * *

Section 3. The act is amended by adding a section to read:

Section 1404.1. Group Capital Calculation Exemptions.-- (a)

The commissioner, as the lead state regulator, has the

discretion to exempt the ultimate controlling person from filing

the annual group capital calculation where the insurance holding

company system meets all of the following criteria:

(1) Has annual direct written and unaffiliated assumed

premium, including international direct and assumed premium, but

excluding premiums reinsured with the Federal Crop Insurance

20220SB1222PN1646 - 8 -

Corporation and Federal Flood Program, of less than one billion

dollars ($1,000,000,000).

(2) Has no insurers within the insurance holding company

system that are domiciled outside of the United States or one of

its territories.

(3) Has no banking, depository or other financial entity

that is subject to an identified regulatory capital framework

within the insurance holding company system.

(4) Attests that there have been no material changes in the

transactions between insurers and noninsurers in the insurance

holding company system during the last year.

(5) The noninsurers within the insurance holding company

system do not pose a material financial risk to the insurer's

ability to honor policyholder obligations.

(b) The commissioner, as the lead state regulator, has the

discretion to accept a limited group capital filing in lieu of

the group capital calculation if the insurance holding company

system has annual direct written and unaffiliated assumed

premiums, including international direct and assumed premiums,

but excluding premiums reinsured with the Federal Crop Insurance

Corporation and Federal Flood Program, of less than one billion

dollars ($1,000,000,000) and all of the following criteria are

met:

(1) The insurance holding company system has no insurers

that are domiciled outside of the United States or one of its

territories.

(2) The insurance holding company system does not include a

banking, depository or other financial entity that is subject to

an identified regulatory capital framework.

(3) The insurance holding company system attests that there

20220SB1222PN1646 - 9 -

have been no material changes in transactions between insurers

and noninsurers in the group during the last year and the

noninsurers within the insurance holding company system do not

pose a material financial risk to the insurer's ability to honor

policyholder obligations.

previously met an exemption with respect to the group capital

calculation under subsections (a) and (b), the commissioner may

at any time require, as the lead state regulator, the ultimate

controlling person to file an annual group capital calculation,

completed in accordance with the NAIC group capital calculation

instructions if any of the following criteria are met:

(1) An insurer within the insurance holding company system

is in a company action level event under Article V of the act of

May 17, 1921 (P.L.789, No.285), known as "The Insurance

Department Act of 1921," or a similar standard for an insurer

outside the United States.

(2) An insurer within the insurance holding company system

meets one or more of the standards of an insurer deemed to be in

hazardous financial condition as described in Article V of "The

Insurance Department Act of 1921," and 31 Pa. Code Ch. 160

(relating to standards to define insurers deemed to be in

hazardous financial condition).

(3) An insurer within the insurance holding company system

otherwise exhibits qualities of a troubled insurer as determined

by the lead state regulator based on unique circumstances,

including the type and volume of business written, ownership and

organizational structure, Federal agency requests and

international supervisor requests.

(d) A jurisdiction outside the United States is considered

20220SB1222PN1646 - 10 -

to recognize and accept the group capital calculation if it

satisfies the following criteria:

(1) The jurisdiction meets the criteria under section

1404(k.1)(3)(iv) in accordance with the following:

(i) The jurisdiction is located outside of the United States

and recognizes the United States' state regulatory approach to

group supervision and group capital by providing confirmation

from a competent regulatory authority in the jurisdiction that

insurers and insurance groups whose lead state is accredited by

the NAIC under the NAIC Accreditation Program shall be subject

only to worldwide prudential insurance group-wide supervision,

including worldwide group governance, solvency and capital and

reporting, as applicable, by the lead state and will not be

subject to group-wide supervision, including worldwide group

governance, solvency and capital and reporting, at the level of

the worldwide parent undertaking of the insurance or reinsurance

group by the jurisdiction located outside the United States.

(ii) If no United-States-based insurance groups operate in

the jurisdiction outside the United States, that jurisdiction

outside the United States notifies the lead state regulator in

writing, with a copy to the IAIS, that the group capital

calculation is an acceptable international capital standard. The

notification shall serve as the confirmation required under

subparagraph (i).

(2) The entities located outside the United States'

jurisdiction provide confirmation by a competent regulatory

authority in the jurisdiction under paragraph (1)(ii) that

information regarding insurers and the parent, subsidiary or

affiliated entities, if applicable, shall be provided to the

lead state regulator in accordance with a memorandum of

20220SB1222PN1646 - 11 -

understanding or similar document between the commissioner and

the jurisdiction, including the IAIS multilateral memorandum of

understanding or other multilateral memoranda of understanding

coordinated by the NAIC. The commissioner shall determine, in

consultation with the NAIC committee process, if the

requirements of the information sharing agreements are in force.

(e) A list of jurisdictions outside the United States that

recognize and accept the group capital calculation will be

published through the NAIC committee process in accordance with

the following standards:

(1) A list of jurisdictions that recognize and accept the

group capital calculation under section 1404(k.1)(3)(iv), shall

be published through the NAIC committee process to assist the

lead state regulator in determining which insurers shall file an

annual group capital calculation. The list must clarify those

situations in which a jurisdiction is exempt from filing under

section 1404(k.1)(3)(iv). To assist with a determination under

section 1404(k.1)(3)(v), the list shall identify whether a

jurisdiction that is exempt under section 1404(k.1)(3)(iii) or

(iv) requires a group capital filing for any United-States-based

insurance group's operations in a jurisdiction outside the

United States.

(2) For a jurisdiction outside the United States that no

United-States-based insurance group operates, the confirmation

provided to meet the requirement of subsection (d)(1)(ii) will

serve as support for a recommendation to be published as a

jurisdiction that recognizes and accepts the group capital

calculation through the NAIC committee process.

(3) If the commissioner, as the lead state regulator, makes

a determination under section 1404(k.1)(3)(iv) that differs from

20220SB1222PN1646 - 12 -

the NAIC list in paragraph (4), the lead state regulator shall

provide documented justification to the NAIC and other states.

(4) Upon determination that a jurisdiction outside of the

United States no longer meets one or more of the requirements to

recognize and accept the group capital calculation, the

commissioner, as the lead state regulator, may provide a

recommendation to the NAIC that the jurisdiction outside the

United States be removed from the list of jurisdictions that

recognize and accept the group capital calculation.

Section 4. Section 1405(a)(1) of the act is amended by

adding subparagraphs and the subsection is amended by adding a

paragraph to read:

Section 1405. Standards and Management of an Insurer within

an Insurance Holding Company System.--(a) (1) Transactions

within an insurance holding company system to which an insurer

subject to registration is a party shall be subject to all of

the following standards:

* * *

(vi) (A) If the commissioner deems an insurer subject to

this act to be in hazardous financial condition, as determined

by the commissioner under 31 Pa. Code Ch. 160 (relating to

standards to define insurers deemed to be in hazardous financial

condition) or a condition that would be grounds for supervision,

conservation or a delinquency proceeding, the commissioner may

require the insurer to secure and maintain a deposit, held by

the commissioner, or a bond, as determined by the insurer at the

insurer's discretion, for the protection of the insurer for the

duration of the contract or agreement, or the existence of the

condition for which the commissioner required the deposit or

bond. In determining whether a deposit or bond is required, the

20220SB1222PN1646 - 13 -

commissioner may consider whether concerns exist with respect to

the affiliated person's ability to fulfill the contract or

agreement if the insurer were to be put into liquidation.

(B) If the insurer is deemed to be in a hazardous financial

condition or a condition that would be grounds for supervision,

conservation or a delinquency proceeding, and a deposit or bond

is necessary, the commissioner has discretion to determine the

amount of the deposit or bond, not to exceed the value of the

contract or agreement in any one year, and whether the deposit

or bond should be required for a single contract, multiple

contracts or a contract only with a specific person.

(vii) (A) All records and data of the insurer held by an

affiliate are and remain the property of the insurer, are

subject to control of the insurer, are identifiable, and are

segregated or readily capable of segregation, at no additional

cost to the insurer, from all other persons' records and data.

(B) Records and data under clause (A) include all records

and data that are otherwise the property of the insurer, in

whatever form maintained, including claims and claim files,

policyholder lists, application files, litigation files, premium

records, rate books, underwriting manuals, personnel records,

financial records or similar records within the possession,

custody or control of the affiliate.

advise that the receiver may obtain a complete set of all

records of any type that pertain to the insurer's business,

obtain access to the operating systems on which the data is

maintained, obtain the software that runs those systems either

through assumption of licensing agreements or otherwise and

restrict the use of the data by the affiliate if it is not

20220SB1222PN1646 - 14 -

operating the insurer's business.

(D) The affiliate shall provide a waiver of any landlord

lien or other encumbrance to give the insurer access to all

records and data in the event of the affiliate's default under a

lease or other agreement.

(viii) Premiums or other funds belonging to the insurer that

are collected by or held by an affiliate are the exclusive

property of the insurer and are subject to the control of the

insurer. Any right of offset in the event an insurer is placed

into receivership shall be subject to Article V of the act of

May 17, 1921 (P.L.789, No.285), known as "The Insurance

Department Act of 1921."

* * *

(6) Supervision, seizure, conservatorship or receivership

proceedings. The following shall apply:

(i) An affiliate that is party to an agreement or contract

with a domestic insurer that is subject to section 1405(a)(2)(v)

shall be subject to the jurisdiction of any supervision,

seizure, conservatorship or receivership proceedings against the

insurer and to the authority of any supervisor, conservator,

rehabilitator or liquidator for the insurer appointed pursuant

to supervision and receivership acts for the purpose of

interpreting, enforcing and overseeing the affiliate's

obligations under the agreement or contract to perform services

for the insurer that:

(A) are an integral part of the insurer's operations,

including management, administrative, accounting, data

processing, marketing, underwriting, claims handling, investment

or any other similar functions; or

(B) are essential to the insurer's ability to fulfill its

20220SB1222PN1646 - 15 -

obligations under insurance policies.

(ii) The commissioner may require that an agreement or

contract under subsection (a)(2)(v) for the provision of

services under clauses (A) and (B) specify that the affiliate

consents to the jurisdiction under this paragraph.

* * *

Section 5. Sections 1406.2(j) and 1407 of the act are

amended to read:

Section 1406.2. Group-wide Supervision for International

Insurance Groups.--* * *

[(j) As used in this section, the following words and

phrases shall have the meanings given to them in this subsection

unless the context clearly indicates otherwise:

"Group-wide supervisor." The chief insurance regulatory

official authorized to engage in conducting and coordinating

group-wide supervision activities who is from the jurisdiction

determined or acknowledged by the department under subsection

international insurance group.

"International insurance group." An insurance group

operating internationally that includes an insurer registered

under section 1404.]

Section 1407. Confidential Treatment.--(a) All information,

documents, materials and copies thereof in the possession or

control of the department that are produced by, obtained by or

disclosed to the department or any other person in the course of

an examination or investigation made pursuant to section 1406 or

investigation made pursuant to section 1406.1 or 1406.2 and all

information reported pursuant to sections 1402(b)(11.1) and

(11.2), 1404 and 1405 are recognized as being proprietary and

20220SB1222PN1646 - 16 -

constituting intellectual property, and shall be privileged and

given confidential treatment and shall not be:

(1) Subject to discovery or admissible in evidence in a

private civil action.

(2) Subject to subpoena.

(3) Subject to the act of February 14, 2008 (P.L.6, No.3),

known as the "Right-to-Know Law."

(4) Made public by the department or any other person,

except to regulatory or law enforcement officials of other

jurisdictions or group supervisors or members of a supervisory

college in accordance with subsection (c), without the prior

written consent of the insurer to which it pertains unless the

department, after giving the insurer and its affiliates who

would be affected thereby notice and opportunity to be heard,

determines that the interest of policyholders, shareholders or

the public will be served by the publication thereof, in which

event it may publish all or any part thereof in such manner as

it may deem appropriate.

(a.1) For purposes of the information reported and provided

to the department under section 1404(k.1)(2), the commissioner

shall maintain the confidentiality of the group capital

calculation report and supporting disclosures and any group

capital information received from an insurance holding company

system supervised by the Federal Reserve Board or any United

States group-wide supervisor.

(a.2) For purposes of the information reported and provided

to the department under section 1404(k.1)(6), the commissioner

shall maintain the confidentiality of the liquidity stress test

results and supporting disclosures and any liquidity stress test

information received from an insurance holding company system

20220SB1222PN1646 - 17 -

supervised by the Federal Reserve Board and and a group-wide

supervisor located outside the United States.

(b) The commissioner, department or any individual or person

who receives documents, materials or other information while

acting under the authority of the commissioner or department or

with whom such documents, materials or other information are

shared under this article shall not be permitted or required to

testify in any private civil action concerning any confidential

documents, materials or information covered under this section.

department may do any of the following:

(1) Share confidential and privileged documents, materials

or other information covered under this section, including

proprietary and intellectual property, documents, materials and

information, with regulatory or law enforcement officials of

this Commonwealth or other jurisdictions, the IAIS, the NAIC and

its affiliates and subsidiaries, group supervisors and members

of any supervisory college under section 1406.1, and any third

party consultants retained by the commissioner, enforcement

officials, the IAIS, the NAIC, group-wide supervisor or members

of a supervisory college, provided that prior to receiving the

documents, materials or other information, the recipient

demonstrates by written statement the necessary authority and

intent to provide the same confidential treatment to the

documents, materials and information as required by this

article. The department may only share confidential and

privileged documents, materials or information reported under

section 1404(k.1) with state insurance regulators having

statutes or regulations substantially similar to subsection (a)

and who have agreed in writing not to disclose such confidential

20220SB1222PN1646 - 18 -

and privileged documents, materials and information.

(2) Receive and maintain as confidential and privileged any

documents, materials or other information, including proprietary

and intellectual property, documents materials and information,

from the IAIS or the NAIC and its affiliates and subsidiaries or

from regulatory and law enforcement officials of this

Commonwealth or other jurisdictions in which the documents,

materials or other information are confidential by law in those

jurisdictions. Documents, materials or other information

obtained under this section shall be given confidential

treatment, may not be subject to subpoena and may not be made

public by the department, commissioner or any other person.

(d) The department shall enter into written agreements with

the IAIS or the NAIC and any third-party consultant retained by

the commissioner, the IAIS or the NAIC governing the sharing and

use of information provided under this article, that include all

of the following:

(1) Specific procedures and protocols regarding the

confidentiality and security of information shared with the IAIS

or the NAIC [and its affiliates and subsidiaries] or a third-

party consultant retained by the commissioner, the IAIS or the

NAIC under this article, including procedures and protocols for

sharing by the IAIS or the NAIC or a third-party consultant

retained by the commissioner, the IAIS or the NAIC with other

Federal, state or international regulators. The agreement shall

provide that the recipient agrees in writing to maintain the

confidentiality and privileged status of the documents,

materials or other information and has verified in writing the

legal authority to maintain the confidentiality.

(2) Provisions specifying that ownership of information

20220SB1222PN1646 - 19 -

shared with the IAIS or the NAIC [and its affiliates and

subsidiaries] or a third-party consultant under this article

remains with the department and that the use of the information

by the IAIS or the NAIC or a third-party consultant retained by

the commissioner, the IAIS or the NAIC is subject to the

approval of the department.

(2.1) A provision specifying that, with the exception of

documents, material or information under section 1404(k.1)(6),

the NAIC, or a third-party consultant under this article, is

prohibited from storing information shared under this article in

a permanent database after the underlying analysis is completed.

(3) A provision providing that the IAIS or the NAIC and its

affiliates and subsidiaries, or a third-party consultant under

this article, will, where permitted by law, give prompt notice

to the department and the insurer regarding any subpoena,

request for disclosure or request for production of the

insurer's confidential information in the possession of the IAIS

or the NAIC or a third-party consultant under this article.

(4) A requirement that the IAIS or the NAIC and its

affiliates and subsidiaries, or a third-party consultant under

this article, will consent to intervention by an insurer in any

judicial or administrative action in which the IAIS or the NAIC

and its affiliates and subsidiaries, or a third-party consultant

under this article may be required to disclose confidential

information about the insurer that was shared with the IAIS or

the NAIC and its affiliates and subsidiaries, or a third-party

consultant under this article.

(5) For documents, materials or information reporting under

section 1404(k.1)(6), in the case of an agreement involving a

third party consultant, a provision for the notification of the

20220SB1222PN1646 - 20 -

identity of the consultant to the department and applicable

insurers.

(e) The sharing of information by the department under this

article shall not constitute a delegation of regulatory

authority or rulemaking.

(f) The department is solely responsible for the

administration, execution and enforcement of the provisions of

this article.

(g) The sharing of information by the department as

authorized by subsection (c) shall not constitute a waiver of

any applicable privilege or claim of confidentiality in the

documents, materials or information.

(h) Documents, materials or other information in the

possession or control of the IAIS or the NAIC or a third-party

consultant as provided under this article shall:

(1) Be confidential and privileged.

(2) Not be subject to the "Right-to-Know Law."

(3) Not be subject to subpoena.

(4) Not be subject to discovery or admissible in evidence in

any private civil action.

(i) The group capital calculation results and supporting

disclosures and any group capital calculation information

required under section 1404(k.1)(2) and the liquidity stress

test results and supporting disclosures and any liquidity stress

test information required under section 1404(k.1)(7) are

regulatory tools for assessing group capital adequacy, group

liquidity and associated risks. These tools are not intended as

a means to rank insurers or insurance holding company systems

generally and will be used in accordance with the following

standards:

20220SB1222PN1646 - 21 -

(1) Except as otherwise required under this article,

directly or indirectly, making, publishing, disseminating,

circulating or placing 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 any electronic means of communication

available to the public, or in any other way as an

advertisement, announcement or statement containing, a

representation or statement with regard to the group capital

calculation results, the liquidity stress test results and

associated supporting disclosures and information of any insurer

or any insurer group, or of any component derived in the

calculation by any insurer, broker, or other person engaged in

any manner in the insurance business, is misleading and

prohibited.

(2) If any materially false statement with respect to the

group capital calculation, resulting group capital ratio, an

inappropriate comparison of any amount to an insurer's or

insurance group's group capital calculation or resulting group

capital ratio, liquidity stress test result, supporting

disclosures for the liquidity stress test or an inappropriate

comparison of any amount to an insurer's or insurance group's

liquidity stress test result or supporting disclosures 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 announcements in any

written publication if the sole purpose of the announcement is

to rebut the materially false statement.

Section 6. The act is amended by adding a section to read:

20220SB1222PN1646 - 22 -

Section 1414. Compliance with Group Capital Calculation and

Liquidity Stress Test Requirements.--(a) An insurer that is

part of an internationally active insurance group shall comply

with the requirement to file a group capital calculation report

under section 1404(k.1)(2) upon the effective date of this

section. All other insurers shall comply with the requirement to

file a group capital calculation no later than January 1, 2026.

(b) An insurer shall be subject to the liquidity stress test

requirements of section 1404(k.1)(7) on January 1, 2023.

Section 7. This act shall take effect in 60 days.

20220SB1222PN1646 - 23 -