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SENATE BILL Arizona State Legislature

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SENATE BILL Arizona State Legislature Powered By Docstoc
					                                                     House Engrossed Senate Bill


      State of Arizona
      Senate
      Forty-fourth Legislature
      First Regular Session
      1999




                        SENATE BILL 1016


                                        AN ACT

     amending section 20-261, Arizona Revised Statutes; relating to reinsurance.

 1   Be it enacted by the Legislature of the State of Arizona:
 2         Section|1.||Section 20-261, Arizona Revised Statutes, is amended to
 3   read:
 4         20-261.||Authorized reinsurance
 5         A.||An insurer shall reinsure its risks, or any part thereof of its
 6   risks, only in solvent insurers having surplus to policyholders not less in
 7   amount than the minimum required capital stock required under this title of
 8   a domestic stock insurer, other than a limited stock insurer or a domestic
 9   life and disability reinsurer, authorized to transact like kinds of
10   insurance.   A domestic limited stock life insurer or domestic life and
11   disability reinsurer may accept reinsurance of the risks of other such
12   limited stock insurers and of domestic benefit insurers or domestic life and
13   disability reinsurers.
14         B.||An insurer shall so may reinsure in such alien insurers only as
15   either if the alien insurers are authorized to transact insurance in at least
16   one state of the United States or have in the United States a duly authorized
17   attorney-in-fact to accept service of legal process against the insurer as
18   to any liability which that might arise on account of such reinsurance.
19         C.||No A credit shall not be allowed, as an admitted asset or as a
20   deduction from liability, to any ceding insurer for reinsurance unless the
21   reinsurance is payable by the assuming insurer reinsurer on the basis of the
22   liability of the ceding insurer under the contracts reinsured without
23   diminution because of the insolvency of the ceding insurer nor unless under
24   the reinsurance contract the liability for such reinsurance is assumed by the
25   assuming insurer or insurers the reinsurer assumes the liability for the
     S.B. 1016




 1   reinsurance as of the same effective date. The reinsurer shall make payment
 2   directly to the ceding insurer or to its statutory successor by whatever name
 3   called for the purpose of liquidating or rehabilitating the business of the
 4   insurer unless either the reinsurance contract or the policies reinsured
 5   required the reinsurer to make payment to the payees under the policies
 6   reinsured in the event the ceding insurer becomes insolvent, or the reinsurer
 7   with the consent of the direct insured assumes the policy obligations of the
 8   ceding insurer to the payees under the policies reinsured in substitution for
 9   the obligations of the ceding insurer to those payees.
10         D.||A domestic insurer shall not be a party to any agreement of
11   reinsurance with an unauthorized insurer until such the agreement is filed
12   with and approved in writing by the director. The director shall approve any
13   such the agreement within a reasonable time after filing unless in his the
14   director’s opinion the effect thereof of the agreement would be to reduce
15   protection or service substantially either to policyholders resident of
16   Arizona this state or to policyholders anywhere of the domestic insurer. If
17   the director does not approve the agreement, he the director shall so notify
18   the domestic insurer in writing specifying his the reasons therefor for not
19   approving the agreement.
20         E.||This section shall does not apply to insurance of ocean marine
21   risks or marine protection and indemnity risks.
22         F.||Unless the director requires the assuming insurer to file
23   assumption reinsurance contracts, assumption reinsurance contracts are exempt
24   from the filing requirements prescribed in subsection D if the assuming
25   insurer has a surplus as to policyholders of at least fifty million dollars
26   as shown in the most recent financial statement that is filed by the insurer
27   with the department.
28         Sec.|2.||Joint legislative study committee on captive insurance;
29                     members; duties; report
30         A.||The joint legislative study committee on captive insurance is
31   established consisting of the following members:
32         1.||Three members of the house of representatives who are appointed by
33   the speaker of the house of representatives, not more than two of whom
34   represent the same political party.
35         2.||Three members of the senate who are appointed by the president of
36   the senate, not more than two of whom represent the same political party.
37         3.||The director of the department of insurance or the director’s
38   designee.
39         4.||One member who represents the captive insurance industry who is
40   appointed by the speaker of the house of representatives.
41         5.||One member who represents the captive insurance industry who is
42   appointed by the president of the senate.




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     S.B. 1016




 1         B.||Committee members are not eligible to receive compensation, but
 2   members appointed pursuant to subsection A, paragraphs 4 and 5 of this
 3   section are eligible for reimbursement of expenses under title 38, chapter
 4   4, article 2, Arizona Revised Statutes.
 5         C.||The committee shall:
 6         1.||Conduct at least two public hearings.
 7         2.||Review and analyze:
 8         (a)||Current statutes, rules and legislation in other states and
 9   countries relating to captive insurance companies.
10         (b)||The feasibility and economic impact to this state of allowing the
11   establishment of captive insurance companies in this state.
12         (c)||The economic impact in the states and countries that have
13   encouraged the establishment of captive insurance companies.
14         (d)||The role of state regulation in the captive insurance market.
15         (e)||The reasons for forming a captive insurance company and the
16   various types of company structures that a captive insurance company may
17   adopt, including the types of coverage that a captive insurance company may
18   insure.
19         (f)||Factors relating to forming a captive insurance company,
20   including:
21         (i)||Capitalization requirements.
22        (ii)||Assessments and costs.
23       (iii)||Access to reinsurance.
24        (iv)||Investment limitations.
25         (v)||State and federal tax implications.
26         3.||Submit a report regarding the committee’s analyses and findings and
27   recommendations for legislative action, if any, on or before November 15 to
28   the speaker of the house of representatives, the president of the senate and
29   the governor.    The committee shall submit a copy of the report to the
30   secretary of state and the director of the department of library, archives
31   and public records.
32         Sec.|3.||Delayed repeal
33         Section 2 of this act is repealed from and after December 31, 1999.




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