For Immediate Release
March 31, 2020
Contact: Cara Zimmermann
(732) 201-4133
NCOIL ADOPTS INSURANCE BUSINESS TRANSFER MODEL ACT
Provides for Improved Operational and Capital Efficiency for Insurance Companies while Ensuring Policyholders are Notified and Protected
Manasquan, NJ – At the recently concluded 2020 NCOIL Spring Meeting in Charlotte, NC, the organization adopted the NCOIL Insurance Business Transfer (IBT) Model Act sponsored by NY Assemblyman Andrew Garbarino and OK Representative Lewis Moore. The measure passed on a voice vote by the NCOIL Joint State-Federal Relations & International Insurance Issues Committee and was affirmed by the Executive Committee.
The OK IBT Law, signed into law in 2018, was introduced to NCOIL to serve as a basis for an NCOIL IBT Model at the 2018 NCOIL Annual Meeting in Oklahoma City, OK. NY Asm. Andrew Garbarino and OK Rep. Lewis Moore then introduced a discussion draft of an NCOIL IBT Model Law at the 2019 NCOIL Spring Meeting in Nashville, TN, based on the OK IBT law.
NY Asm. Andrew Garbarino stated, “I greatly appreciate the Committee’s work on the NCOIL IBT Model and there were a lot of great points made by the panels throughout drafting discussions. The OK IBT Law was a solid foundation to use when considering IBT model legislation. The most frequently used restructuring options in this country are sale and reinsurance or limited portfolio transfers (LPTs) but those options are limited in their scope and effect. There is a need for consistency among states and it seems to be generally agreeable that IBTs can be valuable as long as they are done properly with the right level of consumer protections.”
OK Rep. Lewis Moore said, “I want to echo what Asm. Garbarino stated and thank the Committee and all interested parties for their work and input throughout the drafting process. During the Model legislation drafting discussions, I stressed the importance of the protection of policyholders and worked with NCOIL to ensure that issue remained in the Model. As is always the case with NCOIL models, states are free to change any provisions they deem appropriate. State interest in IBTs has continued to grow significantly since initially discussing IBTs at the 2018 NCOIL Annual Meeting, making it that much more important to send this Model to the states and adequately address the issue.”
During the drafting discussions, NCOIL legislators and staff heard from a wide array of interested parties including: PricewaterhouseCoopers, LLC (PWC); the Oklahoma Dept. of Insurance; the Reinsurance Assoc. of America (RAA); the Rhode Island Dept. of Business Regulation; Enstar; New York Life; the American Council of Life Insurers (ACLI); Brighthouse Financial; International Solutions Services, LLC; Faegre Baker Daniels, LLP; the National Organization of Life & Health Insurance Guaranty Associations (NOLGHA); the National Conference of Insurance Guaranty Funds (NCIGF); and the American Property & Casualty Insurance Association (APCIA).
The purpose of the Model is “to provide options to address the significant limitations in the current methods available to insurers to transfer or assume blocks of insurance business in an efficient and cost-effective manner that provides needed legal finality for such transfers in order to provide for improved operational and capital efficiency for insurance companies, stimulates the economy by attracting segments of the insurance industry to the state, make this state an attractive home jurisdiction for insurance companies, encourages economic growth and increased investment in the financial services sector and increases the availability of quality insurance industry jobs in this state.”
Highlights of the Model include requirements that the IBT applicant notify interested parties such as: the chief insurance regulator in each jurisdiction in which the applicant holds or has ever held a certificate of authority, and in which policies that are part of the subject business were
issued or policyholders currently reside; the National Conference of Insurance Guaranty Funds, the National Organization of Life and Health Insurance Guaranty Associations and all state insurance guaranty associations for the states in which the applicant holds or has ever held a certificate of authority, and in which policies that are part of the subject business were issued or policyholders currently reside; reinsurers of the applicant pursuant to the notice provisions of the reinsurance agreements applicable to the policies that are part of the subject business, or where an agreement has no provision for notice, by internationally recognized delivery service; all policyholders holding policies that are part of the subject business, at their last-known address as indicated by the records of the applicant or to the address to which premium notices or other policy documents are sent; and by publication in a newspaper of general circulation in the state in which the applicant has its principal place of business and in such other publications that the Commissioner requires.
The Model also requires that the Insurance Business Transfer Plan must be filed by the applicant with the Insurance Commissioner for his or her review and approval. The Plan must include information such as: a summary of the Insurance Business Transfer Plan; an identification and
description of the subject business; the most recent audited financial statements and statutory annual and quarterly reports of the transferring insurer and assuming insurer filed with their domiciliary regulator the most recent actuarial report and opinion that quantify the liabilities associated with the subject business; pro-forma financial statements showing the projected statutory balance sheet; results of operations and cash flows of the assuming insurer for the three (3) years following the proposed transfer and novation; the officers’ certificates of the transferring insurer and the assuming insurer attesting that each has obtained all required internal approvals and authorizations regarding the Insurance Business Transfer Plan and completed all necessary and appropriate actions relating thereto; the proposal for Plan implementation and administration, including the form of notice to be provided under the Insurance Business Transfer Plan to any policyholder whose policy is part of the subject business; a full description as to how such notice shall be provided; a description of any reinsurance arrangements that would pass to the assuming insurer under the Insurance Business Transfer Plan; a description of any guarantees or additional reinsurance that will cover the subject business following the transfer and novation; a statement describing the assuming insurer’s proposed investment policies and any contemplated third-party claims management and administration arrangements; a description of how the transferring and assuming insurers will be licensed for guaranty association coverage purpose; and evidence of approval or nonobjection of the transfer from the chief insurance regulator of the state of the transferring insurer’s domicile.
Importantly, the Insurance Business Transfer plan must also contain a report from an independent expert, selected by the Commissioner from a list of at least two nominees submitted jointly by the transferring insurer and the assuming insurer, to assist the Commissioner and the court in connection with their review of the proposed transaction. Should the Commissioner, in his or her sole discretion, reject the nominees, he or she may appoint the independent expert. The Model sets forth specific requirements for what the independent expert report must contain such as the independent expert’s opinion of the likely effects of the Insurance Business Transfer Plan on policyholders and claimants, distinguishing between transferring policyholders and claimants, policyholders and claimants of the transferring insurer whose policies will not be transferred, and policyholders and claimants of the assuming insurer.
The Model then requires the Commissioner to authorize the submission of the Plan to the court unless he or she finds that the Insurance Business Transfer would have a material adverse impact on the interests of policyholders or claimants that are part of the subject business. Within thirty (30) days after notice from the Commissioner that the applicant may proceed with the court filing, the Model then directs the applicant to apply to the court for approval of the Insurance Business Transfer Plan.
Following a court hearing, which the Model requires all parties to be notified of and provides them the opportunity to present evidence or comments if he, she, or itself considers to be adversely affected by the transfer, the Model requires the court to enter a judgment and implementation order if the court finds that the implementation of the Insurance Business Transfer Plan would not materially adversely affect the interests of policyholders or
claimants that are part of the subject business.
The judgment and implementation order shall: order implementation of the Insurance Business Transfer Plan; order a statutory novation with respect to all policyholders or reinsureds and their respective policies and reinsurance agreements under the subject business, including the
extinguishment of all rights of policyholders under policies that are part of the subject business against the transferring insurer, and providing that the transferring insurer shall have no further rights, obligations, or liabilities with respect to such policies, and that the assuming insurer shall have all such rights, obligations, and liabilities as if it were the original insurer of such policies; release the transferring insurer from any and all obligations or liabilities under policies that are part of the subject business; authorize and order the transfer of property or liabilities, including, but not limited to, the ceded reinsurance of transferred policies and contracts on the subject business, notwithstanding any non-assignment provisions in any such reinsurance contracts. The subject business shall vest in and become liabilities of the assuming insurer; order that the applicant provide notice of the transfer and novation in accordance with the notice provisions in Section 5 of the Model; and make such other provisions with respect to incidental, consequential and supplementary matters as are necessary to assure the Insurance Business Transfer Plan is fully and effectively carried out.
The Model also requires the Commissioner to promulgate regulations that are consistent with the Model, rather than authorizing the Commissioner to do so, and states that no Insurance Business Transfer Plan shall be approved in a State unless and until such regulations are promulgated.
NCOIL CEO, Commissioner Tom Considine, stated, “IBTs can be a driver for economic expansion which makes it vital for the states to understand the tools and guidelines that this Model has to offer. These are complex transactions, and making sure the appropriate regulations are promulgated before an IBT is approved is critical in ensuring both businesses and consumers are properly protected. Thank you to the Committee, and a special thanks to Asm. Garbarino and Rep. Moore for sponsoring this and getting the Model to a good place to be ready to send to the states.”
A full copy of the model is below
National Council of Insurance Legislators (NCOIL)
Insurance Business Transfer Model Act
*Sponsored by Asm. Andrew Garbarino (NY) and Rep. Lewis Moore (OK)
*Adopted by the Joint State-Federal Relations and International Insurance Issues Committee on March 6, 2020 and by the Executive Committee on March 8, 2020.
Table of Contents
Section 1. Title
Section 2. Purpose
Section 3. Definitions
Section 4. Court Authority
Section 5. Notice Requirements
Section 6. Application Procedure
A. Submitting Application of Insurance Business Transfer Plan to Insurance Commissioner
B. Application to the Court for Approval of the Insurance Business Transfer Plan
C. Approval of the Insurance Business Transfer Plan
D. Implementation of Insurance Business Transfer Plan
Section 7. Ongoing Oversight by Insurance Commissioner
Section 8. Fees and Costs
Section 9. Effective Date
Section 1. Title
This act shall be known and may be cited as the “Insurance Business Transfer Act”.
Section 2. Purpose
This act is adopted to provide options to address the significant limitations in the current methods available to insurers to transfer or assume blocks of insurance business in an efficient and cost-effective manner that provides needed legal finality for such transfers in order to provide for improved operational and capital efficiency for insurance companies, stimulates the economy by attracting segments of the insurance industry to the state, make this state an attractive home jurisdiction for insurance companies, encourages economic growth and increased investment in the financial services sector and increases the availability of quality insurance industry jobs in this state. These purposes are accomplished by providing a basis and procedures for the transfer and statutory novation of policies from a transferring insurer to an assuming insurer by way of an Insurance Business Transfer without the affirmative consent of policyholders or reinsureds. The novation is effected by court order. This act establishes the requirements for notice and disclosure and standards and procedures for the approval of the transfer and novation by the State Insurance Commissioner and a District Court pursuant to an Insurance Business Transfer Plan. This act does not limit or restrict other means of effecting a transfer or novation.
Section 3. Definitions
A. “Affiliate” means a person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.
B. “Applicant” means a transferring insurer or reinsurer applying under Section 6 of this act.
C. “Assuming insurer” means an insurer domiciled in this State that assumes or seeks to assume policies from a transferring insurer pursuant to this act. An assuming insurer may be a company established pursuant to the State Captive Insurance Company Act.
D. “Court” means the [District Court].
Drafting Note: Each state shall identify the specific court that shall have jurisdiction and venue
E. “Department” means the State Insurance Department.
Drafting Note: In certain states “State Insurance Department” may be replaced with the regulatory body that has jurisdiction over insurance
F. “Commissioner” means the State Insurance Commissioner.
G. “Implementation order” means an order issued by the Court under Section 6 of this act.
H. “Insurance Business Transfer” means a transfer and novation in accordance with this act. Insurance Business Transfers will transfer insurance obligations or risks, or both, of existing or in-force contracts of insurance or reinsurance from a transferring insurer to an assuming insurer. Once approved pursuant to this act, the Insurance Business Transfer will effect a novation of the transferred contracts of insurance or reinsurance with the result that the assuming insurer becomes directly liable to the policyholders of the transferring insurer and the transferring insurer’s insurance obligations or risks, or both, under the contracts are extinguished.
I. “Insurance Business Transfer Plan” or “Plan” means the plan submitted to the Department to accomplish the transfer and novation pursuant to an Insurance Business Transfer, including any associated transfer of assets and rights from or on behalf of the transferring insurer to the assuming insurer.
J. “Independent expert” means an impartial person who has no financial interest in either the assuming insurer or transferring insurer, has not been employed by or acted as an officer, director, consultant or other independent contractor for either the assuming insurer or transferring insurer within the past twelve (12) months, is not appointed by the Commissioner to assist in any capacity in any insurer rehabilitation or delinquency proceeding and is receiving no compensation in connection with the transaction governed by this act other than a fee based on a fixed or hourly basis that is not contingent on the approval or consummation of an Insurance Business Transfer and provides proof of insurance coverage that is satisfactory to the
Commissioner.
K. “Insurer” means an insurance or surety company, including a reinsurance company, and shall be deemed to include a corporation, company, partnership, association, society, order, individual or aggregation of individuals engaging in or proposing or attempting to engage in any kind of
insurance or surety business, including the exchanging of reciprocal or inter-insurance contracts between individuals, partnerships and corporations.
L. “Policy” means a policy, annuity contract or certificate of insurance or a contract of reinsurance pursuant to which the insurer agrees to assume an obligation or risk, or both, of the policyholder or to make payments on behalf of, or to, the policyholder or its beneficiaries, and shall include property, casualty, life, health and any other line of insurance the Commissioner finds via regulation is suitable for an insurance business transfer.
Drafting Note: States may wish to remove certain lines of insurance from the scope of an insurance business transfer.
M. “Policyholder” means an insured or a reinsured under a policy that is part of the subject business.
N. “Subject business” means the policy or policies that are the subject of the Insurance Business Transfer Plan.
O. “Transfer and novation” means the transfer of insurance obligations or risks, or both, of existing or in-force policies from a transferring insurer to an assuming insurer, and is intended to effect a novation of the transferred policies with the result that the assuming insurer becomes directly liable to the policyholders of the transferring insurer on the transferred policies and the transferring insurer’s insurance obligations or risks, or both, under the transferred policies are extinguished.
P. “Transferring insurer” means an insurer or reinsurer that transfers and novates or seeks to transfer and novate obligations or risks, or both, under one or more policies to an assuming insurer pursuant to an Insurance Business Transfer Plan.
Section 4. Court Authority
Notwithstanding any other provision of law, the court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this act. No provision of this act shall be construed to preclude the court from, on its own motion, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of power.
Section 5. Notice Requirements
A. Whenever notice is required to be given by the applicant under the Insurance Business Transfer Act and except as otherwise permitted or directed by the court or the Insurance Commissioner, the applicant shall, within fifteen (15) days of the event triggering the requirement, cause transmittal of the notice:
1. To the chief insurance regulator in each jurisdiction in which the applicant:
a. holds or has ever held a certificate of authority, and
b. in which policies that are part of the subject business were issued or policyholders currently reside;
2. To the National Conference of Insurance Guaranty Funds, the National Organization of Life and Health Insurance Guaranty Associations and all state insurance guaranty associations for the states in which the applicant:
a. holds or has ever held a certificate of authority, and
b. in which policies that are part of the subject business were issued or policyholders currently reside;
3. To reinsurers of the applicant pursuant to the notice provisions of the reinsurance agreements applicable to the policies that are part of the subject business, or where an agreement has no provision for notice, by internationally recognized delivery service;
4. To all policyholders holding policies that are part of the subject business, at their lastknown address as indicated by the records of the applicant or to the address to which premium notices or other policy documents are sent. A notice of transfer shall also be sent to the transferring insurer’s agents or brokers of record on the subject business; and
5. By publication in a newspaper of general circulation in the state in which the applicant has its principal place of business and in such other publications that the Commissioner requires
B. If notice is given in accordance with this section, any orders under this act shall be conclusive with respect to all intended recipients of the notice, whether or not they receive actual notice.
C. Where this act requires that the applicant provide notice but the Commissioner has been named receiver of the applicant, the Commissioner shall provide the required notice.
D. Notice under this section may take the form of first-class mail, facsimile and/or electronic notice.
Section 6. Application Procedure
A. Application Procedure.
1. An Insurance Business Transfer Plan must be filed by the applicant with the Insurance Commissioner for his or her review and approval. The Plan must contain the information set forth below or an explanation as to why the information is not included. The Plan may be supplemented by other information deemed necessary by the Commissioner:
a. the name, address and telephone number of the transferring insurer and the assuming insurer and their respective direct and indirect controlling persons, if any,
b. summary of the Insurance Business Transfer Plan,
c. identification and description of the subject business,
d. most recent audited financial statements and statutory annual and quarterly reports of the transferring insurer and assuming insurer filed with their domiciliary regulator,
e. the most recent actuarial report and opinion that quantify the liabilities associated with the subject business,
f. pro-forma financial statements showing the projected statutory balance sheet, results of operations and cash flows of the assuming insurer for the three (3) years following the proposed transfer and novation,
g. officers’ certificates of the transferring insurer and the assuming insurer attesting that each has obtained all required internal approvals and authorizations regarding the Insurance Business Transfer Plan and completed all necessary and appropriate actions relating thereto,
h. proposal for Plan implementation and administration, including the form of notice to be provided under the Insurance Business Transfer Plan to any policyholder whose policy is part of the subject business,
i. full description as to how such notice shall be provided,
j. description of any reinsurance arrangements that would pass to the assuming insurer under the Insurance Business Transfer Plan,
k. description of any guarantees or additional reinsurance that will cover the subject business following the transfer and novation,
l. a statement describing the assuming insurer’s proposed investment policies and any contemplated third-party claims management and administration arrangements,
m. description of how the transferring and assuming insurers will be licensed for guaranty association coverage purposes,
Drafting Note: The regulatory authorization language of Section 6D. is meant to allow for the promulgation of regulations that address issues including, but not limited to:
(1) Guaranty association coverage;
(2) The financial implications of the transaction including solvency, capital adequacy, cash flow, reserves, asset quality and risk-based capital;
(3) An analysis of the assuming insurer’s corporate governance structure to ensure that there is proper board management oversight and expertise to
manage the subject business;
(4) The competency, experience and integrity of the persons who would control the operation of an involved insurer; and
(5) Ensuring the transaction is not being made for improper purposes, including fraud.
n. evidence of approval or nonobjection of the transfer from the chief insurance regulator of the state of the transferring insurer’s domicile, and
o. a report from an independent expert, selected by the Commissioner from a list of at least two nominees submitted jointly by the transferring insurer and the assuming insurer, to assist the Commissioner and the court in connection with their review of the proposed transaction. Should the Commissioner, in his or her sole discretion, reject the nominees, he or she may appoint the independent expert. The report shall provide the following:
(1) a statement of the independent expert’s professional qualifications and descriptions of the experience that qualifies him or her as an expert
suitable for the engagement,
(2) whether the independent expert has, or has had, direct or indirect interest in the transferring or assuming insurer or any of their respective
affiliates,
(3) the scope of the report,
(4) a summary of the terms of the Insurance Business Transfer Plan to the extent relevant to the report,
(5) a listing and summaries of documents, reports and other material information the independent expert has considered in preparing the report and whether any information requested was not provided,
(6) the extent to which the independent expert has relied on information provided by and the judgment of others,
(7) the people on whom the independent expert has relied and why, in his or her opinion, such reliance is reasonable,
(8) the independent expert’s opinion of the likely effects of the Insurance Business Transfer Plan on policyholders and claimants, distinguishing between:
(a) transferring policyholders and claimants,
(b) policyholders and claimants of the transferring insurer whose policies will not be transferred, and
(c) policyholders and claimants of the assuming insurer,
(9) for each opinion that the independent expert expresses in the report the facts and circumstances supporting the opinion, and
(10) consideration as to whether the security position of policyholders that are affected by the Insurance Business Transfer are materially adversely
affected by the transfer.
2. The independent expert’s report as required by subparagraph o of paragraph 1 of this subsection shall include, but not be limited to, a review of the following:
a. analysis of the transferring insurer’s actuarial review of reserves for the subject business to determine the reserve adequacy,
b. analysis of the financial condition of the transferring and assuming insurers and the effect the transfer will have on the financial condition of each company,
c. review of the plans or proposals the assuming insurer has with respect to the administration of the policies subject to the proposed transfer,
d. whether the proposed transfer has a material, adverse impact on the policyholders and claimants of the transferring and the assuming insurers,
e. analysis of the assuming insurer’s corporate governance structure to ensure that there is proper board and management oversight and expertise to manage the subject business, and
f. any other information that the Commissioner requests in order to review the Insurance Business Transfer.
3. The Commissioner shall have sixty (60) business days from the date of receipt of a complete Insurance Business Transfer Plan to review the Plan to determine if the applicant is authorized to submit it to the court. The Commissioner may extend the sixtyday review period for an additional thirty (30) business days.
4. The Commissioner shall authorize the submission of the Plan to the court unless he or she finds that the Insurance Business Transfer would have a material adverse impact on the interests of policyholders or claimants that are part of the subject business.
5. If the Commissioner determines that the Insurance Business Transfer would have a material adverse impact on the interests of policyholders or claimants that are part of the subject business, he or she shall notify the applicant and specify any modifications, supplements or amendments and any additional information or documentation with respect to the Plan that must be provided to the Commissioner before he or she will allow the applicant to proceed with the court filing.
6. The applicant shall have thirty (30) days from the date the Commissioner notifies him or her, pursuant to paragraph 5 of this subsection, to file an amended Insurance Business Transfer Plan providing the modifications, supplements or amendments and additional information or documentation as requested by the Commissioner. If necessary the applicant may request in writing an extension of time of thirty (30) days. If the applicant does not make an amended filing within the time period provided for in this paragraph, including any extension of time granted by the Commissioner, the Insurance Business Transfer Plan filing will terminate and a subsequent filing by the applicant will be considered a new filing which shall require compliance with all provisions of this act as if the prior filing had never been made.
7. The Commissioner’s review period in paragraph 3 of this subsection shall recommence when the modification, supplement, amendment or additional information requested in paragraph 5 of this subsection is received.
8. If the Commissioner determines that the Plan may proceed with the court filing, the Commissioner shall confirm that fact in writing to the applicant.
B. Application to the court for approval of the Insurance Business Transfer Plan.
1. Within thirty (30) days after notice from the Commissioner that the applicant may proceed with the court filing, the applicant shall apply to the court for approval of the Insurance Business Transfer Plan. Upon written request by the applicant, the Commissioner may extend the period for filing an application with the court for an additional thirty (30) days.
2. The applicant shall inform the court of the reasons why he or she petitions the court to find no material adverse impact to policyholders or claimants affected by the proposed transfer.
3. The application shall be in the form of a verified petition for implementation of the Insurance Business Transfer Plan in the court. The petition shall include the Insurance Business Transfer Plan and shall identify any documents and witnesses which the applicant intends to present at a hearing regarding the petition.
4. The Commissioner shall be a party to the proceedings before the court concerning the petition and shall be served with copies of all filings pursuant to the Rules for District Courts of the State. The Commissioner’s position in the proceeding shall not be limited by his or her initial review of the Plan.
5. Following the filing of the petition, the applicant shall file a motion for a scheduling order setting a hearing on the petition.
6. Within fifteen (15) days after receipt of the scheduling order, the applicant shall cause notice of the hearing to be provided in accordance with the notice provisions of Section 5 of this act. Following the date of distribution of the notice, there shall be a sixty-day comment period.
7. The notice to policyholders shall state or provide:
a. the date and time of the approval hearing,
b. the name, address and telephone number of the assuming insurer and transferring insurer,
c. that a policyholder may comment on or object to the transfer and novation,
d. the procedures and deadline for submitting comments or objections on the Plan,
e. a summary of any effect that the transfer and novation will have on the policyholder’s rights,
f. a statement that the assuming insurer is authorized, as provided in this section, to assume the subject business and that court approval of the Plan shall extinguish all rights of policyholders under policies that are part of the subject business against the transferring insurer,
g. that policyholders shall not have the opportunity to opt out of or otherwise reject the transfer and novation,
h. contact information for the Insurance Department where the policyholder may obtain further information, and
i. information on how an electronic copy of the Insurance Business Transfer Plan may be accessed. In the event policyholders are unable to readily access electronic copies, the applicant shall provide hard copies by first-class mail.
8. Any person, including by their legal representative, who considers himself, herself or itself to be adversely affected can present evidence or comments to the court at the approval hearing. However, such comment or evidence shall not confer standing on any person. Any person participating in the approval hearing must follow the process established by the court and shall bear his or her own costs and attorney fees.
C. Approval of the Insurance Business Transfer Plan.
1. After the comment period pursuant to paragraph 6 of subsection B of this section has ended the Insurance Business Transfer Plan shall be presented by the applicant for approval by the court.
2. At any time before the court issues an order approving the Insurance Business Transfer Plan, the applicant may withdraw the Insurance Business Transfer Plan without prejudice.
3. If the court finds that the implementation of the Insurance Business Transfer Plan would not materially adversely affect the interests of policyholders or claimants that are part of the subject business, the court shall enter a judgment and implementation order. The judgment and implementation order shall:
a. order implementation of the Insurance Business Transfer Plan,
b. order a statutory novation with respect to all policyholders or reinsureds and their respective policies and reinsurance agreements under the subject business, including the extinguishment of all rights of policyholders under policies that are part of the subject business against the transferring insurer, and providing that the transferring insurer shall have no further rights, obligations, or liabilities with respect to such policies, and that the assuming insurer shall have all such rights, obligations, and liabilities as if it were the original insurer of such policies,
c. release the transferring insurer from any and all obligations or liabilities under policies that are part of the subject business,
d. authorize and order the transfer of property or liabilities, including, but not limited to, the ceded reinsurance of transferred policies and contracts on the subject business, notwithstanding any non-assignment provisions in any such reinsurance contracts. The subject business shall vest in and become liabilities of the assuming insurer,
e. order that the applicant provide notice of the transfer and novation in accordance with the notice provisions in Section 5 of this act, and
f. make such other provisions with respect to incidental, consequential and supplementary matters as are necessary to assure the Insurance Business Transfer Plan is fully and effectively carried out.
4. If the court finds that the Insurance Business Transfer Plan should not be approved, the court by its order may:
a. deny the petition, or
b. provide the applicant leave to file an amended Insurance Business Transfer Plan and petition.
5. Nothing in this section in any way effects the right of appeal of any party.
D. Implementation of Insurance Business Transfer Plan.
The Commissioner shall promulgate rules that are consistent with the provisions of the Insurance Business Transfer Act. No insurance business transfer plan shall be approved in a State unless and until such regulations are promulgated.
E. The portion of the application for an Insurance Business Transfer that would otherwise be confidential, including any documents, materials, communications or other information submitted to the Commissioner in contemplation of such application, shall not lose such confidentiality.
Section 7. Ongoing oversight by Insurance Commissioner
Insurers subject to this act consent to the jurisdiction of the Insurance Commissioner with regard to ongoing oversight of operations, management and solvency relating to the transferred business, including the authority of the Commissioner to conduct financial analysis and examinations.
Section 8. Fees and Costs
A. At the time of filing its application with the Insurance Commissioner for review and approval of an Insurance Business Transfer Plan, the applicant shall pay a nonrefundable fee to the Insurance Department.
B. The Commissioner may retain independent attorneys, appraisers, actuaries, certified public accountants, authorized consultants, or other professionals and specialists to assist Department personnel in connection with the review required by the Insurance Business Transfer Act, the cost of which shall be borne by the applicant.
C. The transferring insurer and the assuming insurer shall jointly be obligated to pay any compensation, costs and expenses of the independent expert and any consultants retained by the independent expert and approved by the Department incurred in fulfilling the obligations of the independent expert under this act. Nothing in this act shall be construed to create any duty for the independent expert to any party other than the Department or the Court.
D. Failure to pay any of the requisite fees or costs within thirty (30) days of demand shall be grounds for the Commissioner to request that the court dismiss the petition for approval of the Insurance Business Transfer Plan prior to the filing of an implementation order by the court or, if
after the filing of an implementation order, the Commissioner may suspend or revoke the assuming insurer’s certificate of authority to transact insurance business in this state.
Section 9. Effective Date
This act shall become effective _______.
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NCOIL is a national legislative organization with the nation’s 50 states as members, represented principally by legislators serving on their states’ insurance and financial institutions committees. NCOIL writes Model Laws in insurance and financial services, works to preserve the State jurisdiction over insurance as established by the McCarran-Ferguson Act seventy-five years ago, and to serve as an educational forum for public policymakers and interested parties. Founded in 1969, NCOIL works to assert the prerogative of legislators in making State policy when it comes to insurance and educate State legislators on current and longstanding insurance issues