Source: https://code.dccouncil.us/dc/council/code/titles/31/chapters/20/
Timestamp: 2019-04-19 02:44:06+00:00

Document:
D.C. Law Library - Chapter 20. Risk-Based Capital.
↪ Chapter 20. Risk-Based Capital.
Chapter 21. Standards to Identify Insurance Companies Deemed to Be in Hazardous Financial Condition.
§ 31–2003. Company Action Level Event.
§ 31–2004. Regulatory Action Level Event.
§ 31–2005. Authorized Control Level Event.
§ 31–2006. Mandatory Control Level Event.
§ 31–2008. Confidentiality; prohibition on announcements; prohibition on use in ratemaking.
§ 31–2009. Supplemental provisions; rules; exemption.
(1) “Adjusted RBC Report” means an RBC report that has been adjusted by the Commissioner in accordance with § 31-2002(g).
(2) “Commissioner” means the Commissioner of the Department of Insurance, Securities, and Banking.
(3) “Corrective order” means an order issued by the Commissioner specifying corrective actions which the Commissioner has determined are required.
(4) “District” means the District of Columbia.
(5) “Domestic insurer” means any insurance company domiciled in the District.
(6) “Foreign insurer” means any insurance company which is licensed to do business in the District, but is not domiciled in the District.
(6A) "Fraternal benefit society" means any insurance company licensed under the Fraternal Benefit Societies Act of 1998, effective April 29, 1998 (D.C. Law 12-86; D.C. Official Code § 31-5301 et seq.).
(6B) "Insurer" means an insurance company covered by this chapter. The term "insurer" includes a fraternal benefit society.
(7) “Life or health insurer” means any insurance company licensed to underwrite life or health insurance, or a licensed property and casualty insurer writing only accident and health insurance.
(8) “NAIC” means the National Association of Insurance Commissioners.
(9) “Negative trend” means, with respect to a life or health insurer, negative trend over a period of time, as determined in accordance with the “Trend Test Calculation” included in the RBC Instructions.
(10) “Property and casualty insurer” means any insurance company licensed to underwrite property and casualty insurance, but does not include monoline mortgage guaranty insurers, financial guaranty insurers, and title insurers.
(11) “RBC” means risk-based capital.
(12) “RBC Instructions” means the RBC Report including risk-based capital instructions adopted by the NAIC, as such RBC Instructions may be amended by the NAIC from time to time in accordance with the procedures adopted by the NAIC.
(D) “Mandatory Control Level RBC” means the product of .70 and the Authorized Control Level RBC.
(14) “RBC Plan” means a comprehensive financial plan containing the elements specified in § 31-2003(b). 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”.
(15) “RBC Report” means the report required in § 31-2002.
(B) Such other items, if any, as the RBC Instructions may provide.
(17) “State” means any of the several states, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of Northern Mariana Islands.
This section is referenced in § 31-311.03.
D.C. Law 14-28, in par. (1), substituted “31-2002(g)” for “31-2002(c)”.
D.C. Law 15-166, in par. (2), substituted “Commissioner of the Department of Insurance, Securities, and Banking” for “Commissioner of Insurance and Securities”.
For temporary (90 day) amendment of section, see § 2602 of Fiscal Year 2002 Budget Support Emergency Act of 2001 (D.C. Act 14-124, August 3, 2001, 48 DCR 7861).
For temporary (90 day) amendment of section, see § 4(l)(1) of Consolidation of Financial Services Emergency Amendment Act of 2004 (D.C. Act 15-381, February 27, 2004, 51 DCR 2653).
(c) Factors set forth in subsection (b)(1) through (4) of this section shall be determined in each case by applying the factors in the manner set forth in the RBC Instructions.
(e) The factors set forth in subsection (d)(1) through (4) of this section shall be determined in each case by applying the factors in the manner set forth in the RBC Instructions.
(f) An excess of capital over the amount produced by the risk-based capital requirements contained in this chapter and the formulas, schedules, and instructions referenced in this chapter is desirable in the business of insurance. Insurers should maintain capital above the RBC Levels required by this chapter.
(g) If a domestic insurer files an RBC Report which 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. An RBC Report so adjusted is an Adjusted RBC Report. The notice shall contain a statement of the reason for the adjustment.
This section is referenced in § 31-2001, § 31-2010, and § 31-3931.22.
(3) If, pursuant to § 31-2007, an insurer challenges an Adjusted RBC Report that indicates the event in paragraph (1) of this subsection, the notification by the Commissioner to the insurer that the Commissioner has, after a hearing, rejected the insurer’s challenge.
(5) Identify 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.
(c) The RBC Plan shall be submitted to the Commissioner within 45 days of the Company Action Level Event; or if the insurer challenges an Adjusted RBC Report pursuant to § 31-2007, within 45 days after notification to the insurer that the Commissioner has, after a hearing, rejected the insurer’s challenge.
(d) Within 60 days after the submission by an insurer of an RBC Plan to the Commissioner, the Commissioner shall notify the insurer whether the RBC Plan shall 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 which will render the RBC Plan satisfactory. Upon notification from the Commissioner, the insurer shall prepare a Revised RBC Plan, which may incorporate by reference any revisions proposed by the Commissioner, and shall submit the Revised RBC Plan to the Commissioner within 45 days after the notification from the Commissioner; or if the insurer challenges the notification from the Commissioner under § 31-2007, within 45 days after a notification to the insurer that the Commissioner has, after a hearing, rejected the insurer’s challenge.
(e) 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 at the Commissioner’s discretion, subject to the insurer’s right to a hearing under § 31-2007, specify in the notification that the notification constitutes a Regulatory Action Level Event as defined in § 31-2004.
(B) The date on which the RBC Plan or Revised RBC Plan is filed under § 31-2003(c) and (d).
This section is referenced in § 31-2001, § 31-2004, § 31-2013, and § 31-3931.22.
D.C. Law 19-103, in subsec. (a)(1), deleted “and” from the end of subpar. (A), substituted “; or ” for a period the end of subpar. (B), and added subpar. (C).
(9) If, pursuant to § 31-2007, the insurer challenges a determination by the Commissioner under paragraph (8) of this subsection, the notification by the Commissioner to the insurer that the Commissioner has, after a hearing, rejected the challenge.
(3) Subsequent to the examination or analysis, issue an order specifying such corrective actions as the Commissioner shall determine are required (“Corrective Order”).
(3) If the insurer challenges a Revised RBC Plan pursuant to § 31-2007 and the challenge is not frivolous in the judgment of the Commissioner, within 45 days after the notification to the insurer that the Commissioner has, after a hearing, rejected the insurer’s challenge.
(d) 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 such other party as directed by the Commissioner.
This section is referenced in § 31-2003, § 31-2005, and § 31-2013.
(5) If the insurer has challenged a corrective order under § 31-2007 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) If the Commissioner deems it to be in the best interests of the policyholders and creditors of the insurer and of the public, take such actions as are necessary to cause the insurer to be placed under regulatory control under Chapter 13 of this title. In the event the Commissioner takes such actions, the Authorized Control Level Event shall be deemed sufficient grounds for the Commissioner to take action under Chapter 13 of this title, and the Commissioner shall have the rights, powers, and duties with respect to the insurer as are set forth in Chapter 13 of this title. In the event the Commissioner takes actions under this paragraph pursuant to an Adjusted RBC Report, the insurer shall be entitled to such projections as are afforded to insurers under the provisions of Chapter 13 of this title pertaining to summary proceedings.
This section is referenced in § 31-2013.
(3) If, pursuant to § 31-2007, the insurer challenges an Adjusted RBC Report that indicates the event in paragraph (1) of this subsection, notification by the Commissioner to the insurer that the Commissioner has, after a hearing, rejected the insurer’s challenge.
(1) With respect to a life insurer or fraternal benefit society, the Commissioner shall take such actions as are necessary to place the insurer under regulatory control under Chapter 13 of this title. In that event, the Mandatory Control Level Event shall be deemed sufficient grounds for the Commissioner to take action under Chapter 13 of this title, and the Commissioner shall have the rights, powers, and duties with respect to the insurer as are set forth in Chapter 13 of this title. If the Commissioner takes actions pursuant to an Adjusted RBC Report, the insurer shall be entitled to the protections of Chapter 13 of this title pertaining to summary proceedings. Notwithstanding any of the foregoing, the Commissioner may forego action for up to 90 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 90-day period.
(2) With respect to a property and casualty insurer, the Commissioner shall take such actions as are necessary to place the insurer under regulatory control under Chapter 13 of this title, or, in the case of an insurer which is writing no business and which 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 shall be deemed sufficient grounds for the Commissioner to take action under Chapter 13 of this title, and the Commissioner shall have the rights, powers and duties with respect to the insurer as are set forth in Chapter 13 of this title. If the Commissioner takes actions pursuant to an Adjusted RBC Report, the insurer shall be entitled to the protections of Chapter 13 of this title pertaining to summary proceedings. Notwithstanding any of the foregoing, the Commissioner may forego action for up to 90 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 90-day period.
(4) Notification to an insurer by the Commissioner of a Corrective Order with respect to the insurer.
(b) The insurer shall notify the Commissioner of its request for a hearing within 5 days after the notification by the Commissioner under subsection (a) of this section. Upon receipt of the insurer’s request for a hearing, the Commissioner shall set a date for the hearing, which date shall be no less than 10 nor more than 30 days after the date of the insurer’s request.
This section is referenced in § 31-2003, § 31-2004, § 31-2005, and § 31-2006.
(a) All RBC Reports (to the extent the information therein 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 performed pursuant hereto and any Corrective Order issued by the Commissioner pursuant to examination or analysis) with respect to any domestic insurer or foreign insurer that are in the possession or control of the Department of Insurance, Securities, and Banking shall be confidential and privileged; shall not be subject to subchapter II of Chapter 5 of Title 2; shall not be subject to subpoena; and shall not be subject to discovery or admissible in evidence in a private civil action; provided, that the Commissioner may use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as a part of the Commissioner’s official duties. This information is also exempt from any applicable freedom of information law, public records law, public records disclosure law, or other similar statute.
(a-1) The Commissioner or any person who received documents, materials, or other information while acting under the authority of the Commissioner shall not be permitted or required to testify in a private civil action concerning confidential documents, materials, or other information subject to subsection (a) of this section.
(3) May enter into agreements governing the sharing and use of information consistent with this section.
(a-3) No waiver of an applicable privilege or claim of confidentiality in the documents, materials, or other information shall occur as a result of disclosure to the Commissioner under this section or as a result of sharing as authorized in subsection (a-2) of this section. Nothing in this section shall require an insurer to disclose documents, materials, or other information that is not otherwise required by law to be disclosed.
(b) Except as otherwise required under the provisions of this chapter, 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; provided, however, that 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 insurers’ 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.
(c) The RBC Instructions, RBC Reports, Adjusted RBC Reports, RBC Plans and Revised RBC Plans 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 which an insurer or any affiliate is authorized to write.
This section is referenced in § 31-2003.
D.C. Law 15-166, in subsec. (a), substituted “Department of Insurance, Securities, and Banking” for “Department of Insurance and Securities Regulation”.
For temporary (90 day) amendment of section, see § 4(l)(2) of Consolidation of Financial Services Emergency Amendment Act of 2004 (D.C. Act 15-381, February 27, 2004, 51 DCR 2653).
(a) The provisions of this chapter are supplemental to any other provisions of the laws of the District, and shall not preclude or limit any other powers or duties of the Commissioner under such laws, including, but not limited to, Chapter 13 and Chapter 21 of this title.
(b) The Commissioner may adopt reasonable rules necessary for the implementation of this chapter.
(3) Assumes no reinsurance in excess of 5% of direct premium written.
(2) Fifteen days after the request is received by the foreign insurer.
(b) Any foreign 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 commissioner of any other state.
(c) In the event of a Company Action Level Event, Regulatory Action Level Event or Authorized Control Level Event, with respect to any foreign 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 this chapter), if the insurance commissioner or similar authority of the state of domicile of the foreign insurer fails to require the foreign insurer to file an RBC Plan in the manner specified under that state’s RBC statute (or, if no RBC statute is in force in that state, under § 31-2002), the Commissioner may require the foreign insurer to file an RBC Plan with the Commissioner. In such event, the failure of the foreign insurer to file an RBC Plan with the Commissioner shall be grounds to order the insurer to cease and desist from writing new insurance business in the District.
(d) In the event of a Mandatory Control Level Event with respect to any foreign insurer, if no domiciliary receiver has been appointed with respect to the foreign insurer under the rehabilitation and liquidation statute applicable in the state of domicile of the foreign insurer, the Commissioner may make application to the Superior Court permitted under Chapter 13 of this title with respect to the liquidation of property of foreign insurers found in the District, and the occurrence of the Mandatory Control Level Event shall be considered adequate grounds for the application.
There shall be no liability on the part of, and no cause of action shall arise against, the Commissioner or the Department of Insurance, Securities, and Banking or its employees or agents for any action taken by them in the performance of their powers and duties under this chapter.
For temporary (90 day) amendment of section, see § 4(l)(3) of Consolidation of Financial Services Emergency Amendment Act of 2004 (D.C. Act 15-381, February 27, 2004, 51 DCR 2653).
All notices by the Commissioner to an insurer which may result in regulatory action hereunder shall be effective upon dispatch if transmitted by registered or certified mail, or in the case of any other transmission shall be effective upon the insurer’s receipt of such notice.
(1) In the event of a Company Action Level Event with respect to a domestic insurer, the Commissioner shall take no regulatory action hereunder.
(2) In the event of an Regulatory Action Level Event under § 31-2004(a)(1), (2), or (3), the Commissioner shall take the actions required under § 31-2003.
(3) In the event of an Regulatory Action Level Event under § 31-2004(a)(4), (5), (6), (7), (8), or (9) or an Authorized Control Level Event, the Commissioner shall take the actions required under § 31-2004 with respect to the insurer.
(4) In the event of a Mandatory Control Level Event with respect to an insurer, the Commissioner shall take the actions required under § 31-2005 with respect to the insurer.
(2) In the event of an Regulatory Action Level Event under § 31-2004(a)(1), (2), or (3) the Commissioner shall take the actions required under § 31-2003.

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