An Act To Maintain Compliance of Maine's Insurance Laws with National Standards
Maine Legislature, Session 124, LD 1510
Committee: Insurance and Financial Services
Sponsors: TREAT
Amends: 24-A MRSA §221-A, 24-A MRSA §788, 24-A MRSA §952-A, 24-A MRSA §994, 24-A MRSA §1402, 24-A MRSA §1410, 24-A MRSA §1472

MAINE STATE LEGISLATURE 
The following document is provided by the 
LAW AND LEGISLATIVE DIGITAL LIBRARY 
at the Maine State Law and Legislative Reference Library 
http://legislature.maine.gov/lawlib 
Reproduced from scanned originals with text recognition applied 
(searchable text may contain some errors and/or omissions) 
n 
r-i 
\ 
(~ 
124th MAl E LEGISLATURE 
Legislative Document 
No. 1510 
H.P.1 
House of Representatives, December 10, 2009 
An Act To Maintain Compliance of Maine's Insurance Laws with 
National Standards 
Approved for introduction by a majority of the Legislative Council pursuant to Joint Rule 
203. 
Received by the Clerk of the House on December 8, 2009. Referred to the Committee on 
Insurance and Financial Services pursuant to Joint Rule 308.2 and ordered printed pursuant to 
Joint Rule 401. 
Presented by Representative TREAT of Hallowell. 
Printed on recycled paper 
71/~ 
1J7. 71!tI£~{ 
MILLICENT M. MacFARLAND 
Clerk 
Be it enacted by the People of the State of Maine as follows: 
PART A 
Sec. A-I. 24-A MRSA §221-A, sub-§3, as amended by PL 1999, c. 113, §5, is 
further amended to read: 
3. Audits required. All insurers, excepting insurers transacting business in this 
State pursuant to the terms of chapter 51, shall cause to be conducted an annual audit by 
an independent certified public accountant. Each domestic insurer shall file an audited 
financial report with the superintendent on or before June 1 st for the year ending 
December 31st preceding. An extension of the filing deadline may be granted by the 
superintendent upon a showing by the insurer or its accountant that there exists valid 
justification for such an extension. 
A foreign or alien insurer shall file an audited 
financial report upon the superintendent's request. A firm of independent certified public 
accountants engaged to perform an audit of an insurer shall substitute the appointed audit 
partner in charge with another audit partner in charge at least once every + 2. years. An 
accountant substituted for pursuant to this subsection may not serve as a partner in charge 
of that audit until ~ 2. years after the date of substitution, unless the superintendent waives 
this requirement on the basis of unusual circumstances upon application by the insurer. 
Sec. A-2. 24-A MRSA §221-A, sub-§7, as amended by PL 1999, c. 113, §7, is 
repealed and the following enacted in its place: 
7. Exemptions. Upon written application of any insurer subject to this section, the 
superintendent may grant an exemption of the filing requirements under this section if the 
superintendent finds upon review of the application that compliance would constitute a 
financial hardship upon the insurer. 
An insurer is exempt from the filing requirements of this section for any year in which the 
insurer's annual statement reflects: 
A. Nationwide business in an amount less than $1,000,000 in written premium plus 
reinsurance assumed; and 
B. Outstanding loss reserves in an amount less than $1,000,000. 
Sec. A-3. 24-A MRS A §222, sub-§l1-A, as amended by PL 1999, c. 113, §12, is 
repealed. 
Sec. A-4. 24-A MRS A §222, sub-§l1-B, as enacted by PL 1993, c. 313, §12, is 
repealed. 
Sec. A-5. 24-A MRS A §222, suh-§U-C is enacted to read: 
ll-c' Dividends and distributions. The superintendent shall review all dividends 
and distributions declared or paid by any insurer registered under subsection 8 at least 
annually. 
A. An insurer shall notify the superintendent within 5 days after the declaration of 
any dividend or distribution. 
If the dividend or distribution is not disapproved 
) 
) 
) 
n 
-I 
1 
'------,. 
pursuant to paragraph B and is not an extraordinary dividend as defined in paragraph 
C, the insurer may pay the dividend or distribution once the superintendent has 
approved the payment or 10 days have eiapsed after the superintendent's receipt of 
notice. 
B. The superintendent shall issue an order restricting or disallowing the payment of 
dividends and distributions if the superintendent determines that the insurer's surplus 
would not be reasonable in relation to the insurance company's outstanding 
liabilities, that the insurer's surplus would be inadequate to that company's financial 
needs or that the insurer's financial condition would constitute a condition hazardous 
to policyholders, claimants or the public. 
C. An extraordinary dividend may not be paid until affirmatively approved by the 
superintendent or until at least 60 days after the superintendent has received a request 
to pay an extraordinary dividend. 
(1) 
For purposes of this subsection, "extraordinary dividend" means any 
dividend or distribution, other than a pro rata distribution of a class of the 
insurer's own securities, that: 
(a) Exceeds the greater of 10% of the insurer's surplus to policyholders as of 
December 31st of the preceding year and the net gain from operations for the 
12-month period ending December 31st of the preceding year; 
(b) Is declared within 5 years after any acquisition of control of a domestic 
insurer or of any person controlling that insurer, unless it has been approved 
by a number of continuing directors equal to a majority of the directors in 
office immediately preceding that acquisition of control; or 
ec) Is not paid entirely from unassigned funds. For purposes of this division, 
50% of the net of unrealized capital gains and unrealized capital losses, 
reduced, but not to less than zero, by that portion of the asset valuation 
reserve attributable to equity investments, must be excluded from the 
calculation of unassigned funds. 
(2) An insurer may declare an extraordinary dividend on a conditional basis, 
subject to the superintendent's approval. 
A declaration pursuant to this 
subparagraph does not confer any rights upon stockholders until the 
superintendent has approved the payment or the 60-day review period has 
elapsed. 
Sec. A-6. 24-A MRSA §788, as amended by PL 2007, c. 386, § 16, is further 
amended to read: 
§788. Dividends 
The special purpose reinsurance vehicle may not declare or pay dividends in any 
form to its owners unless the dividends do not cause the reinsurance vehicle or any of its 
protected cells to become impaired and, after giving effect to the dividends, the assets of 
the reinsurance vehicle, including assets held in trust pursuant to the terms of the 
insurance securitization, must be sufficient to meet its obligations. Except for dividends 
specifically provided for in the approved plan of operation under section 782, subsection 
2, paragraph H, the prior approval of the superintendent is required for any dividend paid 
during the tennof coverage or while the reinsurance vehicle has undischarged obligations 
to the ceding insurer. The dividends may be declared by the board of directors of the 
reinsurance vehicle if the dividends would not violate the provisions of this subchapter or 
the approved plan of operation and would not jeopardize the fulfillment of the obligations 
of the reinsurance vehicle or the trustee pursuant to the special purpose reinsurance 
vehicle insurance securitization, the special purpose reinsurance vehicle contract or any 
related transaction. The provisions of section 222, subsections 11 A and 11 B subsection 
II-C do not apply to such dividends. 
PART B 
Sec. B-1. 24-A MRSA §952-A, sub-§5 is enacted to read: 
5. Applicability to health carriers. A health carrier not otherwise subject to this 
section or section 993 shall file an actuarial opinion in accordance with the applicable 
National Association of Insurance Commissioners annual statement instructions. For 
purposes of this section, "health carrier" means an insurer, health maintenance 
organization, nonprofit corporation subject to Title 24 or fraternal benefit society that 
provides health insurance or comparable health benefits. This section and rules adopted 
pursuant to this section apply except to the extent that they do not specifically reference 
health carriers and impose requirements that are inconsistent with or more stringent than 
the annual statement instructions. 
Sec. B-2. 24-A MRSA §994, sub-§l, as enacted by PL 2007, c. 281, §2 and 
affected by §3, is amended to read: 
1. Statement of actuarial opinion. The statement of actuarial opinion under section 
993, subsection 1 must be provided with the annual actuarial opinion statement under 
section 993, subsection 2 423 in accordance with the appropriate NAIC property and 
casualty annual statement instructions and is a public record subject to disclosure 
pursuant to Title 1, chapter 13. 
PART C 
Sec. C-l. 24-A MRSA §1402, sub-§l, E[B, as enacted by PL 1997, c. 457, §23 
and affected by §55, is amended to read: 
B. 
Employees Property and casualty insurance adjusters who are employees of 
insurers; 
Sec. C-2. 24-A MRSA §1402, sub-§9-A is enacted to read: 
9-A. Multiple peril crop insurance adjuster. 
"Multiple peril crop insurance 
adjuster" means a person who adjusts crop insurance claims under the federal crop 
insurance program administered by the United States Department of Agriculture. 
Sec. C-3. 24-A MRSA §1402, sub-§U-A is enacted to read: 
) 
) 
) 
n 
[. 
!' 
('I 
. ) 
'---" 
\ 
) 
~' 
U-A. Property and casualty insurance adiuster. "Property and casualty insurance 
adjuster" means a person who adjusts property and casualty claims of any kind except for 
multiple peril crop insurance claims. 
Sec. C-4. 24-A MRSA §1410, sub-§9 is enacted to read: 
9. Multiple peril crop insurance adiuster examination. An individual applying 
for a resident multiple peril crop insurance adjuster license must either pass a crop 
adjuster examination administered by the superintendent under this section or provide 
proof of federal crop insurance certification pursuant to a process that includes passing a 
crop adjuster proficiency examination. 
Sec. C-S. 24-A MRS A §141S, sub-§3, as enacted by PL 1997, c. 592, §21, is 
II 
amended to read: 
3. Adjuster authorities. A resident or nonresident adjuster may receive the nronertv 
and casualtv authoritv following authorities under the license~~ 
A. Property and casualty insurance adjuster; and 
B. Multiple peril crop insurance adjuster. 
Sec. C-6. 24-A MRSA §1472, sub-§2, ~C, as amended by PL 2001, c. 259, §44, 
is further amended to read: 
C. Must pass any written examination required for the license under subchapter II 2-
or maintain federal crop insurance certification in the case of multiple peril crop 
insurance adjusters who established license qualification through such certification. 
SUMMARY 
This bill makes changes to conform Maine's insurance laws to new national 
standards adopted by the National Association of Insurance Commissioners. 
Part A of the bill increases the time period from 2 to 5 years for the disqualification 
of the lead partner conducting an outside audit of an insurance company and authorizes 
the Superintendent of Insurance to waive the standard for unusual circumstances. Part A 
also clarifies the superintendent's authority related to the declaration and distribution of 
dividends, including extraordinary dividends, by insurance company holding systems. 
Part B of the bill requires all health insurers to submit a qualified actuarial opinion as 
part of their annual statement to the Department of Professional and Financial Regulation, 
Bureau of Insurance. 
Part C of the bill establishes a separate licensing category for multiple peril crop 
insurance adjusters.