2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 45 - Risk Based Capital (§§ 4501 — 4513) › § 4502 - Definitions

For the purposes of this chapter, the following terms shall have the meaning stated below:
(1) Local insurer.— Means any entity as defined in § 301(1) of this title. This term also includes health maintenance organizations defined in § 1902(6) of this title, except in those instances in which it is indicated otherwise.
(2) Property and casualty insurer.— Means any insurer authorized to underwrite insurance defined in §§ 403, 404, 405, 406, 407, 408 and/or 409 of this title.
(3) Life or disability insurer.— Means any insurer authorized to underwrite insurance policies defined in § 402 and/or 403 of this title, or in § 1902(4) of this title. This term also includes a property and casualty insurer that only underwrites insurance policies defined in § 403 of this title.
(4) Foreign insurer.— Means any entity as defined in § 301(2) of this title. This term also includes health maintenance organizations defined in § 1902(6) of this title, except in those instances in which it is indicated otherwise.
(5) Adjusted capital.— Means the addition of:
(a) Capital plus surplus of the insurer, determined by accounting methods applicable to the annual financial statements prepared under § 331 of this title, and
(b) all other items, if any, as provided under the risk based capital instructions.
(6) Risk based capital report.— Means the report required under § 4503 of this title.
(7) Revised risk based capital report or revised report.— Means a risk based capital report that has been modified by the Commissioner pursuant to § 4503(2) of this title.
(8) Risk based capital instructions.— Means the risk based capital report adopted by the NAIC which includes the instructions, which may be amended by the NAIC pursuant to the procedures of said Association.
(9) NAIC.— Means the “National Association of Insurance Commissioners”.
(10) Risk based capital level.— Means the risk based capital level of the insurer which could require one of the following measures: action by the insurer (insurer action level); action by the regulator (regulatory action level); control of the insurer by the regulatory entity (authorized control level); and the rehabilitation or liquidation of the insurer (mandatory control level). These levels are computed as follows:
(a) Insurer action level.— Means, in respect of all insurers, the result of multiplying 2.0 by its authorized control level.
(b) Regulatory action level.— Means the result of multiplying 1.5 by its authorized control level.
(c) Authorized control level.— Means the number determined by using the risk based capital formula as per the risk based capital instructions.
(d) Mandatory control level.— Means the product of multiplying 0.70 by the authorized control level.
(11) Corrective order.— Means an order issued by the Commissioner against an insurer, whereby the Commissioner specifies the corrective action he/she deems to be necessary.
(12) Risk based capital plan.— Means a comprehensive financial plan that contains all the elements specified in § 4504(2) of this title. If the Commissioner were to reject the risk based capital plan submitted by an insurer, and for such a reason the insurer were to revise the same, regardless of whether the insurer includes the recommendations of the Commissioner or not, said plan shall be denominated as “revised risk based capital plan” or “revised plan”.
(13) Negative trend.— Means, in respect of a life or disability insurer, a negative trend during a certain term, computed on the base of the “trend test calculation”, included in the risk based capital instructions.
History —Ins. Code, added as § 45.020 on Mar. 18, 2008, No. 32, § 1, eff. 1 year after Mar. 18, 2008.