Kentucky Administrative Regulations › Title 806 - PUBLIC PROTECTION CABINET - DEPARTMENT OF INSURANCE › Chapter 3 - Authorization of Insurers and General Requirements › Section 806 KAR 3:190 - Risk-based capital for insurers

Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO:
				KRS
				304.3-120,
				304.3-140,
				304.3-240,
				304.5-020,
				304.5-030,
				304.5-040,
				304.5-050,
				304.5-060,
				304.5-070,
				304.5-080,
				304.5-110,
				304.6, 304.7,
				304.24-350,
				304.33,
				304.49-010
NECESSITY, FUNCTION, AND CONFORMITY:
				KRS
				304.2-110 authorizes the Commissioner of
				Insurance to promulgate administrative regulations necessary for or as an aid
				to the effectuation of any provision of the Kentucky Insurance Code, as defined
				by
				KRS
				304.1-010.
				KRS
				304.3-125 authorizes the commissioner to
				promulgate administrative regulations addressing requirements for additional
				capital and surplus based on the kind, type, volume, and nature of insurance
				business transacted, up to the standards prescribed by the National Association
				of Insurance Commissioners. This administrative regulation establishes
				risk-based capital requirements for all insurers authorized to transact
				insurance business in Kentucky.
Section
			 1. Definitions.
(1) "Adjusted
			 RBC report" means an RBC report which has been adjusted by the commissioner in
			 accordance with Section 3(6) of this administrative regulation.
(2) "Authorized control level RBC" means the
			 number determined under the risk-based capital formula in accordance with the
			 RBC instructions.
(3) "Company
			 action level RBC" means the product of two (2.0) and its authorized control
			 level RBC.
(4) "Corrective order"
			 means an order issued by the commissioner specifying corrective actions which
			 the commissioner has determined are required.
(5) "Domestic insurer" is defined by
			 KRS
			 304.1-070(1).
(6) "Foreign insurer" is defined by
			 KRS
			 304.1-070(2).
(7) "Fraternal benefit society" is defined by
			 KRS
			 304.29-011.
(8) "Insurer" is defined by
			 KRS
			 304.1-040.
(9) "Life and health insurer" means any
			 insurer licensed to write insurance as defined in
			 KRS
			 304.5-020,
			 304.5-030,
			 and
			 304.5-040
			 or a licensed property and casualty insurer writing only accident and health
			 insurance.
(10) "Mandatory control
			 level RBC" means the product of seven-tenths (.70) and the authorized control
			 level RBC.
(11) "NAIC" is defined
			 by
			 KRS
			 304.7-012(59).
(12) "Negative trend" means, with respect to
			 a life or health insurer or a fraternal benefit society, negative trend over a
			 period of time, as determined in accordance with the "Trend Test Calculation"
			 included in the Life or Fraternal RBC instructions.
(13) "Property and casualty insurer" means
			 any insurer licensed to write insurance as defined in
			 KRS
			 304.5-050,
			 304.5-060,
			 304.5-070,
			 304.5-080,
			 and
			 304.5-110,
			 except for monoline mortgage guaranty insurers, financial guaranty insurers,
			 and title insurers.
(14) "RBC"
			 means risk-based capital.
(15) "RBC
			 instructions" means the RBC Report including risk-based capital instructions
			 adopted by the NAIC.
(16) "RBC
			 Level" means an insurer's company action level RBC, regulatory action level
			 RBC, authorized control level RBC, or mandatory control level RBC.
(17) "RBC plan" means a comprehensive
			 financial plan containing the elements specified in Section 4(2) of this
			 administrative regulation.
(18)
			 "RBC report" means the report required in Section 3 of this administrative
			 regulation.
(19) "Regulatory action
			 level RBC" means the product of one and five-tenths (1.5) and its authorized
			 control level RBC.
(20) "Revised
			 RBC plan" means an RBC plan that has been rejected by the commissioner and then
			 revised by the insured.
(21) "Total
			 adjusted capital" means the sum of:
(a) An
			 insurer's statutory capital and surplus as determined in accordance with the
			 statutory accounting applicable to the annual financial statements required to
			 be filed under
			 KRS
			 304.3-240; and
(b) Any other items as specified in the RBC
			 instructions.