House of Representatives

SB 1096

NOW:  nationally standardized tests; public view

Sponsors: Senator Daniels

 

W/D

Committee on Education

X

Committee on Financial Institutions and Insurance

 

Caucus and COW

 

 

As Passed the House

 

SB 1096 exempts from public records law any nationally standardized test administered to pupils in Arizona under specified conditions.  The bill also requires the State Board of Education to adopt rules that will allow the general public to view the state’s nationally standardized test.

 

SB 1096 has a proposed strike-everything amendment establishing that captive insurers may transact insurance business in this state upon formation and licensure under Title 20, Chapter 4, Article 14 of the Arizona Revised Statutes.

 

History

There are approximately 3,200 captives worldwide.  Estimates of premiums written or reinsured by these captives are around 60 billion dollars.  Although most jurisdictions available to captives are overseas, twenty-one states have adopted legislation in an attempt to bolster their economies.

 

Captive insurance is a form of self-insurance.  Captive insurance companies are established to serve specific needs within corporations.  A typical captive is owned or controlled by a single parent or group of companies that are not primarily engaged in the business of insurance.  Captives function as risk bearing entities that essentially perform the same role as traditional insurers.  All or a significant portion of the risks written are “captive,” related in some way to the risks of the shareholders or third-party risks which the shareholders control.  Risks insured by captives vary.  Coverage may include such risks as property, liability or worker’s compensation and may be for primary or excess layers of risk.  Typical coverage includes a primary policy, some type of excess coverage and a stop-loss policy.  Primary coverage is often assumed by the captive while excess and stop-loss coverage is normally purchased in the traditional market.  

 

Provisions

·                      Requires captive insurers and domestic life and disability reinsurers to pay certificate of authority issuance and renewal fees as prescribed by the Director.

·                      Defines affiliate, association, association captive insurer, captive insurer, controlled unaffiliated business, manager, member organization and pure captive insurer.

·                      Prohibits a pure captive insurer from insuring risks other than those of its affiliates or a controlled unaffiliated business.

·                      Prohibits an association captive insurer from insuring risks other than those of the member organizations or its association and the organization’s affiliates.

·                      Prohibits a captive insurer from engaging in the insurance business of hospital and medical service corporations, health care service organizations, prepaid legal insurance contracts, title insurance, mortgage guaranty insurance, workers’ compensation and motor vehicle or homeowner’s insurance.

·                      Requires that all captive insurers conducting business in this state be licensed in Arizona, maintain their principal place of business in this state and hold at least one board of directors meeting each year in Arizona.

·                      Requires each captive insurer to appoint a resident statutory agent to accept service of process on its behalf in this state.

·                      Requires that each captive insurer file with the Director evidence that the captive insurer will be able to meet its policy obligations.  Any material change in this information shall be provided to the Director within 30 days of the change.

·                      Establishes that information submitted for the purpose of licensure is confidential.

·                      Prohibits a captive insurer from adopting a name that is the same or similar to any existing business registered in Arizona.

·                      Requires a pure captive insurer to maintain at least $250,000 in capital and surplus.  A pure captive insurer transacting reinsurance shall maintain half of this amount.

·                      Requires an association captive insurer to maintain at least $500,000 in capital and surplus.  An association captive insurer transacting reinsurance shall maintain half of this amount.

·                      Capital and surplus requirements shall be in the form of a letter of credit that is held by the Director in trust for the protection of policyholders.

·                      Requires pure captive insurers to be incorporated as a stock insurer.

·                      An associative captive may be incorporated as a stock insurer or mutual insurer.

·                      Requires all captive insurers to submit a report of their financial condition to the Director no later than 90 days after the end of the captive insurer’s fiscal year.

·                      Authorizes the Director to examine a captive insurer whenever deemed prudent by the Director.

·                      Authorizes the Director to use independent contractor examiners to review the financial condition of captive insurers.  Expenses related to the examination shall be paid by the captive insurer.

·                      Authorizes the Director to suspend, revoke or refuse to renew a captive insurer’s license on the basis of: (1) insolvency, (2) failure to submit an annual report, (3) failure to comply with the captive insurer’s organizational documents and (4) use of any methods that render the captive insurer’s operation hazardous to the public or its policyholders.

·                      Associate captives are subject to the restrictions on allowable assets. 

·                      Authorizes a captive insurer to provide reinsurance on risks ceded by another insurer.

·                      Establishes that a captive insurer is not required to join a rating organization.

·                      Prohibits a captive insurer from joining or contributing financially to any plan, pool, association or guaranty or insolvency fund in this state.

·                      Permits the Director to adopt rules necessary to carry out this Article.

·                      Requires that a captive insurer hire a manager who is a resident of this state that shall maintain the records of the captive insurer’s business.

·                      Requires that the manager of a captive notify the Director of any failure of the captive insurer to comply with this Article.

·                      Requires DOI to submit an annual report that includes the list of fees collected by captive insurers and domestic life and disability reinsurers by the Department.  The report shall be submitted to the Speaker of the House, President of the Senate and Governor.

·                      Contains an effective date of December 31, 2001.

 

 

 

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454th Legislature                     

First Regular Session    3          April 5, 2001

 

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