Senate Bill Report — SB 6027, Insurer Holding Company Act (Washington, January 11, 2024)

Summary

Senate Bill Report on SB 6027, as of January 11, 2024, covers an act relating to the insurer holding company act, with Senators Stanford, Kuderer and Nobles listed as sponsors by request of Insurance Commissioner. The bill incorporates the 2020 revisions to the NAIC Holding Company Act and Model Regulation into Washington State's Insurer Holding Company Act. Every authorized insurer in a holding company must file an annual Group Capital Calculation with the OIC at registration, and Liquidity Stress Test results may also be required. The OIC must keep the results confidential but may share them with designated third party consultants under written conditions. The report lists Appropriation: None.

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Issuer: Congressional materials
Document type: Report
Date: 2024-01-11
Case: 2024 01 11 A31505 D263707 Bill Report 6027 Sba Bfgt 24

Cite this document

“Senate Bill Report — SB 6027, Insurer Holding Company Act (Washington, January 11, 2024).” Original at app.leg.wa.gov, dated 2024-01-11. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2024-01-11-2024-01-11-a31505-d263707-bill-report-6027-sba-bfgt-24/, SHA-256 8f14ed64b0b6699ca787e08fa3e06d56ea89e2288bd078b2ae56e561c0d8a1e8.

Full text

SENATE BILL REPORT
SB 6027

As of January 11, 2024

Title: An act relating to the insurer holding company act.

Brief Description: Concerning the insurance holding company act.

Sponsors: Senators Stanford, Kuderer and Nobles; by request of Insurance Commissioner.

Brief History:
Committee Activity: Business, Financial Services, Gaming & Trade: 1/11/24.

Brief Summary of Bill
• Requires insurance holding companies to provide certain information
regarding solvency at registration.
• Establishes certain rules and requirements around confidential treatment
of information regarding solvency.
• Allows an insurance holding company's solvency information to be
shared with a designated third-party consultant if certain conditions are
met.

SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES, GAMING & TRADE

Staff: Kellee Gunn (786-7429)

Background: National Association of Insurance Commissioners. The National Association
of Insurance Commissioners (NAIC) is governed by the chief insurance regulators from the
50 states, the District of Columbia, and five U.S. territories to coordinate regulation of
multistate insurers. The NAIC develops legal, financial, and organizational standards for
insurance regulators through its accreditation process.

Insurance Holding Companies. An insurance holding company is a system that consists of

This analysis was prepared by non-partisan legislative staff for the use of legislative
members in their deliberations. This analysis is not part of the legislation nor does it
constitute a statement of legislative intent.

Senate Bill Report -1- SB 6027
two or more affiliated persons, one of which is an insurer. Every insurer authorized to do
business in this state that is a member of a holding company system is required to be
registered with the Office of the Insurance Commissioner (OIC) unless they are subject to
substantially similar requirements where they are domiciled.

National Association of Insurance Commissioners Model Acts for Insurance Group
Supervision. The NAIC’s Insurance Holding Company System Regulatory
Act—#440—and Insurance Holding Company System Model Regulation with Reporting
Forms and Instructions—#450—provide state insurance departments with a framework for
insurance group supervision. The intent of the act is to provide a stronger domestic legal
structure under which holding companies are supervised.

Within the last couple of years, NAIC adopted revisions to model acts applicable to
insurance holding companies. The 2020 revisions create a Group Capital Calculation (GCC)
and Liquidity Stress Test (LST) to provide U.S. regulators with additional tools for
conducting group-wide supervision and help understand the financial condition of non-
insurance entities. The GCC satisfies group capital assessment requirements of the Covered
Agreements with the EU and UK. LST provides insights into the financial health and risks
monitored by the U.S. Treasury, and requires insurers to file the results of a specific year’s
LST to the state insurance commissioner.

Model Act revisions made in 2020 will become an NAIC accreditation requirement,
effective January 1, 2026.

Summary of Bill: The 2020 revisions to the NAIC Holding Company Act—#440—and
Model Regulation—#450—are incorporated into Washington State's Insurer Holding
Company Act.

Tools to Test for Solvency in Insurance Group Supervision. Every insurer authorized to do
business in this state who is a member of an insurance holding company shall file an annual
GCC with the OIC at registration, concurrently with other necessary information. If scoped
by the NAIC's LST framework, LST results may also be required at registration. The report
of the GCC and LST must be completed in accordance with NAIC's instructions.

GCC and resulting group capital ratio as well as LST results and supporting disclosures are
not intended as a means for ranking insurers or insurance holding companies. Publishing, or
otherwise communicating to the public the results of the GCC or LST is prohibited except
for in instances to rebut a materially false statement.

Confidentiality Relating to Information from a Group Capital Calculation and Liquidity
Stress Test. The OIC shall maintain confidentiality of GCC and the group capital ratio
produced within an insurance holding company's calculation or the LST and supporting
disclosures and other information from the insurance holding company.

Senate Bill Report -2- SB 6027
The OIC may share and receive confidential information with third party consultants
designated by the commissioner provided that the recipient agrees in writing to maintain the
confidentiality and the privileged status of the information; to ensure the information is not
stored in a permanent database after the underlying analysis is completed; and consent to
intervention or notification to an insurer under certain circumstances.

Appropriation: None.

Fiscal Note: Not requested.

Creates Committee/Commission/Task Force that includes Legislative members: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Senate Bill Report -3- SB 6027

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Our copy: 2024-01-11_a31505_d263707_bill-report-6027-sba-bfgt-24.pdf
Original: app.leg.wa.gov