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PAG LIN
1 1 Section 1. NEW SECTION. 521F.1 PURPOSE.
1 2 The purpose of this chapter is to establish minimum capital
1 3 requirements for health organizations that will provide
1 4 protection related to the risks to which an individual health
1 5 organization may be subject including, but not limited to, the
1 6 health organization's asset risk, underwriting risk, credit
1 7 risk, and other business risk.
1 8 Sec. 2. NEW SECTION. 521F.2 DEFINITIONS.
1 9 As used in this chapter, unless the context otherwise
1 10 requires:
1 11 1. "Adjusted risk-based capital report" means a risk-based
1 12 capital report adjusted by the commissioner pursuant to
1 13 section 521F.3, subsection 4.
1 14 2. "Commissioner" means the commissioner of insurance.
1 15 3. "Corrective order" means an order issued by the
1 16 commissioner specifying corrective actions which the
1 17 commissioner has determined are required.
1 18 4. "Domestic health organization" means a health
1 19 organization domiciled in this state.
1 20 5. "Filing date" means March 1 of each year.
1 21 6. "Foreign health organization" means a health
1 22 organization that is not domiciled in this state.
1 23 7. "Health organization" means a health maintenance
1 24 organization, limited service organization, dental or vision
1 25 plan, hospital, medical and dental indemnity or service
1 26 corporation or other managed care organization licensed under
1 27 chapter 514, 514B, or 1993 Iowa Acts, chapter 158, or any
1 28 other entity engaged in the business of insurance, risk
1 29 transfer, or risk retention, that is subject to the
1 30 jurisdiction of the commissioner of insurance or the director
1 31 of public health. "Health organization" does not include an
1 32 insurance company licensed to transact the business of
1 33 insurance under chapter 508, 515, or 520, and which is
1 34 otherwise subject to chapter 521E.
1 35 8. "Revised risk-based capital plan" means a risk-based
2 1 capital plan that has been rejected by the commissioner and
2 2 has been revised by the health organization, with or without
2 3 the commissioner's recommendation.
2 4 9. "Risk-based capital instructions" means the
2 5 instructions included in the risk-based capital report as
2 6 adopted by the national association of insurance
2 7 commissioners, as such risk-based capital instructions may be
2 8 amended by the national association of insurance commissioners
2 9 from time to time in accordance with the procedures adopted by
2 10 the national association of insurance commissioners.
2 11 10. "Risk-based capital level" means a health
2 12 organization's company-action-level risk-based capital,
2 13 regulatory-action-level risk-based capital, authorized-
2 14 control-level risk-based capital, or mandatory-control-level
2 15 risk-based capital as follows:
2 16 a. "Company-action-level risk-based capital" means the
2 17 product of two and the health organization's authorized-
2 18 control-level risk-based capital.
2 19 b. "Regulatory-action-level risk-based capital" means the
2 20 product of one and one-half and the health organization's
2 21 authorized-control-level risk-based capital.
2 22 c. "Authorized-control-level risk-based capital" means the
2 23 number determined under the risk-based capital formula in
2 24 accordance with the risk-based capital instructions.
2 25 d. "Mandatory-control-level risk-based capital" means the
2 26 product of seven-tenths and the health organization's
2 27 authorized-control-level risk-based capital.
2 28 11. "Risk-based capital plan" means a comprehensive
2 29 financial plan containing the elements identified in section
2 30 521F.4, subsection 2.
2 31 12. "Risk-based capital report" means the report required
2 32 in section 521F.3.
2 33 13. "Total adjusted capital" means the sum of the
2 34 following:
2 35 a. A health organization's statutory capital and surplus.
3 1 b. Such other items, if any, as identified in the risk-
3 2 based capital instructions.
3 3 Sec. 3. NEW SECTION. 521F.3 RISK-BASED CAPITAL REPORTS.
3 4 1. A domestic health organization, on or prior to the
3 5 filing date, shall prepare and submit to the commissioner a
3 6 report of the health organization's risk-based capital levels
3 7 as of the end of the calendar year immediately preceding the
3 8 filing date, in a form and containing the information required
3 9 by the risk-based capital instructions. A domestic health
3 10 organization shall also file its risk-based capital report
3 11 with the insurance commissioner in each state in which the
3 12 health organization is authorized to do business, if such
3 13 insurance commissioner has notified the health organization of
3 14 its request in writing. Upon receipt of the written request,
3 15 the health organization shall file its risk-based capital
3 16 report with the requesting commissioner by no later than the
3 17 later of the following:
3 18 a. Fifteen days from the receipt of the written request.
3 19 b. The filing date.
3 20 2. a. A health organization's risk-based capital shall be
3 21 determined pursuant to the formula set forth in the risk-based
3 22 capital instructions. The formula shall take into account all
3 23 of the following, and may by adjusted, as deemed appropriate
3 24 by the commissioner, for the covariance between the following:
3 25 (1) Assets risk.
3 26 (2) Credit risk.
3 27 (3) Underwriting risk.
3 28 (4) All other business risks and other relevant risks as
3 29 identified in the risk-based capital instructions.
3 30 b. The risk factors shall be applied in the manner set
3 31 forth in the risk-based capital instructions.
3 32 3. A health organization shall seek to maintain capital
3 33 above the risk-based capital levels required by this chapter.
3 34 4. A risk-based capital report filed by a domestic health
3 35 organization which in the judgment of the commissioner is
4 1 inaccurate, shall be adjusted by the commissioner to correct
4 2 the inaccuracy. The commissioner shall notify the health
4 3 organization of the adjustment. The notice shall contain a
4 4 statement of the reason for the adjustment.
4 5 Sec. 4. NEW SECTION. 521F.4 COMPANY-ACTION-LEVEL EVENT.
4 6 1. "Company-action-level event" means any of the
4 7 following:
4 8 a. The filing of a risk-based capital report by a health
4 9 organization which indicates that the health organization's
4 10 total adjusted capital is greater than or equal to its
4 11 regulatory-action-level risk-based capital but less than its
4 12 company-action-level risk-based capital.
4 13 b. Notification by the commissioner to a health
4 14 organization of an adjusted risk-based capital report that
4 15 indicates an event in paragraph "a", provided the health
4 16 organization does not challenge the adjusted risk-based
4 17 capital report and request a hearing pursuant to section
4 18 521F.8.
4 19 c. If a hearing is requested pursuant to section 521F.8,
4 20 notification by the commissioner to the health organization
4 21 after the hearing that the commissioner has rejected the
4 22 health organization's challenge of the adjusted risk-based
4 23 capital report indicating the event in paragraph "a".
4 24 2. Upon the occurrence of a company-action-level event,
4 25 the health organization shall prepare and submit to the
4 26 commissioner a risk-based capital plan that includes all of
4 27 the following:
4 28 a. Identification of the conditions which contributed to
4 29 the company-action-level event.
4 30 b. Proposed corrective actions which the health
4 31 organization intends to implement and which are expected to
4 32 result in the elimination of the company-action-level event.
4 33 c. Projections of the health organization's financial
4 34 results for the current year and at least the two succeeding
4 35 years, including projections of statutory balance sheets,
5 1 operating income, net income, capital and surplus, and risk-
5 2 based capital levels. Projections shall be provided assuming
5 3 the absence of the proposed corrective actions and assuming
5 4 the implementation of the proposed corrective actions.
5 5 Projections shall be provided for each major line of business
5 6 and separately identify each significant income, expense, and
5 7 benefit component.
5 8 d. Identification of the primary assumptions impacting the
5 9 health organization's projections and the sensitivity of the
5 10 projections to the assumptions.
5 11 e. Identification of the quality of, and problems
5 12 associated with, the health organization's business, including
5 13 but not limited to its assets, anticipated business growth and
5 14 associated surplus strain, extraordinary exposure to risk, mix
5 15 of business, and use of reinsurance, if any, in each case.
5 16 3. The risk-based capital plan shall be filed within
5 17 forty-five days of the company-action-level event, or, if the
5 18 health organization requests a hearing pursuant to section
5 19 521F.8 for the purpose of challenging the adjusted risk-based
5 20 capital report, within forty-five days after notification to
5 21 the insurer that the commissioner, after hearing, has rejected
5 22 the insurer's challenge.
5 23 4. Within sixty days after the submission by a health
5 24 organization of a risk-based capital plan to the commissioner,
5 25 the commissioner shall notify the health organization whether
5 26 the risk-based capital plan shall be implemented or, in the
5 27 judgment of the commissioner, is unsatisfactory. If the
5 28 commissioner determines the risk-based capital plan is
5 29 unsatisfactory, the notification to the health organization
5 30 shall set forth the reasons for the determination, and may set
5 31 forth proposed revisions which in the judgment of the
5 32 commissioner will render the risk-based capital plan
5 33 satisfactory. Upon the receipt of the notification from the
5 34 commissioner, the health organization shall prepare a revised
5 35 risk-based capital plan, which may incorporate by reference
6 1 any revisions proposed by the commissioner, and file the
6 2 revised risk-based capital plan with the commissioner.
6 3 5. The revised risk-based capital plan shall be filed
6 4 within forty-five days of the receipt of notification from the
6 5 commissioner of the commissioner's determination that the
6 6 risk-based capital plan is unsatisfactory, or, if the health
6 7 organization requests a hearing pursuant to section 521F.8 for
6 8 the purpose of challenging the commissioner's determination,
6 9 within forty-five days after notification to the health
6 10 organization that the commissioner, after hearing, has
6 11 rejected the health organization's challenge.
6 12 6. After notification of the health organization by the
6 13 commissioner that the health organization's risk-based capital
6 14 plan or revised risk-based capital plan is unsatisfactory, the
6 15 commissioner, pursuant to section 521F.8, may specify in the
6 16 notification that the notification constitutes a regulatory-
6 17 action-level event.
6 18 7. a. A domestic health organization that files a risk-
6 19 based capital plan or revised risk-based capital plan with the
6 20 commissioner shall file a copy of the risk-based capital plan
6 21 or revised risk-based capital plan with the insurance
6 22 commissioner in a state in which the health organization is
6 23 authorized to do business if both of the following apply:
6 24 (1) The other state has a risk-based capital provision
6 25 substantially similar to section 521F.9, with respect to the
6 26 confidentiality and availability of such plans.
6 27 (2) The insurance commissioner of that state has notified
6 28 the health organization in writing of its request to receive a
6 29 copy of the risk-based capital plan or revised risk-based
6 30 capital plan.
6 31 b. Upon receipt of the written request under paragraph
6 32 "a", subparagraph (2), the health organization shall file a
6 33 copy of the risk-based capital plan or revised risk-based
6 34 capital plan with the requesting commissioner by no later than
6 35 the later of the following:
7 1 (1) Fifteen days after the receipt of the written request.
7 2 (2) The date on which the risk-based capital plan or
7 3 revised risk-based capital plan is filed under subsection 3 or
7 4 5, as applicable.
7 5 Sec. 5. NEW SECTION. 521F.5 REGULATORY-ACTION-LEVEL
7 6 EVENT.
7 7 1. "Regulatory-action-level event" means any of the
7 8 following:
7 9 a. The filing of a risk-based capital report by the health
7 10 organization that indicates that the health organization's
7 11 total adjusted capital is greater than or equal to its
7 12 authorized-control-level risk-based capital but less than its
7 13 regulatory-action-level risk-based capital.
7 14 b. Notification by the commissioner to a health
7 15 organization of an adjusted risk-based capital report that
7 16 indicates the event in paragraph "a", provided the health
7 17 organization does not challenge the adjusted risk-based
7 18 capital report and request a hearing pursuant to section
7 19 521F.8.
7 20 c. After a hearing pursuant to section 521F.8,
7 21 notification by the commissioner to the health organization
7 22 that the commissioner has rejected the health organization's
7 23 challenge of the adjusted risk-based capital report indicating
7 24 the event in paragraph "a".
7 25 d. Failure of the health organization to file a risk-based
7 26 capital report by the filing date, unless the health
7 27 organization has provided an explanation for the failure which
7 28 is satisfactory to the commissioner and has cured the failure
7 29 within ten days after the filing date.
7 30 e. Failure of the health organization to submit a risk-
7 31 based capital plan to the commissioner within the time period
7 32 set forth in section 521F.4, subsection 3.
7 33 f. Notification by the commissioner to the health
7 34 organization of both of the following:
7 35 (1) The risk-based capital plan or revised risk-based
8 1 capital plan filed by the health organization, in the judgment
8 2 of the commissioner, is unsatisfactory.
8 3 (2) Notification pursuant to this paragraph constitutes a
8 4 regulatory-action-level event with respect to the health
8 5 organization, provided the health organization has not
8 6 challenged the determination pursuant to section 521F.8.
8 7 g. After a hearing pursuant to section 521F.8,
8 8 notification by the commissioner to the health organization
8 9 that the commissioner has rejected the health organization's
8 10 challenge of the determination made by the commissioner
8 11 pursuant to paragraph "f".
8 12 h. Notification by the commissioner to the health
8 13 organization that the health organization has failed to adhere
8 14 to its risk-based capital plan or revised risk-based capital
8 15 plan, but only if the failure has a substantial adverse effect
8 16 on the ability of the health organization to eliminate the
8 17 company-action-level event pursuant to the health
8 18 organization's risk-based capital plan or revised risk-based
8 19 capital plan and the commissioner has so stated in the
8 20 notification. However, notification by the commissioner
8 21 pursuant to this paragraph does not constitute a company-
8 22 action-level event if the health organization has challenged
8 23 the determination of the commissioner pursuant to section
8 24 521F.8.
8 25 i. After a hearing pursuant to section 521F.8,
8 26 notification by the commissioner to the health organization
8 27 that the commissioner rejected the health organization's
8 28 challenge of the commissioner's determination pursuant to
8 29 paragraph "h".
8 30 2. Upon the occurrence of a regulatory-action-level event,
8 31 the commissioner shall do all of the following:
8 32 a. Require the health organization to prepare and submit a
8 33 risk-based capital plan or revised risk-based capital plan, as
8 34 applicable.
8 35 b. Perform an examination or analysis of the assets,
9 1 liabilities, and operations of the health organization,
9 2 including a review of its risk-based capital plan or revised
9 3 risk-based capital plan.
9 4 c. Subsequent to the examination or analysis pursuant to
9 5 paragraph "b", issue a corrective order.
9 6 3. The commissioner, in determining the corrective actions
9 7 to be ordered, may take into account factors the commissioner
9 8 deems relevant with respect to the health organization based
9 9 upon the commissioner's examination or analysis of the assets,
9 10 liabilities, and operations of the health organization,
9 11 including, but not limited to, the results of any sensitivity
9 12 tests undertaken pursuant to the risk-based capital
9 13 instructions. The risk-based capital plan or revised risk-
9 14 based capital plan shall be submitted within forty-five days
9 15 after the occurrence of the regulatory-action-level event,
9 16 except as follows:
9 17 a. If the health organization challenges a risk-based
9 18 capital report pursuant to section 521F.8, and in the judgment
9 19 of the commissioner the challenge is not frivolous, within
9 20 forty-five days after the notification to the health
9 21 organization that the commissioner, after a hearing pursuant
9 22 to section 521F.8, has rejected the health organization's
9 23 challenge.
9 24 b. If the health organization challenges a revised risk-
9 25 based capital plan pursuant to section 521F.8, and in the
9 26 judgment of the commissioner the challenge is not frivolous,
9 27 within forty-five days after the notification to the health
9 28 organization that the commissioner, after a hearing pursuant
9 29 to section 521F.8, has rejected the health organization's
9 30 challenge.
9 31 4. The commissioner may retain actuaries, investment
9 32 experts, and other consultants as deemed necessary by the
9 33 commissioner to review the health organization's risk-based
9 34 capital plan or revised risk-based capital plan; examine or
9 35 analyze the assets, liabilities, and operations of the health
10 1 organization; and assist in the formulation of the corrective
10 2 order with respect to the health organization. Fees of the
10 3 actuaries, investment experts, or other consultants retained
10 4 by the commissioner shall be paid by the health organization
10 5 subject to the review or examination.
10 6 Sec. 6. NEW SECTION. 521F.6 AUTHORIZED-CONTROL-LEVEL
10 7 EVENT.
10 8 1. "Authorized-control-level event" means any of the
10 9 following:
10 10 a. The filing of a risk-based capital report by the health
10 11 organization which indicates that the health organization's
10 12 total adjusted capital is greater than or equal to its
10 13 mandatory-control-level risk-based capital but less than its
10 14 authorized-control-level risk-based capital.
10 15 b. Notification by the commissioner to a health
10 16 organization of an adjusted risk-based capital report that
10 17 indicates the event in paragraph "a", provided the health
10 18 organization does not challenge the adjusted risk-based
10 19 capital report and request a hearing pursuant to section
10 20 521F.8.
10 21 c. After a hearing pursuant to section 521F.8,
10 22 notification by the commissioner to the health organization
10 23 that the commissioner has rejected the health organization's
10 24 challenge of the adjusted risk-based capital report indicating
10 25 the event in paragraph "a".
10 26 d. Failure of the health organization to respond to a
10 27 corrective order in a manner satisfactory to the commissioner,
10 28 unless the health organization has challenged the corrective
10 29 order pursuant to section 521F.8.
10 30 e. Failure of the health organization to respond to a
10 31 corrective order in a manner satisfactory to the commissioner
10 32 after the health organization has challenged the corrective
10 33 order pursuant to section 521F.8, and the commissioner, after
10 34 a hearing pursuant to section 521F.8, has rejected the
10 35 challenge or modified the corrective order.
11 1 2. In the event of an authorized-control-level event, the
11 2 commissioner shall do either of the following:
11 3 a. Take action as required pursuant to section 521F.5 in
11 4 the same manner as if a regulatory-action-level event has
11 5 occurred.
11 6 b. Take action as necessary to cause the health
11 7 organization to be placed under supervision or other
11 8 regulatory control under chapter 507C, if the commissioner
11 9 deems such action to be in the best interests of the
11 10 policyholders and creditors of the health organization and of
11 11 the public. If the commissioner takes such action pursuant to
11 12 this paragraph, the authorized-control-level event is deemed
11 13 sufficient grounds for the commissioner to take action
11 14 pursuant to chapter 507C and the commissioner has the rights,
11 15 powers, and duties with respect to the health organization as
11 16 set forth in chapter 507C. If the commissioner takes action
11 17 under this paragraph pursuant to an adjusted risk-based
11 18 capital report, the health organization is entitled to the
11 19 protections of chapter 17A pertaining to summary proceedings.
11 20 Sec. 7. NEW SECTION. 521F.7 MANDATORY-CONTROL-LEVEL
11 21 EVENT.
11 22 1. "Mandatory-control-level event" means any of the
11 23 following:
11 24 a. The filing of a risk-based capital report which
11 25 indicates that a health organization's total adjusted capital
11 26 is less than its mandatory-control-level risk-based capital.
11 27 b. Notification by the commissioner to a health
11 28 organization of an adjusted risk-based capital report that
11 29 indicates the event in paragraph "a", provided the health
11 30 organization does not challenge the adjusted risk-based
11 31 capital report and request a hearing pursuant to section
11 32 521F.8.
11 33 c. After a hearing pursuant to section 521F.8,
11 34 notification by the commissioner to the health organization
11 35 that the commissioner has rejected the health organization's
12 1 challenge of the adjusted risk-based capital report indicating
12 2 the event in paragraph "a".
12 3 2. In the event of a mandatory-control-level event, the
12 4 commissioner shall take action as necessary to place the
12 5 health organization under supervision or other regulatory
12 6 control pursuant to chapter 507C. If the commissioner takes
12 7 action pursuant to this subsection, the mandatory-control-
12 8 level event is deemed sufficient grounds for the commissioner
12 9 to take action pursuant to chapter 507C, and the commissioner
12 10 has the rights, powers, and duties with respect to the health
12 11 organization as are set forth in chapter 507C. If the
12 12 commissioner takes action pursuant to an adjusted risk-based
12 13 capital report, the health organization is entitled to the
12 14 protections of chapter 17A pertaining to summary proceedings.
12 15 Notwithstanding this subsection, the commissioner may forego
12 16 action for up to ninety days after the mandatory-control-level
12 17 event if the commissioner finds a reasonable expectation
12 18 exists that the mandatory-control-level event may be
12 19 eliminated within the ninety-day period.
12 20 Sec. 8. NEW SECTION. 521F.8 CONFIDENTIAL HEARINGS.
12 21 1. A health organization receiving a notification pursuant
12 22 to subsection 2 is entitled to a confidential hearing before
12 23 the insurance division, at which the health organization may
12 24 challenge a determination or action by the commissioner. Upon
12 25 receipt of the health organization's request for a hearing,
12 26 the commissioner shall set a date for the hearing, which shall
12 27 be not less than ten and not more than thirty days after the
12 28 date of the health organization's request.
12 29 2. A health organization shall notify the commissioner of
12 30 the health organization's request for a confidential hearing
12 31 within five days after the occurrence of any of the following:
12 32 a. Notification to a health organization by the
12 33 commissioner of an adjusted risk-based capital report.
12 34 b. Notification to a health organization by the
12 35 commissioner of both of the following:
13 1 (1) The health organization's risk-based capital plan or
13 2 revised risk-based capital plan is unsatisfactory.
13 3 (2) That the notification pursuant to this paragraph
13 4 constitutes a regulatory-action-level event with respect to
13 5 the health organization.
13 6 c. Notification to a health organization by the
13 7 commissioner that the health organization has failed to adhere
13 8 to its risk-based capital plan or revised risk-based capital
13 9 plan and that the failure has a substantial adverse effect on
13 10 the ability of the health organization to eliminate the
13 11 company-action-level event in accordance with its risk-based
13 12 capital plan or revised risk-based capital plan.
13 13 d. Notification to a health organization by the
13 14 commissioner of a corrective order with respect to the health
13 15 organization.
13 16 Sec. 9. NEW SECTION. 521F.9 CONFIDENTIALITY – USE OF
13 17 REPORTS AND INFORMATION – PROHIBITION ON ANNOUNCEMENTS –
13 18 PROHIBITION ON USE IN RATEMAKING.
13 19 1. A risk-based capital report, to the extent the
13 20 information in the report is not required to be set forth in a
13 21 publicly available annual statement schedule, a risk-based
13 22 capital plan, including the results or report of any
13 23 examination or analysis of a health organization performed
13 24 pursuant to this chapter, and any corrective order issued by
13 25 the commissioner pursuant to an examination or analysis, which
13 26 are filed with the commissioner, are deemed not to be public
13 27 records under chapter 22 and are privileged and confidential.
13 28 This information shall not be made public and is not subject
13 29 to subpoena, other than by the commissioner, and then only for
13 30 the purpose of enforcement actions taken by the commissioner
13 31 pursuant to this chapter or any other provision of the
13 32 insurance laws of this state.
13 33 2. The comparison of a health organization's total
13 34 adjusted capital to any of its risk-based capital levels is a
13 35 regulatory tool which may indicate the need for possible
14 1 corrective action with respect to the health organization, and
14 2 is not to be used as a means to rank health organizations
14 3 generally.
14 4 3. Except as otherwise required under this chapter, the
14 5 publication or dissemination in any manner of an announcement
14 6 or statement which contains an assertion, representation, or
14 7 statement with regard to the risk-based capital levels of a
14 8 health organization, or of a component derived in the
14 9 calculation, by a health organization, agent, broker, or other
14 10 person engaged in any manner in the business of insurance, is
14 11 prohibited. However, if a materially false statement
14 12 comparing a health organization's total adjusted capital to
14 13 its risk-based capital levels or a misleading comparison of
14 14 any other amount to the health organization's risk-based
14 15 capital levels is published or disseminated in any manner and
14 16 if the health organization is able to demonstrate to the
14 17 commissioner with substantial proof that the statement is
14 18 false, misleading, or inappropriate, as the case may be, the
14 19 health organization may publish an announcement in a written
14 20 publication for the sole purpose of rebutting the materially
14 21 false, misleading, or inappropriate statement.
14 22 4. The risk-based capital instructions, risk-based capital
14 23 reports, adjusted risk-based capital reports, risk-based
14 24 capital plans, and revised risk-based capital plans shall be
14 25 solely used by the commissioner in monitoring the solvency of
14 26 health organizations and the need for possible corrective
14 27 action with respect to health organizations. The risk-based
14 28 capital instructions, risk-based capital reports, adjusted
14 29 risk-based capital reports, risk-based capital plans, and
14 30 revised risk-based capital plans shall not be used by the
14 31 commissioner for ratemaking and shall not be considered or
14 32 introduced as evidence in any rate proceeding or used by the
14 33 commissioner to calculate or derive any elements of an
14 34 appropriate premium level or rate of return for any line of
14 35 insurance which a health organization or any affiliate is
15 1 authorized to write.
15 2 Sec. 10. NEW SECTION. 521F.10 SUPPLEMENTAL PROVISIONS –
15 3 RULES – EXEMPTION.
15 4 1. This chapter shall not preclude or limit any other
15 5 powers or duties of the commissioner under insurance laws
15 6 including but not limited to chapter 507C.
15 7 2. The commissioner may adopt rules pursuant to chapter
15 8 17A as are necessary for the administration of this chapter.
15 9 3. The commissioner may exempt from filing a risk-based
15 10 capital report a domestic health organization which writes
15 11 direct business only in this state and satisfies any of the
15 12 following:
15 13 a. Writes direct annual premiums of one hundred thousand
15 14 dollars or less, and does not assume reinsurance in excess of
15 15 five percent of direct annual premiums written.
15 16 b. Is authorized to do business pursuant to chapter 514
15 17 and writes direct annual premiums of one hundred thousand
15 18 dollars or less.
15 19 c. Is a limited health service organization that covers
15 20 fewer than five hundred lives.
15 21 Sec. 11. NEW SECTION. 521F.11 FOREIGN HEALTH
15 22 ORGANIZATIONS.
15 23 1. A foreign health organization, upon the written request
15 24 of the commissioner, shall submit to the commissioner a risk-
15 25 based capital report for the previous calendar year just ended
15 26 by the later of the following:
15 27 a. The filing date.
15 28 b. Fifteen days after the request is received by the
15 29 foreign health organization.
15 30 2. A foreign health organization, upon the written request
15 31 of the commissioner, shall promptly submit to the commissioner
15 32 a copy of any risk-based capital plan that is filed with the
15 33 insurance commissioner of any other state.
15 34 3. The commissioner may require a foreign health
15 35 organization to file a risk-based capital plan under either of
16 1 the following circumstances:
16 2 a. In the event of a company-action-level event,
16 3 regulatory-action-level event, or authorized-control-level
16 4 event as determined under the risk-based capital statute
16 5 applicable in the state of domicile of the foreign health
16 6 organization, or, if no risk-based capital statute is in force
16 7 in that state, under this chapter.
16 8 b. The insurance commissioner of the state of domicile of
16 9 the foreign health organization fails to require the foreign
16 10 health organization to file a risk-based capital plan in the
16 11 manner specified under that state's risk-based capital
16 12 statute, or if no risk-based capital statute is in force in
16 13 that state, pursuant to this chapter.
16 14 4. The failure of the foreign health organization to file
16 15 a risk-based capital plan is sufficient grounds to order the
16 16 health organization to cease and desist from writing new
16 17 insurance business in this state.
16 18 5. In the event of a mandatory-control-level event with
16 19 respect to a foreign health organization, if a domiciliary
16 20 receiver has not been appointed with respect to the foreign
16 21 health organization under the rehabilitation and liquidation
16 22 statute applicable in the state of domicile of the foreign
16 23 health organization, the commissioner may make application to
16 24 the district court as permitted under chapter 507C with
16 25 respect to the liquidation of property of foreign health
16 26 organizations found in this state, and the occurrence of the
16 27 mandatory-control-level event shall be considered adequate
16 28 grounds for the application.
16 29 Sec. 12. NEW SECTION. 521F.12 IMMUNITY.
16 30 Liability shall not arise on the part of and a cause of
16 31 action shall not arise against the commissioner or the
16 32 insurance division or its employees or agents for an action
16 33 taken in the exercise of powers or performance of duties under
16 34 this chapter.
16 35 Sec. 13. NEW SECTION. 521F.13 NOTICES.
17 1 Notice by the commissioner to a health organization which
17 2 may result in regulatory action under this chapter is
17 3 effective upon being sent if transmitted by certified mail,
17 4 or, in the case of any other transmission, is effective upon
17 5 the health organization's receipt of the notice.
17 6 EXPLANATION
17 7 This bill relates to measures of risk-based capital for
17 8 purposes of regulating health organizations in this state.
17 9 The bill establishes a new Code chapter 521F.
17 10 New Code section 521F.1 states the purpose of the chapter
17 11 and new Code section 521F.2 establishes the definitions of
17 12 terms used in the bill.
17 13 New Code section 521F.3 requires a domestic health
17 14 organization to annually file with the commissioner a report
17 15 of the health organization's risk-based capital levels as of
17 16 the end of a calendar year. In addition to the insurance
17 17 commissioner, the report is to be filed with the insurance
17 18 commissioner in each state in which the insurance company is
17 19 authorized to do business. The section defines how the risk-
17 20 based capital is determined for a health organization.
17 21 New Code section 521F.4 establishes and defines a company-
17 22 action-level event and the steps which the health organization
17 23 must take as a result of the event.
17 24 New Code section 521F.5 establishes and defines a
17 25 regulatory-action-level event and steps which the health
17 26 organization must take as a result of the event.
17 27 New Code section 521F.6 establishes and defines an
17 28 authorized-control-level event. Upon the occurrence of an
17 29 authorized-control-level event, the commissioner may take
17 30 action in the same manner as if a regulatory-action-level
17 31 event has occurred, or may take action to place the health
17 32 organization under supervision or other regulatory control.
17 33 New Code section 521F.7 establishes and defines a
17 34 mandatory-control-level event. Upon the occurrence of a
17 35 mandatory-control-level event, the commissioner is required to
18 1 take the necessary action to place the health organization
18 2 under supervision or other regulatory control.
18 3 New Code section 521F.8 establishes the right of a health
18 4 organization to request a hearing upon receipt of the health
18 5 organization of notification by the commissioner of an
18 6 adjusted risk-based capital report, or notification by the
18 7 commissioner that a health organization's risk-based capital
18 8 plan or revised risk-based capital plan is unsatisfactory and
18 9 that the notification constitutes a regulatory-action-level
18 10 event with respect to the health organization.
18 11 New Code section 521F.9 provides that all risk-based
18 12 capital reports are confidential and provides that such
18 13 reports are not to be used or introduced as evidence with
18 14 regard to any rate proceeding.
18 15 New Code section 521F.10 provides that the commissioner may
18 16 exempt from filing a risk-based capital report a domestic
18 17 health organization which writes direct business only in this
18 18 state, writes direct annual premiums of $100,000 or less, and
18 19 does not assume reinsurance in excess of 5 percent of direct
18 20 annual premiums written; is authorized to do business pursuant
18 21 to Code chapter 514 and writes direct annual premiums of
18 22 $100,000 or less; or is a limited health service organization
18 23 that covers fewer than 500 lives.
18 24 New Code section 521F.11 establishes the manner in which
18 25 the chapter applies to foreign health organizations.
18 26 New Code section 521F.12 provides that the commissioner,
18 27 insurance division, and employees and agents of the division
18 28 do not incur liability as the result of any action taken in
18 29 the exercise of powers or performance of duties under new Code
18 30 chapter 521F.
18 31 New Code section 521F.13 provides that notice by the
18 32 commissioner to a health organization which may result in
18 33 regulatory action under new Code chapter 521F is effective
18 34 upon being sent if transmitted by certified mail, or in the
18 35 case of any other transmission is effective upon the health
19 1 organization's receipt of the notice.
19 2 LSB 5250DP 78
19 3 mj/gg/8.1
Text: SSB03042 Text: SSB03044 Text: SSB03000 - SSB03099 Text: SSB Index Bills and Amendments: General Index Bill History: General Index
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