The Arkansas Insurance Department (AID) was an active participant in encouraging state lawmakers to pass legislation this year to adopt the new insurance business transfer model called the Insurance Business Transfer (IBT) Act.
The IBT Act will become effective on July 28, 2021.
In a media release, AID noted that the law provides insurance companies an organized and efficient process to transfer blocks of insurance business from any jurisdiction to another insurance company in Arkansas, benefiting insurers seeking to restructure and improve operational efficiency, and ultimately creating a unique opportunity for Arkansas to attract new business to the state.
Modeled after the Part VII transfer process in the United Kingdom and EU, Arkansas’ new IBT Act provides a mechanism for insurers to absolutely transfer blocks of insurance business to another insurance company. The IBT provides an efficient and straightforward process to transferring and assuming companies, while also providing legal finality, the department said.
AID worked closely with bill sponsor, Senator Jason Rapert of Conway, as well as stakeholders, and will bring the same level of commitment to the implementation process. The department said it promises to provide the dedicated staff and resources necessary for each IBT application to be thoroughly and expeditiously reviewed.
The finalized legislation requires that the state insurance commissioner promulgate rules necessary for proper implementation of the IBT Act. AID is currently working with stakeholders on a rule to support the legislation and expects it to be formally promulgated and effective later this year.
There are several safeguards throughout the IBT application review process to ensure that the interests of policyholders are protected. An application must be reviewed and approved by both the insurance commissioner and a court of general jurisdiction. Once approved, an IBT will result in a novation of the transferred contracts of insurance or reinsurance resulting in the assuming insurer becoming directly liable to the policyholders or reinsureds of the transferring insurer and extinguishing the transferring insurer’s insurance obligations or risks under the contracts.
Source: AID
Topics Arkansas
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