The Georgia General Assembly this week passed a bill that adopts National Association of Insurance Commissioners’ recommendations for insurance holding companies, including calculations for group capital and a framework for liquidity stress tests.
House Bill 969 was requested by the Georgia Office of Commissioner of Insurance and was needed to maintain the department’s accreditation with the NAIC, a spokesman for the department said.
The measure, if signed into law, would require insurers to file an annual group capital calculation, in keeping with the NAIC’s revised guidelines.
The calculation is intended to provide additional analytical information to the state insurance commissioner “for use in assessing group risks and capital adequacy to complement the current holding company analysis,” explains an October report by the NAIC. “This analytical tool is designed to include information on potential risks, as well as the location and sources of capital within the group.”
Those exempt from the filing requirement would include holding companies with only one insurer and those who are required to perform a group capital calculation for the Federal Reserve Board, the bill notes.
The liquidity stress test would apply mostly to life insurance groups but could affect property/casualty insurers if they are part of the same insurance group.
HB 969 also would add statutory language that would allow the insurance commissioner to require an insurer to post a deposit or bond if the insurance company is deemed to be in a hazardous financial condition.
The measure also makes it clear that the group capital calculation and the stress test results are regulatory tools and are not intended to be used to rank insurance companies. Any advertisements or information published in newspapers or magazines about that “would be misleading and is therefore prohibited,” the bill reads.
An NAIC report shows that three other Southeastern states have similar bills pending. These include Alabama, with SB 166 and two other bills; Louisiana, with HB 715, which has passed the House; and Kentucky, with HB 350, which has passed both chambers and is awaiting the governor’s signature.
Topics Legislation Georgia
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