The Alabama Department of Insurance has updated a number of regulations in keeping with the National Association of Insurance Commissioners’ model regulations and recommendations from the Insurance Institute for Business and Home Safety.
Some of the rules, which take effect this week, had not been updated for almost two decades, the department’s general counsel said. The rules affect custodial agreements, clearing corporations, captive groups and the state’s wind-mitigation/home hardening program.
Clearing corporations, used to handle securities transactions, now include “treasury/reserve automated debt entry securities systems” and “treasury direct” book entry securities systems as established by federal law.
Custodians, such as banks or other organizations that hold investment assets, now include Federal Home Loan Banks, the rules note. Broker/dealers must now be registered with the U.S. Securities and Exchange Commission, must be members of the Securities Investor Protection Corp. and should have a net worth of at least $250 million.
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The broker/dealer must maintain insurance to protect each insurance company’s custodied securities, equal to the market value of the securities. The state insurance commissioner may determine if the type and amount of insurance coverage is adequate, the regulations note.
“The custodian shall be obligated to indemnify the insurance company for any loss of custodied securities, except that the custodian shall not be so obligated to the extent that the loss was caused by other than the negligence or dishonesty of the custodian,” the new rules read.
The action also updates the list of statutes and regulations that apply to captive risk retention groups, including the new regulations on clearing corporations and custody agreements.
“Thus, captive risk retention groups domiciled in Alabama are now subject to the same rules regarding custodial agreements and the use of clearing corporations as are other domestic insurers,” ALDOI General Counsel Reyn Norman said in an email.
The new regulations also were updated to reflect changes by the IBHS on contractor requirements for the Strengthen Alabama Homes program, which provides wind-mitigation grants for homeowners.
A contractor must hold a valid license, a general liability insurance policy with $1 million in coverage, and workers’ compensation insurance. The contractor must complete wind and hurricane fortification training, must not have a conflict of interest, and cannot be the evaluator for the project, determining mitigation needs.
To be eligible for the grants, the homeowner’s primary residence must be in a county where the grants are approved, the new rules read. If the home is in a flood area, the homeowner must provide proof of flood insurance.
Topics Alabama
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