Bill No.: HB0005                  Drafter:  LGC

LSO No.:  10LSO-0156              Effective Date:  7/1/2010

Enrolled Act No.:  HEA0008

Chapter No.:       26

Prime Sponsor:     Joint Corporations, Elections and Political Subdivisions Interim Committee

Catch Title:       Insurance-risk based capital revisions.

Subject:       Amending events triggering a company action level event under risk based capital requirements.

Summary/Major Elements:

· The act amends the existing risk-based capital law.  Risk-based capital is a way of determining the amount of capital any given insurer should have in order to remain solvent based on the particular risks that insurer undertakes.  Risk-based capital requirements help assure that insurers have sufficient reserves to pay claims in the future. 

· This act adds a trend test for property and casualty insurers.  A trend test for life and health insurers exists in current law.

·   The trend test gives regulators advanced notice or early warning with regard to an insurer's risk-based capital.  If the trend test is triggered, the insurance department can require the insurer to take action to correct the risk-based capital issue before it becomes a significant problem.

· The act was created to comply with accreditation requirements from the National Association of Insurance Commissioners.