3901-3-16 Credit for reinsurance.

 

 

 

Rule Summary and Fiscal Analysis (Part A)

 

Department of Insurance

Agency Name

 

Tina Chubb

Division                                                                  Contact

 

50 W Town Street Suite 300 Columbus OH 43215-0000

[phone]     (614)

644-3742

Agency Mailing Address (Plus Zip)                                       Phone                     Fax

[e-mail]

Email

3901-3-16

Rule Number

AMENDMENT

TYPE of rule filing

Rule Title/Tag Line              Credit for reinsurance.

RULE SUMMARY

1.  Is the rule being filed consistent with the requirements of the RC 119.032 review? No

2.  Are you proposing this rule as a result of recent legislation? Yes

Bill Number: SB140               General Assembly: 130           Sponsor: Senator Kevin

Bacon

3.  Statute prescribing the procedure in accordance with the agency is required to adopt the rule: 119.03

4.  Statute(s) authorizing agency to adopt the rule: 3901.041, 3901.65

5.  Statute(s) the rule, as filed, amplifies or implements: 3901.61 to 3901.65

6.  State the reason(s) for proposing (i.e., why are you filing,) this rule:

The department is filing this rule due to the recent adoption of legislation SB 140.

7.  If the rule is an AMENDMENT, then summarize the changes and the content of the proposed rule; If the rule type is RESCISSION, NEW or NO CHANGE,

then summarize the content of the rule:

Rule sets procedural requirements to carry out provisions of sections 3901.61 to

3901.65 of the Revised Code, allowing credit for reinsurance ceded.

The purpose of reinsurance reforms with the proposed amendments is to provide a more competitive environment for Ohio's insurers to obtain reinsurance coverage at stable rates from a broader market of accredited reinsurance providers, while also enabling adequate financial statement credit for the ceded insurance. Amended language implements statute as adopted in SB 140 and reduces the amount of collateral an unaccredited insurer must post in order for an admitted, ceding insurer to take financial credit. Prior law required that reinsurers not licensed in Ohio post one hundred per cent cash or cash-equivalent collateral on all the risks they assume. The change in law and amended rule allow for a reduced amount based on a sliding scale determined by the company's financial strength to be assessed by evaluating financial documents and third-party rating companies.

8.  If the rule incorporates a text or other material by reference and the agency claims the incorporation by reference is exempt from compliance with sections

121.71 to 121.74 of the Revised Code because the text or other material is generally available to persons who reasonably can be expected to be affected by the rule, provide an explanation of how the text or other material is generally available to those persons:

This response left blank because filer specified online that the rule does not incorporate a text or other material by reference.

9.  If the rule incorporates a text or other material by reference, and it was infeasible for the agency to file the text or other material electronically, provide an explanation of why filing the text or other material electronically was infeasible:

This response left blank because filer specified online that the rule does not incorporate a text or other material by reference.

10.  If the rule is being rescinded and incorporates a text or other material by reference, and it was infeasible for the agency to file the text or other material, provide an explanation of why filing the text or other material was infeasible:

Not Applicable.

11.  If revising or refiling this rule, identify changes made from the previously

filed version of this rule; if none, please state so. If applicable, indicate each specific paragraph of the rule that has been modified:

Revised question on RSFA to indicate that this rule is not part of a five year review.

12. 119.032 Rule Review Date: 8/31/2015

(If the rule is not exempt and you answered NO to question No. 1, provide the scheduled review date. If you answered YES to No. 1, the review date for this rule is the filing date.)

NOTE: If the rule is not exempt at the time of final filing, two dates are required: the current review date plus a date not to exceed 5 years from the effective date for Amended rules or a date not to exceed 5 years from the review date for No Change rules.

FISCAL ANALYSIS

13.  Estimate the total amount by which this proposed rule would increase / decrease either revenues / expenditures for the agency during the current biennium (in dollars): Explain the net impact of the proposed changes to the budget of your agency/department.

This will have no impact on revenues or expenditures. 0.00

Not applicable.

14.  Identify the appropriation (by line item etc.) that authorizes each expenditure necessitated by the proposed rule:

Not applicable.

15.  Provide a summary of the estimated cost of compliance with the rule to all directly affected persons. When appropriate, please include the source for your information/estimated costs, e.g. industry, CFR, internal/agency:

An insurer applying for certification must supply certain financial information and would have costs associated with internal reviewing and compiling to provide information in the forms as required. This would vary based on the complexity of the company, the organization of internal record-keeping, and cost of legal representation or staffing.

16.  Does this rule have a fiscal effect on school districts, counties, townships, or municipal corporations? No

17.  Does this rule deal with environmental protection or contain a component dealing with environmental protection as defined in R. C. 121.39? No

S.B. 2 (129th General Assembly) Questions

18.  Has this rule been filed with the Common Sense Initiative Office pursuant to

R.C. 121.82? Yes

19.  Specific to this rule, answer the following:

A.) Does this rule require a license, permit, or any other prior authorization to engage in or operate a line of business? Yes

Companies wanting authorization to provide reinsurance in Ohio must meet the requirements to apply for and maintain certification or accreditation.

B.) Does this rule impose a criminal penalty, a civil penalty, or another sanction, or create a cause of action, for failure to comply with its terms? Yes

Failure to provide the required information would prohibit an insurer from claiming financial credit for ceded insurance. Failure to apply and provide information would prevent a reinsurer from becoming authorized as a certified reinsurer.

C.) Does this rule require specific expenditures or the report of information as a condition of compliance? Yes

An insurer applying for certification must supply certain financial information and would have costs associated with internal reviewing and compiling to provide information in the forms as required. This would vary based on the complexity of the company, the organization of internal record-keeping, and cost of legal representation or staffing.