The California State Legislature has passed Senate Bill 1448, which updates California’s Insurance Holding Company System Regulatory Act.
The bill was authored by Senate Insurance Committee Chairman Ron Calderon, D-Montebello, and is sponsored by Insurance Commissioner Dave Jones.
“SB 1448 ensures that the insurance commissioner and the Department of Insurance have the authority and regulatory tools needed to evaluate the risks that non-insurance entities pose to an insurer in the holding company system,” Jones said in a statement.
The need for insurance regulators to have greater authority to evaluate the risks that non-insurance entities pose to an insurer in a holding company system was intensified by the Wall Street financial crisis in 2008, according to Jones.
In response, the National Association of Insurance Commissioners updated its Insurance Holding Company Systems Model Laws and Regulations. SB 1448 brings these changes into California law.
A key provision in the bill would require the controlling person of the holding company system to disclose an enterprise risk, defined as any situation involving one or more affiliates of an insurer that, if not quickly corrected, would adversely affect the financial condition of the insurer.
The bill would also authorize Jones to participate in “supervisory colleges,” or meetings of international regulators for internationally active insurance groups to share financial and operational information.
SB 1448 now goes to Gov. Jerry Brown for his consideration.
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