Effective - 01 Jan 2017, 2 histories
375.1287. Notice of transfer, form, contents, filing with director, when — prior approval required, period for approval, factors for director to consider in reviewing request — penalty for violation. — 1. A notice of transfer regarding an assumption reinsurance agreement shall be provided to the policyholders of a transferring insurer in the following manner:
(1) The transferring insurer shall provide or cause to be provided to each policyholder a notice of transfer by first class mail, addressed to the policyholder's last known address or to the address to which premium notices or other policy documents are sent or, with respect to home service business, by personal delivery with acknowledged receipt. A notice of transfer shall also be sent to the transferring insurer's agents and brokers of record on the affected policies;
(2) The notice of transfer shall state or provide:
(a) The date on which the transfer and novation of the policyholder's contract of insurance is proposed to take place;
(b) The name and addresses and telephone numbers of the transferring insurer and assuming insurer;
(c) That the policyholder has the right to either consent to or reject the transfer and novation;
(d) The procedures and time limit for consenting to or rejecting the transfer and novation;
(e) A summary of any effect that consenting to or rejecting the transfer and novation will have on the policyholder's rights;
(f) A statement that the assuming insurer is licensed to write the type of business being assumed in the state where the policyholder resides, or is otherwise authorized, as provided herein, to assume such business;
(g) The name and address of the person at the transferring insurer to whom the policyholder should send its written statement of acceptance or rejection of the transfer and novation;
(h) The address and phone number of the insurance department where the policyholder resides so that the policyholder may write or call its insurance department for further information regarding the financial condition of the assuming insurer; and
(i) The following financial data for both companies:
a. Ratings for the last five years if available or for such lesser period as is available from two nationally recognized insurance rating services acceptable to the director including the rating service's explanation of the rating's meaning. If ratings are unavailable for any year of the five-year period, this shall also be disclosed;
b. A balance sheet as of December thirty-first for the previous three years if available or for such lesser period as is available and as of the date of the most recent quarterly statement;
c. A copy of the management's discussion and analysis that was filed as a supplement to the previous year's annual statement; and
d. An explanation of the reason for the transfer;
(3) Notice in a form identical or substantially similar to the following, or as specified by the director of the department of commerce and insurance by regulation, shall be deemed to comply with the requirements of this subsection:
| (FIRST, SECOND OR THIRD AND FINAL) | ||
| NOTICE OF TRANSFER | ||
| IMPORTANT: THIS NOTICE AFFECTS YOUR CONTRACT RIGHTS. PLEASE READ IT CAREFULLY. | ||
| TRANSFER OF POLICY | ||
| The (name of assuming insurance company) has agreed to replace us as your insurer under (insert policy/certificate name and number) effective (insert date). The (assuming insurance company's) principal place of business is (insert address) and certain financial information concerning both companies are attached, including: (1) ratings for the last five years if available or for such lesser period as is available from two nationally recognized insurance rating services; (2) balance sheets for the previous three years if available or for such lesser period as is available and as of a date no later than ninety days prior to the current date; (3) a copy of the management's discussion and analysis that was filed as a supplement to the previous year's annual statement; and (4) an explanation of the reason for the transfer. You may obtain additional information concerning (name of assuming insurance company) from reference materials in your local library or by contacting your state insurance director at (insert address). The (name of assuming insurance company) is licensed to write this coverage in your state. | ||
| Your Rights | ||
| You may choose to accept or reject the transfer of your policy to (name of assuming insurance company). If you want your policy transferred, you must notify us in writing immediately by signing and returning the enclosed preaddressed, postage-paid or by writing to us at: (Insert name, address and facsimile number of contact person.). Payment of your premiums to the assuming company will also constitute acceptance of the transaction. However, a method will be provided to allow you to pay the premium while reserving the right to reject the transfer. If you reject the transfer, you may keep your policy with us or exercise any option under your policy. If we do not receive a written rejection from you within thirty months of our first notice of transfer, (insert date of initial mailing), you will, as a matter of law, have consented to the transfer. However, before this consent is final, you will be provided a second notice, twelve months after our first notice, and a third and final notice, twenty-four months after our first notice. After the third and final notice is provided, you will have only six months to reply. If you have paid your premium to (the assuming insurance company) without reserving your right to reject the transfer, you will not receive a subsequent notice. | ||
| Effect of Transfer | ||
| If you accept this transfer, (name of assuming insurance company) will be your insurer. It will have direct responsibility to you for the payment of all claims, benefits and for all other policy obligations. We will no longer have any obligations to you. If you accept this transfer, you should make all premium payments and claims submissions to (name of assuming insurance company) and direct all questions to (name of assuming insurance company). If you have any further questions about this agreement, you may contact (name of transferring insurance company) or (name of assuming insurance company). | ||
| Sincerely, ______ | ||
| (Name of Transferring | (Name of Assuming | |
| Insurance Company | Insurance Company | |
| Address | Address | |
| Telephone Number) | Telephone Number) | |
| For your convenience, we have enclosed a preaddressed postage-paid response card. Please take time now to read the enclosed notice and complete and return the response card to us. | ||
| (Notice Date) | ||
| RESPONSE CARD | ||
| ______ Yes, I accept the transfer of my policy from (name of transferring company) to (name of assuming company). | ||
| ______ No, I reject the proposed transfer of my policy from (name of transferring company) to (name of assuming company) and wish to retain my policy with (name of transferring company). | ||
| (Date) ______ | (Signature) ______ | |
| Name: ______ | ||
| Street Address: ______ | ||
| City, State, Zip: ______ | ||
(4) The notice to transfer shall include a preaddressed, postage-paid response card which a policyholder may return as its written statement of acceptance or rejection of the transfer and novation;
(5) The notice of transfer proposed to be used shall be filed as part of the prior approval requirement set forth below in subdivision (1) of subsection 2 of this section.
2. (1) Prior approval by the director is required for any transaction where an insurer domiciled in this state assumes or transfers obligations or risks on contracts of insurance under an assumption reinsurance agreement. No insurer licensed in this state shall transfer obligations or risks on contracts of insurance owned by policyholders residing in this state to any insurer that is not licensed in this state. An insurer domiciled in this state shall not assume obligations or risks on contracts of insurance owned by policyholders residing in any other state unless it is licensed in the other state, or the insurance regulatory official of that state has approved such assumption in writing.
(2) Any licensed foreign insurer that enters into an assumption reinsurance agreement, which transfers the obligations or risks on contracts of insurance owned by policyholders residing in this state, shall file or cause to be filed the assumption certificate with the director of the department of commerce and insurance of this state, a copy of the notice of transfer, and an affidavit that the transaction is subject to substantially similar requirements in the state of domicile of both the transferring and assuming insurer.
(3) Any licensed foreign insurer that enters into an assumption reinsurance agreement, which transfers the obligations or risks on contracts of insurance owned by policyholders residing in this state, shall obtain the prior approval of the director of the department of commerce and insurance of this state and shall be subject to all other requirements of sections 375.1280 to 375.1295 unless the transferring and assuming insurers are subject to assumption reinsurance requirements adopted by statute or regulation in the jurisdiction of their domicile which are substantially similar to sections 375.1280 to 375.1295.
(4) No insurer required to receive approval of assumption reinsurance transactions under this section shall enter into an assumption reinsurance transaction until:
(a) Thirty days after the director has received a request for approval and has not within such period disapproved such transaction; or
(b) The director shall have approved the transaction within the thirty-day period.
(5) The following factors, along with such other factors as the director deems appropriate under the circumstances, shall be considered by the director in reviewing the request for approval:
(a) The financial condition of the transferring and assuming insurer and the effect the transaction will have on the financial condition of each company;
(b) The competence, experience and integrity of those persons who control the operation of the assuming insurer;
(c) The plans or proposals the assuming party has with respect to the administration of the policies subject to the proposed transfer;
(d) Whether the transfer is fair and reasonable to the policyholders of both companies;
(e) Whether the notice of transfer to be provided by the insurer is fair, adequate and not misleading; and
(f) Whether the transfer lessens competition or restrains trade.
3. Any officer, director or stockholder of any insurer violating or consenting to the violation of any provision of subsection 2 of this section is guilty of a class E felony.
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(L. 1993 H.B. 709 § 16, A.L. 2014 S.B. 491)
Effective 1-01-17