This bill revises various provisions regarding insurance, as described below. CLAIMS EXPERIENCE REPORT Present law provides general requirements for doing business as an insurance company in this state. This bill requires that, no later than 30 days after a health benefit plan issuer receives a written request for a claims experience report from a plan, plan sponsor, or plan administrator, the health benefit plan issuer must provide the report to the requesting party. In this bill, a "group health plan" or "plan" means an employee welfare benefit plan that has 25 or more participants or is administered by an entity other than the employer that established and maintains the plan. To the extent such requested information is available to the health benefit plan issuer and is relevant to the request made, this bill further requires a report to include the following information for the 36-month period preceding the date of the request or for the entire period of coverage, whichever is shorter:  Aggregate paid claims experience by month, including claims experience for medical, dental, and pharmacy benefits, as applicable.  Total premiums paid by month.  Total number of covered employees on a monthly basis by coverage tier, including whether coverage was for an employee only, an employee with dependents only, an employee with a spouse only, or an employee with spouse and dependents.  An aggregate report of all claims exceeding $10,000.  Total dollar amount of claims pending as of the date of the request for the report. In the case of a report request made after the date of termination of coverage, this bill requires the report to contain the information outlined above that is available to the health benefit plan issuer as of the date of the request and is relevant to the request for the 36-month period preceding the date of termination of coverage or for the entire policy period, whichever period is shorter. Within 30 days of the termination of coverage under a group health plan, a health benefit plan issuer must provide to a plan, plan sponsor, or plan administrator who made a request for a report before the termination date a supplemental written report of the information described above to update the claims experience report with information that was not included in the original report. This bill authorizes a plan, plan sponsor, or plan administrator to use information in a written claims experience report only as necessary to perform treatment, payment, or health care operations as those activities are described under the HIPAA Privacy Rule. Except where the release of information is otherwise prohibited by law, a health benefit plan issuer that releases information in a report has not violated a standard of care and is not liable for civil damages resulting from, and is not subject to criminal prosecution for, releasing such information. SECURING OBLIGATIONS Present law requires the commissioner of commerce and insurance ("commissioner") to assign a rating to each certified reinsurer, giving due consideration to the financial strength ratings that have been assigned by rating agencies deemed acceptable to the commissioner. A certified reinsurer must secure obligations assumed from the United States ceding insurers at a level consistent with its ratings. A certified reinsurer whose certification has been terminated for any reason must be treated as a certified reinsurer required to secure 100% of its obligations. "Terminated" refers to revocation, suspension, voluntary surrender, or inactive status. If the commissioner continues to assign a higher rating, this requirement to secure 100% of obligations does not apply to a certified reinsurer in active status or to a reinsurer whose certification has been suspended. This bill revises this last provision so that instead of the requirement not applying to certified reinsurers in active status, it does not apply to certified reinsurers in inactive status. RECIPROCAL JURISDICTIONS Present law requires the commissioner to create and publish a list of qualified jurisdictions, under which an assuming insurer licensed and domiciled in such jurisdiction is eligible to be considered for certification by the commissioner as a certified reinsurer. The commissioner may remove a jurisdiction from the list of reciprocal jurisdictions if the commissioner determines that the jurisdiction no longer meets reciprocal jurisdiction criteria. Upon removal from this list, credit for reinsurance ceded to an assuming insurer that has its home office or domicile in that jurisdiction is allowed. This bill prohibits the commissioner from removing a reciprocal jurisdiction that is either (i) a non-U.S. jurisdiction that is subject to an in-force covered agreement to which the United States is a party or, in the case of a covered agreement between the United States and the European Union, is a member state of the European Union or (ii) a U.S. jurisdiction that meets the requirements for accreditation under the National Association of Insurance Commissioners' (NAIC) financial standards and accreditation program. SECURITIES Form of Security Present law requires an asset or a reduction from liability for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting set out requirements to be allowed in an amount not exceeding the liabilities carried by the ceding insurer. The reduction must be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a reinsurance contract with the assuming insurer as security for the payment of obligations under the contract, if the security is held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer, or, in the case of a trust, held in a qualified United States financial institution. This security may be in certain forms of including clean, irrevocable, unconditional letters of credit, issued or confirmed by a qualified United States financial institution no later than December 31 of the year for which filing is being made, and in the possession of the ceding company on or before the filing date of its annual statement. This bill clarifies that the security can be held in trust as an alternative to possession. Institutions Present law requires letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance, or confirmation, notwithstanding the issuing or confirming institution's subsequent failure to meet applicable standards of issuer acceptability, to continue to be acceptable as security until their expiration, extension, renewal, modification or amendment, whichever first occurs. This bill clarifies that the confirming institution must be a qualified United States financial institution. Present law provides that a "qualified United States financial institution" means an institution meets all of the following conditions:  Is organized or licensed, in the case of a United States office of a foreign banking organization, under the laws of the United States or any state in the United States.  Is regulated, supervised and examined by United States federal or state authorities having regulatory authority over banks and trust companies.  Has been determined by either the commissioner, or the Securities Valuation Office of the NAIC, to meet the standards of financial condition and standing considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the commissioner. CESSATION Present law authorizes the commissioner to promulgate rules applicable to reinsurance arrangements relating to (i) life insurance policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits; (ii) universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period; (iii) variable annuities with guaranteed death or living benefits; (iv) long-term care insurance policies; or (v) other life and health insurance and annuity products as to which the commissioner adopts regulatory requirements with respect to credit for reinsurance. However, any such rule promulgated does not apply to cessions to an assuming insurer that is (i) certified in this state or certified in a minimum of five other states; or (ii) maintains at least $250,000,000 in capital and surplus, determined in accordance with the NAIC Accounting Practices and Procedures Manual, and is licensed in at least 26 states, or licensed in at least 10 states and licensed or accredited in a total of at least 35 states. This bill adds that any such rule promulgated does not apply to an assuming insurer that meets the conditions that allow a credit for reinsurance. Under present law, credit is allowed when the reinsurance is ceded to an assuming insurer that has its head office in, or is domiciled in, a reciprocal jurisdiction, and is licensed in a reciprocal jurisdiction and all of the following conditions are met:  Has and maintains, on an ongoing basis, minimum capital and surplus, or its equivalent in an amount set by the commissioner of commerce and insurance by rule.  Has and maintains, on an ongoing basis, a minimum solvency or capital ratio, as applicable, set by the commissioner by rule.  Agrees to provide adequate assurance to the commissioner that it will comply with the following requirements: (i) notify the commissioner if it falls below the minimum requirements described in the conditions above or if regulatory action is taken against it for serious noncompliance; (ii) consent to the jurisdiction of the courts of this state and appoint the commissioner of agent; (iii) agree to pay a final judgment obtained by a ceding insurer in certain situations; (iv) include in each of its agreements to provide security equal to its liability in certain situations; and (v) confirm it is not participating in any solvent scheme of arrangement involving this state's ceding insurer and complies with other related requirements.  Provides certain documentation specified by the commissioner by rule.  Maintains a practice of prompt payment of claims under reinsurance agreements, pursuant to criteria set by rule.  Confirms to the commissioner on an annual basis compliance with the first and second listed conditions above. FARMS This bill requires the following farm-related provisions to take effect January 1, 2026, and apply to plans, policies, and agreements issued, delivered, amended, or renewed to take effect on or after January 1, 2026. Personal Risk Insurance Present law requires every insurer of personal risk insurance to file with the commissioner all rates, supplementary rate information, supporting information, policy forms, and endorsements at least 30 days before the proposed effective date. Upon written application by the insurer, the commissioner may authorize rates to be effective before the expiration of the waiting period or an extension of the waiting period. "Personal risk insurance" is property and casualty insurance that provides certain coverage. This bill removes from the definition insurance on farm property or farm risk, including farm premises, buildings, machinery, equipment, motor vehicles and watercraft, livestock, and other personal property used in farming operations. Farm Property This bill prohibits the consideration of commercial risk insurance policy coverage of farm risks or real or personal property used in farming in determining whether property is classified as farm or agricultural property under another law or rule in this state. READING EASE TEST SCORE With certain exceptions, present law prohibits policy forms from being issued or delivered unless such forms meet all of the following requirements:  The text achieves a minimum score of 40 on the Flesch reading ease test or an equivalent score on any other comparable test.  It is printed, except for specification pages, schedules and tables, in not less than 10-point type, one-point leaded.  The style, arrangement and overall appearance of the policy give no undue prominence to any portion of the text of the policy or to any endorsements or riders.  It contains a table of contents or an index of the principal sections of the policy, if the policy has more 3,000 words printed on three or fewer pages of text, or if the policy has more than three pages regardless of the number of words. This bill removes the requirement that the policy forms be printed. This bill also revises the last requirement to require, instead, that the policy form contains a table of contents or an index of the principal sections of the policy if the policy has more than 3,000 words. REMOVAL OF PLAN COVERAGE PROVISIONS This bill deletes several provisions pertaining to plan coverage, including all of the following:  The continuation of terminated group coverage that authorizes an employee, whose group health insurance is terminated (except if the entire policy is discontinued), to continue coverage for a fractional policy month plus three additional months by paying the full premium.  Conditions for a converted policy, which specifies the requirements that the new individual policy must meet.  Conditions exempting insurers from the conversion requirement.  Requests for information from insured persons and the grounds for nonrenewal of policies.  Ceiling on converted policy benefits.  Limits the benefits for preexisting conditions in the first policy year.  Optional coverage.  Optional election of retirement conversion rights.  Medicare eligibility and its effect on coverage.  Group coverage in lieu of converted individual coverage.  Notice of conversion privilege to be given to the insured. ON MARCH 13, 2025, THE SENATE ADOPTED AMENDMENT #1 AND PASSED SENATE BILL 1270, AS AMENDED. AMENDMENT #1 makes the following revisions:  Revises the definition of "group health plan" such that such plan has to have 50 or more participants as defined in the federal "Employee Retirement Income and Security Act of 1974" (ERISA), instead of 25 or more participants.  Revises the provision requiring the report to include certain information for the 36-month period preceding the date of the request or for the entire period of coverage, whichever is shorter to, instead, require such information for (i) the 36-month period preceding the date of the request, (ii) for the entire period of coverage, or (iii) for the period of time specified in the request, whichever period is shortest.  Revises the provision relative to such information including the total premiums paid by month to, instead, require the total premium or premium equivalent earned by month.  Adds to such information the total dollar amount of claims pending as the date of the request for the report.  Revises the provision authorizing a plan, plan sponsor, or plan administrator to use information in a written claims experience report provided under the bill only as necessary to perform treatment, payment, or health care operations as those activities are described by federal regulations to, instead, provide such authorization to use such information only as permitted or required by the federal "Health Insurance Portability and Accountability Act of 1996" (HIPAA) and its implementing regulations.  Adds that the claims experience report provisions in the bill apply to the extent not preempted by ERISA.  Revises, as of January 1, 2026, the definition of "personal risk insurance" in the bill to include (i) insurance on every kind of farm property or farm risk, including farm premises, buildings, machinery, equipment, motor vehicles, livestock, and other personal property used in farming operations, unless insured on a commercial risk insurance policy; (ii) insurance on private passenger nonfleet motor-driven vehicles, not used for hire, which are used for farm needs with fewer than four wheels; and (iii) insurance on pleasure watercraft that are used for farm needs.  Revises present law relative to rates and rating organizations with regard to commercial risk insurance by clarifying that "commercial risk insurance" includes insurance on every kind of farm property or farm risk that is not personal risk insurance, including farm premises, buildings, machinery, equipment, motor vehicles, livestock, and other personal property used in farming operations.

Statutes affected:
Introduced: 56-2-208(b)(6)(F)(vi)(c), 56-2-208, 56-2-208(b)(8)(C)(iii), 56-2-208(b)(8)(D), 56-2-208(b)(10), 56-2-208(b)(11)(B)(ii), 56-2-208(b)(11)(C), 56-2-209(a)(2), 56-2-209, 56-2-209(a)(2)(C), 56-2-209(b), 56-2-209(c), 56-2-209(g)(4), 56-5-102(7), 56-5-102, 56-7-1605(a), 56-7-1605, 56-7-1605(b)(1), 56-7-1605(c), 68-1-115