CERTIFICATION OF ENROLLMENT
SENATE BILL 6027
Chapter 42, Laws of 2024
68th Legislature
2024 Regular Session
INSURER HOLDING COMPANY ACT—REVISION
EFFECTIVE DATE: June 6, 2024
Passed by the Senate February 7, 2024 CERTIFICATE
Yeas 48 Nays 0
I, Sarah Bannister, Secretary of
the Senate of the State of
DENNY HECK Washington, do hereby certify that
President of the Senate the attached is SENATE BILL 6027 as
passed by the Senate and the House
of Representatives on the dates
hereon set forth.
Passed by the House February 27, 2024
Yeas 95 Nays 0
SARAH BANNISTER
LAURIE JINKINS Secretary
Speaker of the House of
Representatives
Approved March 13, 2024 11:35 AM FILED
March 14, 2024
Secretary of State
JAY INSLEE State of Washington
Governor of the State of Washington
 SENATE BILL 6027
Passed Legislature - 2024 Regular Session
State of Washington 68th Legislature 2024 Regular Session
By Senators Stanford, Kuderer, and Nobles; by request of Insurance
Commissioner
Prefiled 01/05/24. Read first time 01/08/24. Referred to Committee
on Business, Financial Services, Gaming & Trade.
1 AN ACT Relating to the insurer holding company act; and amending
2 RCW 48.31B.005, 48.31B.025, and 48.31B.038.
3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
4 Sec. 1. RCW 48.31B.005 and 2020 c 243 s 1 are each amended to
5 read as follows:
6 The definitions in this section apply throughout this chapter
7 unless the context clearly requires otherwise.
8 (1) "Affiliate" means an affiliate of, or person affiliated with,
9 a specific person, and includes a person that directly, or indirectly
10 through one or more intermediaries, controls, or is controlled by, or
11 is under common control with, the person specified.
12 (2) "Commissioner" means the insurance commissioner, the
13 commissioner's deputies, or the office of the insurance commissioner,
14 as appropriate.
15 (3) "Control," including the terms "controlling," "controlled
16 by," and "under common control with," means the possession, direct or
17 indirect, of the power to direct or cause the direction of the
18 management and policies of a person, whether through the ownership of
19 voting securities, by contract other than a commercial contract for
20 goods or nonmanagement services, or otherwise, unless the power is
21 the result of an official position with or corporate office held by
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 1 the person. Control is presumed to exist if any person, directly or
2 indirectly, owns, controls, holds with the power to vote, or holds
3 proxies representing, ten percent or more of the voting securities of
4 any other person. This presumption may be rebutted by a showing made
5 in a manner similar to that provided by RCW 48.31B.025(11) that
6 control does not exist in fact. The commissioner may determine, after
7 furnishing all persons in interest notice and opportunity to be heard
8 and making specific findings of fact to support such determination,
9 that control exists in fact, notwithstanding the absence of a
10 presumption to that effect.
11 (4) "Enterprise risk" means any activity, circumstance, event, or
12 series of events involving one or more affiliates of an insurer that,
13 if not remedied promptly, is likely to have a material adverse effect
14 upon the financial condition or liquidity of the insurer or its
15 insurance holding company system as a whole including, but not
16 limited to, anything that would cause the insurer's risk-based
17 capital to fall into company action level as set forth in RCW
18 48.05.440 or 48.43.310 or would cause the insurer to be in hazardous
19 financial condition as defined in WAC 284-16-310.
20 (5) "Group capital calculation instructions" means the group
21 capital calculation instructions as adopted by the national
22 association of insurance commissioners and as amended by the national
23 association of insurance commissioners from time to time in
24 accordance with the procedures adopted by the national association of
25 insurance commissioners.
26 (6) "Group-wide supervisor" means the regulatory official
27 authorized to engage in conducting and coordinating group-wide
28 supervision activities who is determined or acknowledged by the
29 commissioner under RCW 48.31B.036 to have sufficient contacts with
30 the internationally active insurance group.
31 (((6))) (7) "Insurance holding company system" means a system
32 that consists of two or more affiliated persons, one or more of which
33 is an insurer.
34 (((7))) (8) "Insurer" includes an insurer authorized under
35 chapter 48.05 RCW, a fraternal mutual insurer or society holding a
36 license under RCW 48.36A.290, a health care service contractor
37 registered under chapter 48.44 RCW, a health maintenance organization
38 registered under chapter 48.46 RCW, and a self-funded multiple
39 employer welfare arrangement under chapter 48.125 RCW, as well as all
40 persons engaged as, or purporting to be engaged as insurers,
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 1 fraternal benefit societies, health care service contractors, health
2 maintenance organizations, or self-funded multiple employer welfare
3 arrangements in this state, and to persons in process of organization
4 to become insurers, fraternal benefit societies, health care service
5 contractors, health maintenance organizations, or self-funded
6 multiple employer welfare arrangements, except it does not include
7 agencies, authorities, or instrumentalities of the United States, its
8 possessions and territories, the commonwealth of Puerto Rico, the
9 District of Columbia, or a state or political subdivision of a state.
10 (((8))) (9) "Internationally active insurance group" means an
11 insurance holding company system that:
12 (a) Includes an insurer registered under RCW 48.31B.025; and
13 (b) Meets the following criteria:
14 (i) Premiums written in at least three countries;
15 (ii) The percentage of gross premiums written outside the United
16 States is at least ten percent of the insurance holding company
17 system's total gross written premiums; and
18 (iii) Based on a three-year rolling average, the total assets of
19 the insurance holding company system are at least fifty billion
20 dollars or the total gross written premiums of the insurance holding
21 company system are at least ten billion dollars.
22 (((9))) (10) "National association of insurance commissioners
23 liquidity stress test framework" means a separate national
24 association of insurance commissioners publication which includes a
25 history of the national association of insurance commissioners'
26 development of regulatory liquidity stress testing, the scope
27 criteria applicable for a specific data year, and the liquidity
28 stress test instructions and reporting templates for a specific data
29 year, such scope criteria, instructions, and reporting template being
30 as adopted by the national association of insurance commissioners and
31 as amended by the national association of insurance commissioners
32 from time to time in accordance with the procedures adopted by the
33 national association of insurance commissioners.
34 (11) "Person" means an individual, a corporation, a partnership,
35 an association, a joint stock company, a trust, an unincorporated
36 organization, any similar entity, or any combination of the foregoing
37 acting in concert, but does not include a joint venture partnership
38 exclusively engaged in owning, managing, leasing, or developing real
39 or tangible personal property.
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 1 (((10))) (12) "Scope criteria" means the designated exposure
2 bases along with minimum magnitudes thereof for the specified data
3 year, used to establish a preliminary list of insurers considered
4 scoped into the national association of insurance commissioners
5 liquidity stress test framework for that data year.
6 (13) "Securityholder" means a securityholder of a specified
7 person who owns any security of that person, including common stock,
8 preferred stock, debt obligations, and any other security convertible
9 into or evidencing the right to acquire any of the foregoing.
10 (((11))) (14) "Subsidiary" means a subsidiary of a specified
11 person who is an affiliate controlled by that person directly or
12 indirectly through one or more intermediaries.
13 (((12))) (15) "Voting security" includes any security convertible
14 into or evidencing a right to acquire a voting security.
15 Sec. 2. RCW 48.31B.025 and 2015 c 122 s 5 are each amended to
16 read as follows:
17 (1) Every insurer that is authorized to do business in this state
18 and is a member of an insurance holding company system shall register
19 with the commissioner, except a foreign insurer subject to
20 registration requirements and standards adopted by statute or
21 regulation in the jurisdiction of its domicile that are substantially
22 similar to those contained in:
23 (a) This section;
24 (b) RCW 48.31B.030 (1)(a), (2), and (3); and
25 (c) Either RCW 48.31B.030(1)(b) or a provision such as the
26 following: Each registered insurer shall keep current the information
27 required to be disclosed in its registration statement by reporting
28 all material changes or additions within fifteen days after the end
29 of the month in which it learns of each change or addition.
30 Any insurer which is subject to registration under this section
31 shall register within fifteen days after it becomes subject to
32 registration, and annually thereafter by May 1st of each year for the
33 previous calendar year, unless the commissioner for good cause shown
34 extends the time for registration, and then within the extended time.
35 The commissioner may require any insurer authorized to do business in
36 the state that is a member of a holding company system, and which is
37 not subject to registration under this section, to furnish a copy of
38 the registration statement, the summary specified in subsection (3)
39 of this section, or other information filed by the insurance company
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 1 with the insurance regulatory authority of its domiciliary
2 jurisdiction.
3 (2) Every insurer subject to registration shall file the
4 registration statement on a form and in a format prescribed by the
5 national association of insurance commissioners, containing the
6 following current information:
7 (a) The capital structure, general financial condition,
8 ownership, and management of the insurer and any person controlling
9 the insurer;
10 (b) The identity and relationship of every member of the
11 insurance holding company system;
12 (c) The following agreements in force, and transactions currently
13 outstanding or that have occurred during the last calendar year
14 between the insurer and its affiliates:
15 (i) Loans, other investments, or purchases, sales, or exchanges
16 of securities of the affiliates by the insurer or of the insurer by
17 its affiliates;
18 (ii) Purchases, sales, or exchange of assets;
19 (iii) Transactions not in the ordinary course of business;
20 (iv) Guarantees or undertakings for the benefit of an affiliate
21 that result in an actual contingent exposure of the insurer's assets
22 to liability, other than insurance contracts entered into in the
23 ordinary course of the insurer's business;
24 (v) All management agreements, service contracts, and cost-
25 sharing arrangements;
26 (vi) Reinsurance agreements;
27 (vii) Dividends and other distributions to shareholders; and
28 (viii) Consolidated tax allocation agreements;
29 (d) Any pledge of the insurer's stock, including stock of
30 subsidiary or controlling affiliate, for a loan made to a member of
31 the insurance holding company system;
32 (e) If requested by the commissioner, the insurer must include
33 financial statements of or within an insurance holding company
34 system, including all affiliates. Financial statements may include
35 but are not limited to annual audited financial statements filed with
36 the United States securities and exchange commission pursuant to the
37 securities act of 1933, as amended, or the securities exchange act of
38 1934, as amended. An insurer required to file financial statements
39 pursuant to this subsection (2)(e) may satisfy the request by
40 providing the commissioner with the most recently filed parent
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 1 corporation financial statements that have been filed with the United
2 States securities and exchange commission;
3 (f) Other matters concerning transactions between registered
4 insurers and any affiliates as may be included from time to time in
5 registration forms adopted or approved by the commissioner;
6 (g) Statements that the insurer's board of directors oversees
7 corporate governance and internal controls and that the insurer's
8 officers or senior management have approved, implemented, and
9 continue to maintain and monitor corporate governance and internal
10 control procedures; and
11 (h) Any other information required by the commissioner by rule.
12 (3) All registration statements must contain a summary outlining
13 all items in the current registration statement representing changes
14 from the prior registration statement.
15 (4) No information need be disclosed on the registration
16 statement filed under subsection (2) of this section if the
17 information is not material for the purposes of this section. Unless
18 the commissioner by rule or order provides otherwise, sales,
19 purchases, exchanges, loans or extensions of credit, investments, or
20 guarantees involving one-half of one percent or less of an insurer's
21 admitted assets as of December 31st next preceding are not deemed
22 material for purposes of this section. The definition of materiality
23 provided in this subsection shall not apply for purposes of the group
24 capital calculation or the liquidity stress test framework.
25 (5) Subject to RCW 48.31B.030(2), each registered insurer shall
26 report to the commissioner all dividends and other distributions to
27 shareholders within fifteen business days after their declaration.
28 (6) Any person within an insurance holding company system subject
29 to registration is required to provide complete and accurate
30 information to an insurer, where the information is reasonably
31 necessary to enable the insurer to comply with this chapter.
32 (7) The commissioner shall terminate the registration of an
33 insurer that demonstrates that it no longer is a member of an
34 insurance holding company system.
35 (8) The commissioner may require or allow two or more affiliated
36 insurers subject to registration under this section to file a
37 consolidated registration statement.
38 (9) The commissioner may allow an insurer authorized to do
39 business in this state and which is part of an insurance holding
40 company system to register on behalf of an affiliated insurer which
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 1 is required to register under subsection (1) of this section and to
2 file all information and material required to be filed under this
3 section.
4 (10) This section does not apply to an insurer, information, or
5 transaction if and to the extent that the commissioner by rule or
6 order exempts the insurer, information, or transaction from this
7 section.
8 (11) Any person may file with the commissioner a disclaimer of
9 affiliation with any authorized insurer, or any insurer or any member
10 of an insurance holding company system may file the disclaimer. The
11 disclaimer must fully disclose all material relationships and bases
12 for affiliation between the person and the insurer as well as the
13 basis for disclaiming the affiliation. A disclaimer of affiliation is
14 deemed to have been granted unless the commissioner, within thirty
15 days following receipt of a complete disclaimer, notifies the filing
16 party the disclaimer is disallowed. In the event of disallowance, the
17 disclaiming party may request an administrative hearing, which shall
18 be granted. The disclaiming party is relieved of its duty to register
19 under this section if approval of the disclaimer has been granted by
20 the commissioner, or if the disclaimer is deemed to have been
21 approved.
22 (12) The ultimate controlling person of every insurer subject to
23 registration shall also file an annual enterprise risk report. The
24 report must, to the best of the ul