Amendment No. 1073

Senate Amendment to Assembly Bill No. 680 First Reprint (BDR 57-651)

Proposed by: Committee on Commerce and Labor

Amendment Box: Replaces Amendment No. 1001. Resolves conflicts with S.B. No. 92 and S.B. No. 145. Makes substantive changes.

Resolves Conflicts with: SB92, SB145

Amends: Summary: Title: Preamble: Joint Sponsorship:

ASSEMBLY ACTION Initial and Date | SENATE ACTION Initial and Date

Adopted Lost | Adopted Lost

Concurred In Not | Concurred In Not

Receded Not | Receded Not

Amend the bill as a whole by adding new sections designated sections 5.2, 5.4, 5.6 and 5.8, following sec. 5, to read as follows:

"Sec. 5.2. NRS 682A.100 is hereby amended to read as follows:

682A.100 1. An insurer may invest in preferred or guaranteed stocks or shares of any solvent institution existing under the laws of the United States of America, Canada or Mexico, or of any state or province thereof, if all of the prior obligations and prior preferred stocks, if any, of [such] the institution at the date of acquisition of the investment by the insurer are eligible as investments under this chapter and if the net earnings of [such] the institution available for its fixed charges during either of the last 2 years have been, and during each of the last 5 years have averaged, not less than 1 1/2 times the sum of its average annual fixed charges, if any, its average annual maximum contingent interest, if any, and its average annual preferred dividend requirements. For the purposes of this section , such computation [shall refer to] must be based on the fiscal years immediately preceding the date of acquisition of the investment by the insurer, and the term "preferred dividend [requirement"] requirements" shall be deemed to mean cumulative or noncumulative dividends, whether paid or not.

2. No insurer [shall] may invest in any such preferred or guaranteed stocks in an amount in excess of [10] 35 percent of any issue [or] of such guaranteed or preferred stocks or, subject to subsection 1 of NRS 682A.050 , [(diversification),] more than an amount equal to 10 percent of the insurer’s admitted assets in any one issue.

Sec. 5.4. NRS 682A.110 is hereby amended to read as follows:

682A.110 An insurer may invest up to [25] 35 percent of its assets in nonassessable (except as to bank or trust company stocks, and except for taxes) common stocks, other than insurance stocks, of any solvent corporation organized and existing under the laws of the United States of America, Canada or Mexico, or of any state or province thereof, if [such] that corporation has had net earnings available for dividends on such stock in each of the 5 fiscal years next preceding acquisition by the insurer. If the issuing corporation has not been in legal existence for the whole of [such] the 5 fiscal years , but was formed as a consolidation or merger of two or more businesses of which at least one was in operation on a date 5 years [prior to] before the investment, the test of eligibility of its common stock [under] pursuant to this section [shall] must be based upon consolidated pro forma statements of the predecessor or constituent institutions.

Sec. 5.6. NRS 682A.130 is hereby amended to read as follows:

682A.130 1. An insurer may invest in the stock of its subsidiary insurance corporation formed or acquired by it, or in the stock of its subsidiary business corporation or corporations formed and engaged solely in any one or more of the following businesses:

(a) In any business necessary and incidental to the convenient operation of the insurer’s insurance business or to the administration of any of its lawful affairs;

(b) Providing any actuarial, computer, data processing, accounting, claims, appraisal, collection, sales, loss prevention or safety engineering and similar services;

(c) Real property management and development;

(d) Premium financing;

(e) Financing of agents of the insurer;

(f) Acting as investment adviser and principal underwriter or investment adviser or principal underwriter of a management company or management companies (mutual funds), registered as such under the Investment Company Act of 1940;

(g) Financial and investment counseling services;

(h) Administration of self-insurance plans;

(i) Administration of self-insured pension and similar plans, or the self-insured portions of such plans;

(j) Securities broker-dealer;

(k) Escrow services; [or]

(l) Trust services with respect to [funds] money payable or paid by it under its insurance contracts [.

2. For the purposes of this section a "subsidiary" is a corporation of which the insurer owns sufficient stock to give it effective control.

3.] ;

(m) A bank, thrift company, savings and loan association, or credit union; or

(n) An insurance agency.

2. All of the insurer’s investments under this section shall be deemed to be common stocks for the purposes of the [25-percent-of-assets] limitation imposed by NRS 682A.110.

3. For the purposes of this section, a "subsidiary" is a corporation of which the insurer owns sufficient stock to give it effective control.

Sec. 5.8. NRS 682A.190 is hereby amended to read as follows:

682A.190 An insurer may invest in share or savings accounts of savings and loan associations, or in savings accounts of banks, and in any one such institution only to the extent that the investment is insured . [by the Federal Deposit Insurance Corporation.]".

Amend sec. 20, page 14, line 36, after "inclusive," by inserting:

"and section 1 of Senate Bill No. 145 of this [act] session,".

Amend the bill as a whole by adding a new section designated sec. 26.5, following sec. 26, to read as follows:

"Sec. 26.5. NRS 685A.070 is hereby amended to read as follows:

685A.070 1. A broker shall not knowingly place surplus lines insurance with an insurer which is unsound financially or ineligible pursuant to this section.

2. [No] Except as otherwise provided in this section, no insurer is eligible for the acceptance of surplus lines risks pursuant to this chapter unless it has surplus as to policyholders in an amount of not less than $5,000,000 and, if an alien insurer, unless it has and maintains in a bank or trust company which is a member of the United States Federal Reserve System a trust fund established pursuant to terms reasonably adequate for the protection of all of its policyholders in the United States in an amount of not less than $1,500,000. Such a trust fund must not have an expiration date which is at any time less than 5 years in the future, on a continuing basis. In the case of:

(a) A group of insurers which includes individual unincorporated insurers, such a trust fund must not be less than $100,000,000.

(b) A group of incorporated insurers under common administration, such a trust fund must not be less than $100,000,000. The group of incorporated insurers must:

(1) Operate under the supervision of the Department of Trade and Industry of the United Kingdom;

(2) Possess aggregate policyholders surplus of $10,000,000,000, which must consist of money in trust in an amount not less than the assuming insurers’ liabilities attributable to insurance written in the United States; and

(3) Maintain a joint trusteed surplus of which $100,000,000 must be held jointly for the benefit of United States ceding insurers of any member of the group.

(c) An insurance exchange created by the laws of a state, [such] the insurance exchange shall have and maintain a trust fund [must not be] in an amount of not less than $50,000,000 [.] or have a surplus as to policyholders in an amount of not less than $50,000,000. If an insurance exchange maintains money for the protection of all policyholders, each syndicate shall maintain minimum capital and surplus of not less than $5,000,000 and must qualify separately to be eligible for the acceptance of surplus lines risks pursuant to this chapter.

The commissioner may require larger trust funds or surplus as to policyholders than those set forth in this section if, in his judgment, the volume of business being transacted or proposed to be transacted warrants larger amounts.

3. No insurer is eligible to write surplus lines of insurance unless it has established a reputation for financial integrity and satisfactory practices in underwriting and handling claims. In addition, a foreign insurer must be authorized in the state of its domicile to write the kinds of insurance which it intends to write in Nevada.

4. The commissioner may from time to time compile or approve a list of all surplus lines insurers deemed by him to be eligible currently, and may mail a copy of the list to each broker at his office last of record with the commissioner. To be placed on the list, a surplus lines insurer must file an application with the commissioner. The application must be accompanied by a nonrefundable fee of $2,450. This subsection does not require the commissioner to determine the actual financial condition or claims practices of any unauthorized insurer. The status of eligibility, if granted by the commissioner, indicates only that the insurer appears to be sound financially and to have satisfactory claims practices, and that the commissioner has no credible evidence to the contrary. While any such list is in effect, the broker shall restrict to the insurers so listed all surplus lines business placed by him.".

Amend the bill as a whole by deleting sec. 54 and adding:

"Sec. 54. (Deleted by amendment.)".

Amend sec. 60, page 41, line 1, by deleting:

"less than $1,000 nor" and inserting:

"[less than $1,000 nor]".

Amend the bill as a whole by adding a new section designated sec. 63.5, following sec. 63, to read as follows:

"Sec. 63.5. NRS 697.100 is hereby amended to read as follows:

697.100 1. Except as otherwise provided in this section, no license may be issued:

(a) Except in compliance with this chapter.

(b) To a bail agent, bail enforcement agent or bail solicitor, unless he is a natural person.

2. A corporation may be licensed as a bail agent or bail enforcement agent if [ownership] :

(a) The corporation is owned and controlled by an insurer authorized to write surety in this state or a subsidiary corporation of such an insurer; or

(b) Ownership and control of the corporation is retained by one or more licensed agents.

3. This section does not prohibit two or more licensed bail agents from entering into a partnership for the conduct of their bail business. No person may be a member of such a partnership unless he is licensed pursuant to this chapter in the same capacity as all other members of the partnership. A limited partnership or a natural person may not have any proprietary interest, directly or indirectly, in a partnership or the conduct of business thereunder except licensed bail agents as provided in this chapter.".

Amend the bill as a whole by adding new sections designated sections 65.3, 65.5 and 65.7, following sec. 65, to read as follows:

"Sec. 65.3. NRS 277.055 is hereby amended to read as follows:

277.055 1. As used in this section:

(a) "Medical facility" has the meaning ascribed to it in NRS 449.0151.

(b) "Nonprofit medical facility" means a nonprofit medical facility in this or another state.

(c) "Public agency" has the meaning ascribed to it in NRS 277.100, and includes any municipal corporation.

2. Any two or more public agencies or nonprofit medical facilities may enter into a cooperative agreement for the purchase of insurance or the establishment of a self-insurance reserve or fund for coverage under a plan of:

(a) Casualty insurance, as that term is defined in NRS 681A.020;

(b) Marine and transportation insurance, as that term is defined in NRS 681A.050;

(c) Property insurance, as that term is defined in NRS 681A.060;

(d) Surety insurance, as that term is defined in NRS 681A.070;

(e) Health insurance, as that term is defined in NRS 681A.030; or

(f) Insurance for any combination of these kinds.

3. Every such agreement must:

(a) Be ratified by formal resolution or ordinance of the governing body or board of trustees of each agency or nonprofit medical facility included;

(b) Be included in the minutes of each governing body or board of trustees, or attached in full to the minutes as an exhibit;

(c) Be submitted to the commissioner of insurance not less than 30 days before the date on which the agreement is to become effective for approval in the manner provided by NRS 277.150; and

(d) If a public agency is a party to the agreement, comply with the provisions of NRS 277.080 to 277.180, inclusive.

4. Each participating agency or nonprofit medical facility shall provide for any expense to be incurred under any such agreement.

Sec. 65.5. NRS 287.025 is hereby amended to read as follows:

287.025 The governing body of any county, school district, municipal corporation, political subdivision, public corporation or other public agency of the State of Nevada may, in addition to the other powers granted in NRS 287.010 and 287.020:

1. Negotiate and contract with any other such agency or with the committee on benefits for the state’s group insurance plan to secure group insurance for its officers and employees and their dependents by participation in any group insurance plan established or to be established or in the state’s group insurance plan . [; and] Each such contract:

(a) Must be submitted to the commissioner of insurance not less than 30 days before the date on which the contract is to become effective for approval.

(b) Does not become effective unless approved by the commissioner.

(c) Shall be deemed to be approved if not disapproved by the commissioner of insurance within 30 days after its submission.

2. To secure group health or life insurance for its officers and employees and their dependents, participate as a member of a nonprofit cooperative association or nonprofit corporation that has been established in this state to secure such insurance for its members from an insurer licensed pursuant to the provisions of Title 57 of NRS.

3. In addition to the provisions of subsection 2, participate as a member of a nonprofit cooperative association or nonprofit corporation that has been established in this state to:

(a) Facilitate contractual arrangements for the provision of medical services to its members’ officers and employees and their dependents and for related administrative services.

(b) Procure health-related information and disseminate that information to its members’ officers and employees and their dependents.

Sec. 65.7. NRS 287.0434 is hereby amended to read as follows:

287.0434 The committee on benefits may:

1. Use its assets to pay the expenses of health care for its members and covered dependents, to pay its employees’ salaries and to pay administrative and other expenses.

2. Enter into contracts relating to the administration of a plan of insurance, including contracts with licensed administrators and qualified actuaries. Each such contract with a licensed administrator:

(a) Must be submitted to the commissioner of insurance not less than 30 days before the date on which the contract is to become effective for approval as to the reasonableness of administrative charges in relation to contributions collected and benefits provided.

(b) Does not become effective unless approved by the commissioner.

(c) Shall be deemed to be approved if not disapproved by the commissioner of insurance within 30 days after its submission.

3. Enter into contracts with physicians, surgeons, hospitals, health maintenance organizations and rehabilitative facilities for medical, surgical and rehabilitative care and the evaluation, treatment and nursing care of members and covered dependents.

4. Enter into contracts for the services of other experts and specialists as required by a plan of insurance.

5. Charge and collect from an insurer, health maintenance organization, organization for dental care or nonprofit medical service corporation, a fee for the actual expenses incurred by the committee, the state or a participating public employer in administering a plan of insurance offered by that insurer, organization or corporation.".

Amend sec. 67, page 46, line 37, after "inclusive," by inserting:

"or chapter 617".

Amend the bill as a whole by adding a new section designated sec. 69, following sec. 68, to read as follows:

"Sec. 69. Sections 20 and 67 of this act become effective at 12:01 a.m. on October 1, 1999.".

Amend the title of the bill to read as follows:

"AN ACT relating to insurance; revising the fees for the issuance and renewal of a license for a surplus lines broker; revising the provisions governing authorized investments by insurers; requiring the commissioner of insurance to adopt regulations for the licensing of provider-sponsored organizations; revising the requirements for certain insurers to accept surplus lines risks; clarifying the authority of the commissioner to impose a fine or penalty or initiate or continue a disciplinary proceeding against a person who has voluntarily surrendered his license or certificate of registration; revising the provisions governing the disclosure statement required for certain umbrella policies; revising various provisions governing health insurance; requiring an applicant for a license as a general agent to file a bond; revising the requirements for the issuance of a certificate of registration as an administrator; revising the qualifications for licensure by a corporation as a bail agent or bail enforcement agent; revising the authority of the commissioner to approve certain contracts relating to the state’s group insurance plan; and providing other matters properly relating thereto.".