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HB20-1136

Insurance Investment Regulation Modernization

Concerning the regulation of investments made by domestic insurance companies.
Session:
2020 Regular Session
Subjects:
Business & Economic Development
Insurance
Bill Summary

Current law regulates the types and amounts of investments a domestic insurer may make, including investments in bonds and other evidences of indebtedness. Section 1 of the bill clarifies the types of indebtedness that may be invested in and allows the domestic insurer to invest in the debts of an issuer that is in default in the payment of interest on the debt.

Current law allows a domestic insurer to invest in first-priority mortgage loans in the United States and Canada. In connection with this, section 2 :

  • Authorizes investment in lower-priority loans if the holder of the lower-priority loan holds the first-priority loan;
  • Repeals the requirement that a mortgage loan be evidenced by a written appraisal;
  • Repeals the requirement that the mortgaged land have a building, be used for agriculture or pasture, or be income-producing;
  • Repeals the requirement that improvements to the land be insured against fire loss;
  • Repeals mortgage loan documentation requirements; and
  • Authorizes domestic insurers to acquire mortgage loans for land located in other foreign jurisdictions that have a sovereign debt rating of "1" from the securities valuation office of the National Association of Insurance Commissioners if these assets do not exceed 10% of the domestic insurer's investments.

Current law allows a domestic insurer to invest in real estate for income. In connection with this, section 3 broadens the current definition of "real estate", which covers fee simple ownership and leasehold estates, to include all interests in property, including mineral estates.

Current law allows a domestic insurer to invest in preferred or common stock in businesses within the United States and Canada. In connection with this, section 4:

  • Broadens current law to allow investment in equity interests of businesses other than preferred or common stock;
  • Repeals the requirement that the business not be in arrears as to dividends for the last 3 years;
  • Repeals the requirement that any sinking fund for preferred stock must be current;
  • Repeals the requirement that common stock must be registered on a national securities exchange or regularly traded on a national or regional basis;
  • Exempts, from a limit that investments in one corporation may not exceed 2% of assets, mutual funds, commingled funds, or open-end or exchange-traded index funds;
  • Limits the amount of equity that is not listed on a nationally registered securities exchange or securities market to 5% of the domestic insurer's assets; and
  • Authorizes a domestic insurer to invest in equity interests in businesses created in other foreign jurisdictions that have a sovereign debt rating of "1" from the securities valuation office of the National Association of Insurance Commissioners if these assets do not exceed 3% of the domestic insurer's investments.

Current law allows a domestic insurer to invest in money market mutual funds. Section 9 requires the funds to comply with certain federal regulations and requires government-backed funds to meet certain standards of the National Association of Insurance Commissioners.

Sections 5 through 8 make conforming amendments.

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)


(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)

Status

Introduced
Passed

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Bill Text

COVID-19 Resources

Temporary Guidelines for Review and Comment Meetings

The House and Senate are temporarily adjourned. The building is closed to the public.