BILL NUMBER: SB 714	INTRODUCED
	BILL TEXT


INTRODUCED BY   Committee on Insurance (Senators Calderon (Chair),
Anderson, Corbett, Correa, Gaines, Lowenthal, Price, and Wyland)

                        FEBRUARY 18, 2011

   An act to amend Section 1215 of the Insurance Code, relating to
insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 714, as introduced, Committee on Insurance. Insurance: holding
companies.
   Existing law, the Insurance Holding Company System Regulatory Act,
provides for regulation by the Department of Insurance of certain
transactions involving 2 or more affiliated persons, at least one of
which is an insurer. Under the act, the Insurance Commissioner is
authorized to order an insurer subject to registration to produce
records, books, or other information or papers in the possession of
the insurer or its affiliates as necessary to ascertain the financial
condition or legality of conduct of the insurer, as specified.
   This bill would, for purposes of the act, revise the definition of
"insurer" to exclude agencies, authorities, or instrumentalities of
the United States, its possessions and territories, the Commonwealth
of Puerto Rico, the District of Columbia, or a state or political
subdivision of a state. The bill would further define the term
"enterprise risk" to mean any activity, circumstance, or event, or
series of events, involving one or more affiliates of an insurer
that, if not remedied promptly, is likely to have a material adverse
effect upon the financial condition or liquidity of the insurer or
its holding company system as a whole, as specified.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1215 of the Insurance Code is amended to read:
   1215.  As used in this article, the following terms shall have the
respective meanings hereinafter set forth, unless the context shall
otherwise require:
   (a) An "affiliate" of, or person "affiliated" with, a specific
person, is a person that directly, or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common
control with, the person specified.
   (b) The term "control" includes the terms "controlling,"
"controlled by," and "under common control with," and means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, whether through
the ownership of voting securities, by contract other than a
commercial contract for goods or nonmanagement services, or
otherwise, unless the power is the result of an official position
with or corporate office held by the person. Control shall be
presumed to exist if any person, directly or indirectly, owns,
controls, holds with the power to vote, or holds proxies
representing, more than 10 percent of the voting securities of any
other person. This presumption may be rebutted by a showing that
control does not exist in fact pursuant to the filing of a disclaimer
of affiliation in accordance with subdivision (  l  ) of
Section 1215.4. The commissioner may, after furnishing all persons in
interest notice and opportunity to be heard, determine that control
exists in fact, notwithstanding the absence of a presumption to that
effect.
   (c) An "insurance holding company system" consists of two or more
affiliated persons, one or more of which is an insurer.
   (d) "Insurer" shall have the same meaning as set forth in Section
826  of this code  , excluding subdivisions (e) and
(f) of that section  , and excluding agencies, authorities, or
instrumentalities of the United States, its possessions and
territories, the Commonwealth of Puerto Rico, the District of
Columbia, or a state or political subdivision of a state  .
   (e) "Person" is an individual, a corporation, a partnership, an
association, a joint stock company, a business trust, an
unincorporated organization, or any similar entity, or any
combination thereof acting in concert.
   (f) A "subsidiary" of a specified person is an affiliate
controlled by that person directly, or indirectly through one or more
intermediaries.
   (g) "Business day" is any day other than Saturday, Sunday, and any
other day that is specified or provided for as a holiday in the
Government Code. 
   (h) "Enterprise risk" means any activity, circumstance, or event,
or series of events, involving one or more affiliates of an insurer
that, if not remedied promptly, is likely to have a material adverse
effect upon the financial condition or liquidity of the insurer or
its insurance holding company system as a whole, including, but not
limited to, anything that would cause the insurer's risk-based
capital to fall into company action level as set forth in Sections
739 and 739.3 or would cause the insurer to be in hazardous financial
condition, as defined in Section 130.