Senate Bill No. 512
(By Senator Helmick)
[Introduced February 16, 2000;
referred to the Committee on Banking and Insurance.]
A BILL to amend and reenact section two, article three, chapter
thirty-three of the code of West Virginia, one thousand nine
hundred thirty-one, as amended; and to further amend said
chapter by adding thereto a new article, designated article
three-a, all relating to eliminating trade barriers affecting
insurers and producers; prohibition against licensing
insurance companies owned by state or foreign governments; and
establishing a process for licensing insurers organized under
the laws of foreign countries.
Be it enacted by the Legislature of West Virginia:
That section two, article three, chapter thirty-three of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted; and that said chapter be further amended by adding thereto a new article, designated article three-
a, all to read as follows:
ARTICLE 3. LICENSING, FEES AND TAXATION OF INSURERS.
§33-3-2. Qualifications for license.
(a) To qualify for a license to transact insurance in West
Virginia an insurer must be otherwise in compliance with the
provisions of this chapter and with its charter and must be an
incorporated stock insurer or an incorporated mutual insurer or a
(b) No license to transact insurance in this state may be
issued, renewed or continued in effect to any domestic, foreign or
alien insurer which is owned, or financially controlled, in whole
or in part, by any state, or by a foreign government, or any
political subdivision, instrumentality or agency of either, or
which is an agency of any such state, government or subdivision,
unless such insurer was so owned, controlled or constituted prior
to the first day of January, one thousand nine hundred fifty-five,
and licensed to transact insurance in this state prior to the first
day of January, one thousand nine hundred fifty-five.
(c) (b) No foreign insurer may be authorized to transact
insurance in this state if it is domiciled in a state that does not
have reserve requirements that are equal to or greater than those required by article seven of this chapter, as applicable to the
kind or kinds of insurance transacted by such the insurer, wherever
transacted in the United States of America, or which transacts
business anywhere in the United States of America on the assessment
plan, the stipulated premium plan or any similar plan.
(d) (c) No insurer may be authorized to transact a kind of
insurance in this state unless duly authorized or qualified to
transact such insurance in the state or country of its domicile.
(e) (d) No insurer may be authorized to transact in this state
any kind of insurance which is not defined in section ten, article
one of this chapter.
(f) (e) No authority to transact such insurance may be granted
or continued to any insurer that is in arrears to the state for
fees, licenses, taxes, assessments, fines or penalties accrued on
insurance previously transacted in this state.
ARTICLE 3A. STATE OF ENTRY FOR FOREIGN INSURERS.
(a) "Non-U. S. insurer" means an insurer organized under the
laws of a foreign country.
(b) "United States branch" or "U. S. branch" means the
business unit through which business is transacted within the
United States by a non-U. S. insurer and the assets and liabilities of the insurer within the United States pertaining to such
(c) "Home jurisdiction" means the foreign country under whose
laws the non-U. S. insurer has been organized.
This article applies to a U. S. branch using this state as a
state of entry to transact insurance in the United States. The U.
S. branch shall also be subject to all state laws applicable to an
insurer domiciled in this state unless otherwise provided.
§33-3A-3. Authorization of entry.
(a) A non-U. S. insurer may use this state as a state of entry
to transact insurance in the United States through a U. S. branch
(1) Qualifying as an insurer to do business in this state; and
(2) Establishing a trust account, pursuant to a trust
agreement approved by the commissioner with a U. S. bank approved
by the commissioner, in an amount at least equal to the minimum
capital and surplus or authorized control level risk based capital,
whichever is greater, required to be maintained by a domestic
insurer licensed to transact the same kind of insurance.
(b) Before authorizing the entry through this state of a U. S.
branch of any non-U. S. insurer, the commissioner shall require the non-U. S. insurer, in addition to meeting the requirements of
section five of this article and any other requirement of this
(1) To submit a copy of its charter and bylaws, if any,
currently in force, and any other documents necessary to show the
kinds of business which it is empowered to transact in its home
jurisdiction, attested to as accurate and complete by the insurance
supervisory official of its home jurisdiction; and a full
statement, subscribed and affirmed as true under the penalties of
perjury by two officers, or equivalent responsible representatives,
in a manner as the commissioner shall prescribe, of its financial
conditions as of the close of its latest fiscal year, showing its
assets, liabilities, income disbursements, business transacted and
other facts required to be shown in its annual statement, as
reported to the insurance supervisory official of its home
jurisdiction; an English language translation, as necessary, of any
other documents required herein; and
(2) To submit to an examination of the insurer's affairs at
its principal office within the United States. However, the
commissioner may instead accept a report of the insurance
supervisory official of the insurer's home jurisdiction.
§33-3A-4. Maintenance of trust account.
The assets in the trust account shall be known as "trusteed
assets" and shall at all times be in an amount equal to the U. S.
branch's reserves and other liabilities plus the minimum capital
and surplus, or authorized control level risk based capital,
whichever is greater, required to be maintained by a domestic
insurer licensed to do the same kind of insurance.
§33-3A-5. Requirements for trust agreement.
(a) The deed of trust and all amendments thereto shall be
authenticated in a form and manner as the commissioner may
prescribe and shall not be effective unless approved by the
commissioner upon a finding that:
(1) A deed of trust or its amendments are sufficient in form
and in conformity with law;
(2) The trustee or trustees are eligible as such; and
(3) The deed of trust is adequate to protect the interests of
the beneficiaries of the trust.
(b) If at any time the commissioner finds, after reasonable
notice and hearing, that the requisites for the approval no longer
exist, the commissioner may withdraw approval.
(c) The commissioner may from time to time approve
modifications of, or variations in any deed of trust, which in the
commissioner's judgment are not prejudicial to the interests of the people of this state or the United States policyholders and
creditors of the U. S. branch.
(d) The deed of trust shall contain provisions which:
(1) Vest legal title to trusteed assets in the trustees, and
their successors lawfully appointed;
(2) Require that all assets deposited in the trust shall be
continuously kept within the United States;
(3) Provide for substitution of a new trustee or trustees in
case of a vacancy by death; resignation or otherwise, subject to
the approval of the commissioner;
(4) Require that the trustee or trustees shall continuously
maintain a record at all times sufficient to identify the assets of
(5) Require that the trusteed assets shall consist of cash
and/or investments eligible for investment of the funds of domestic
insurers and accrued interest thereon if collectible by the
(6) Require that the trust shall be for the exclusive benefit,
security and protection of the policyholders, or policyholders and
creditors, of the U. S. branch in the United States and that it
shall be maintained as long as there is outstanding any liability
of the non-U. S. insurer arising out of its insurance transactions in the United States; and
(7) Provide, in substance, that no withdrawals of assets,
other than income as specified in subsection (e) of this section
shall be made or permitted by the trustee or trustees without the
approval of the commissioner except to:
(A) Make deposits required by law in any state for the
security or benefit of all policyholders, or policyholders and
creditors, of the U. S. branch in the United States;
(B) Substitute other assets permitted by law and at least
equal in value and quality to those withdrawn, upon the specific
written direction of the United States manager of the U. S. branch
when duly empowered and acting pursuant to either general or
specific written authority previously given or delegated by the
board of directors; or
(C) Transfer such assets to an official liquidator or
rehabilitator pursuant to an order of a court of competent
(e) The deed of trust may provide that income, earnings,
dividends or interest accumulations of the assets of the fund may
be paid over the United States manager of the U. S. branch upon
request, provided that the total trusteed assets shall not thereby
be less than the amount required to be maintained pursuant to section four of this article.
(f) Upon withdrawal of trusteed assets deposited in another
state in which the insurer is authorized to do business, it shall
be sufficient if the deed of trust requires similar written
approval of the insurance supervising official of that state in
lieu of approval of the commissioner provided that the total
trusteed assets shall not thereby be less than the amount required
to be maintained pursuant to section four of this article. In all
such cases the U. S. branch shall notify the commissioner in
writing of the nature and extent of the withdrawal.
(g) The commissioner may from time to time:
(1) Make examinations of the trusteed assets of any authorized
U. S. branch at the insurer's expense; and
(2) Require the trustee or trustees to file a statement, in
such form as the commissioner may prescribe, certifying the assets
of the trust fund and the amounts thereof.
(h) Refusal or neglect of any trustee to comply with the
foregoing requirements shall be grounds for the revocation of the
insurer's license or the liquidation of its United States branch.
§33-3A-6. Reporting requirements for U. S. branches of non-U. S.
(a) In addition to other requirements of this article, every authorized U. S. branch shall, not later than the first day of
March in each year and forty-five days after the end of each of the
first three calendar-year quarters, file with the commissioner and
with the national association of insurance commissioners (NAIC):
(1) Annual and quarterly statements of the business transacted
within the U. S. and the assets held by or for it within the United
States for the protection of United States policyholders and
creditors within the United States, and of the liabilities incurred
against the assets. The forms shall not contain any statement in
regard to its assets and business elsewhere. The statements shall
be in the same format required of an insurer domiciled in the U. S.
branch's state of entry state and licensed to write the same kinds
of insurance; and
(2) A statement of trusteed surplus, in such form as the
commissioner may prescribe, as of the end of the same period
covered by the statement filed pursuant to subdivision (1) of this
subsection. The aggregate value of the insurer's general state
deposits and trusteed assets deposited with a trustee in compliance
with section five of this article, plus accrued investment income
thereon where the interest is collected by the states for trustees,
less the aggregate net amount of all of its reserves and other
liabilities in the United States, as determined in accordance with this section, shall be known as its "trusteed surplus" in the
United States. In determining the net amount of the U. S. branch's
liabilities in the United States to be reported in the statement of
trusteed surplus, the U. S. branch shall make adjustments to total
liabilities reported on the accompanying annual or quarterly
statement as follows:
(A) Add back liabilities used to offset admitted assets
reported in the accompanying quarterly or annual statement; and
(i) Unearned premiums on agent's balances or uncollected
premiums not more than ninety days past due;
(ii) Reinsurance on losses with authorized insurers, less
unpaid reinsurance premiums;
(iii) Reinsurance recoverables on paid losses from
unauthorized insurers that are included as an asset in the annual
statement, but only to the extent a liability for unauthorized
recoverables is included in the liabilities report in the trusteed
(iv) Special state deposits held for the exclusive benefit of
policyholders, or policyholders and creditors, of any particular
state not exceeding net liabilities reports for that state;
(v) Secured accrued retrospective premiums;
(vi) If the insurer is a life insurer:
(I) The amount of its policy loans to policyholders within the
United States, not exceeding the amount of legal reserve required
on each policy; and
(II) The net amount of uncollected and deferred premiums; and
(vii) Any other nontrusteed asset which the commissioner
determines secures liabilities in a substantially similar manner;
(3) Any additional information that the commissioner may
require relating to the total business or assets, or any portion
thereof, of the non-U. S. insurer.
(b) The annual statement and trusteed surplus statement shall
be signed and verified by the United States manager, attorney-in-
fact, or a duly empowered assistant United States manager, of the
U. S. branch. The items of securities and other property held
under trust deeds shall be certified in the trusteed surplus
statement by the United States trustee or trustees.
(c) Every report on examination of a U. S. branch shall
include a trusteed surplus statement as of the date of examination
in addition to the general statement of the financial condition of
the U. S. branch.
§33-3A-7. Additional requirements for the U. S. branch license.
(a) Before issuing any new or renewal license to any U. S.
branch, the commissioner may require satisfactory proof, either in
the non-U. S. insurer's charter or by an agreement evidenced by a
duly certified resolution of its board of directors, or otherwise
as the commissioner may require, that the insurer will not engage
in any insurance business in contravention of the provisions of
this article or not authorized by its charter.
(b) The commissioner shall issue a renewal license to any U.
S. branch if satisfied, by proof as he or she considers
satisfactory, that the insurer is not delinquent with respect to
any requirement imposed by this article, and that its continuance
in business in this state will not be hazardous or prejudicial to
the best interests of the people of this state.
(c) No U. S. branch shall be licensed to do in this state any
kind of insurance business, or any combination of kinds of
insurance business, which are not permitted to be done by domestic
insurers licensed under the provisions of this article. No U. S.
branch shall be authorized to do an insurance business in this
state if it does anywhere within the United States any kind of
business other than an insurance business and the business
necessarily or properly incidental to the kind or kinds of
insurance business which it is authorized to do in this state.
(d) Except as otherwise specifically provided, no U. S.
branch, entering through this state or another state, shall be or
continue to be authorized to do an insurance business in this state
if it fails to comply substantially with any requirement or
limitation of this chapter, applicable to similar domestic insurers
hereafter organized, which in the judgment of the commissioner is
reasonably necessary to protect the interest of the policyholders.
(e) No U. S. branch which does outside of this state any kind
or combination of kinds of insurance business not permitted to be
done in this state by similar domestic insurers hereafter
organized, shall be or continue to be authorized to do an insurance
business in this state, unless in the judgment of the commissioner
the doing of such kind or combination of kinds of insurance
business will not be prejudicial to the best interests of the
people of this state.
(f) No U. S. branch shall be or continue to be authorized to
do an insurance business in this state if it fails to keep full and
correct entries of its transactions, which shall at all times be
open to the inspection of persons invested by law with the rights
of inspection and be maintained in its principal office within this
§33-3A-8. Authority of commissioner.
Whenever it appears to the commissioner from any annual or
quarterly statement or trusteed surplus statement or any other
report that a U. S. branch's trusteed surplus is reduced below
minimum capital and surplus, or the authorized control level risk
based capital, whichever is greater, required to be maintained by
a domestic insurer licensed to transact the same kinds of
insurance, the commissioner may proceed against the insurer
pursuant to the provisions of sections ten and eleven, article
three of this chapter, and treat the insurer as one whose condition
is such that its further transaction of business in the United
States will be hazardous to its policyholders, its creditors or the
public in the United States.
(NOTE: This bill eliminates the statutory prohibition against
licensing insurers controlled or owned by foreign or other state
governments. The new article three-a provides a process for
licensing alien insurers that are not yet licensed in another
state, and is virtually identical to NAIC (National Association of
Insurance Commissioners) model legislation.)