17:27A-5.2 Group-wide supervision for international insurance groups.

8. Group-wide supervision for international insurance groups.

a. As used in this section, the following terms shall have the respective meanings hereinafter set forth, unless the context clearly indicates otherwise:

"Group-wide supervisor" means the chief insurance regulatory official authorized to engage in conducting and coordinating group-wide supervision activities who is from the jurisdiction determined or acknowledged by the commissioner under this section to have sufficient significant contacts with the international insurance group.

"International insurance group" means an insurance group operating internationally that includes an insurer registered under section 3 of P.L.1970, c.22 (C.17:27A-3).

b. The commissioner is authorized to act as the group-wide supervisor for any international insurance group if the international insurance group's ultimate controlling person is domiciled in this State. The commissioner may otherwise acknowledge another jurisdiction as the group-wide supervisor pursuant to the factors set forth in subsections c. and f. of this section whenever the international insurance group:

(1) Does not have substantial insurance operations in the United States;

(2) Has substantial insurance operations in the United States, but not in this State; or

(3) Has substantial insurance operations in the United States and this State, but the commissioner has determined that another jurisdiction is the appropriate group-wide supervisor.

c. In cooperation with other supervisors, the commissioner may determine that the commissioner is the appropriate group-wide supervisor for an international insurance group with substantial operations concentrated in this State or with substantial insurance operations conducted by subsidiary insurance companies domiciled in this State, where the ultimate controlling person is domiciled outside of this State, or the commissioner may acknowledge that another chief insurance regulatory official is the appropriate group-wide supervisor for the international insurance group. The commissioner shall consider the following factors and the relative scale of each when making a determination or acknowledgment under this subsection:

(1) The location where the international insurance group is based or the place of domicile of the ultimate controlling person of the international insurance group;

(2) The locations of the international insurance group's executive offices;

(3) The locations of origin of the insurance business of the international insurance group;

(4) The locations of the assets and liabilities of the international insurance group;

(5) The locations of the business operations and activities of the international insurance group; and

(6) If another chief insurance regulatory official is seeking to act as the lead group-wide supervisor whether that jurisdiction:

(a) provides the commissioner with reasonably reciprocal recognition and cooperation; and

(b) is accredited by the National Association of Insurance Commissioners (NAIC) or has substantially similar laws when compared to the insurance laws of this State, especially with regard to the provision of group-wide supervision, enterprise risk analysis and cooperation with other chief insurance regulatory officials.

However, when another chief insurance regulatory official is currently acting as the lead group-wide supervisor of an international insurance group and is acknowledged as such in the National Association of Insurance Commissioners (NAIC) Lead State Summary Report, the commissioner shall defer to that lead group-wide supervisor designation unless the commissioner determines that there has been a significant material change in the international insurance group that:

(i) results in the group's insurers domiciled in this State holding the majority of the group's assets or liabilities;

(ii) materially alters the operations or ownership of the group's insurers domiciled in this State; or

(iii) makes this State the jurisdiction with the group's largest premium volume or insured exposures.

In the event of a dispute as to the proper jurisdiction to act as lead group-wide supervisor, a determination by the commissioner not to defer to the current lead group-wide supervisor shall be made only after notice and a hearing, and such determination shall be accompanied by specific findings of fact and conclusions of law.

d. Pursuant to section 5 of P.L.1970, c.22 (C.17:27A-5), the commissioner is authorized to collect from any insurer registered pursuant to section 3 of P.L.1970, c.22 (C.17:27A-3) all information necessary to determine whether the commissioner may act as the group-wide supervisor or if the commissioner may acknowledge another insurance regulatory official to act as the group-wide supervisor. Prior to issuing a determination that an international insurance group is subject to group-wide supervision by the commissioner, the commissioner shall notify the insurer registered pursuant to section 3 of P.L.1970, c.22 (C.17:27A-3) and the ultimate controlling person within the international insurance group. The international insurance group shall have not less than 30 days to provide the commissioner with additional information pertinent to the pending determination. The commissioner shall publish on the Department of Banking and Insurance website the identity of international insurance groups that the commissioner has determined are subject to its group-wide supervision.

e. If the commissioner is the group-wide supervisor for an international insurance group, the commissioner is authorized to engage in conducting and coordinating any of the following group-wide supervision activities:

(1) Assess the enterprise risks within the international insurance group, pursuant to section 5 of P.L.1970, c.22 (C.17:27A-5), to ensure that:

(a) The material financial condition and liquidity risks to the members of the international insurance group which are engaged in the business of insurance are identified by management.

(b) Reasonable and effective mitigation measures are in place.

(2) Request, from any member of an international insurance group subject to the commissioner's supervision, information necessary and appropriate to assess enterprise risk, including, but not limited to, information about the members of the international insurance group regarding:

(a) Governance, risk assessment and management.

(b) Capital adequacy.

(c) Material intercompany transactions.

(3) Compel development and implementation of reasonable measures designed to assure that the international insurance group is able to timely recognize and mitigate material risks to members that are engaged in the business of insurance.

(4) Communicate with other insurance regulatory officials for members within the international insurance group and share relevant information subject to the confidentiality provisions of section 6 of P.L.1970, c.22 (C.17:27A-6), through supervisory colleges as set forth in section 7 of P.L.2014, c.81 (C.17:27A-5.1) or otherwise.

(5) Enter into agreements with or obtain documentation from any insurer registered under section 3 of P.L.1970, c.22 (C.17:27A-3), any member of the international insurance group and any other chief insurance regulatory officials for members, providing the basis for or otherwise clarifying the commissioner's role as group supervisor, including provisions for resolving disputes with other relevant supervisory authorities. Such agreements or documentation shall not serve as evidence in any proceeding that any insurer or person within an insurance holding company system not incorporated in this State is doing business in this State or is otherwise subject to jurisdiction in this State.

(6) Other group-wide supervisory activities as considered appropriate by the commissioner.

f. If the commissioner acknowledges that a regulatory official from a jurisdiction which is not accredited by the National Association of Insurance Commissioners (NAIC) is the group-wide supervisor, the commissioner is authorized to reasonably cooperate, through supervisory colleges or otherwise, with group supervision undertaken by the group-wide supervisor, provided that:

(1) The commissioner's cooperation is in compliance with the insurance laws of this State.

(2) The regulator also recognizes and cooperates with the commissioner's activities as a group-wide supervisor for other international insurance groups where applicable. Whenever such recognition and cooperation is not reasonably reciprocal, the commissioner is authorized to refuse recognition and cooperation.

g. The commissioner is authorized to enter into agreements with or obtain documentation from any insurer registered under section 3 of P.L.1970, c.22 (C.17:27A-3), any affiliate of the insurer and other regulatory officials for members of the insurance group, which provide the basis for or otherwise clarify a regulatory official's role as group supervisor.

h. The commissioner may promulgate regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) necessary for the administration of this section. In determining whether to promulgate a regulation, the commissioner shall give appropriate consideration to model laws, model regulations and definitions or guidelines pertaining to group-wide supervision, if any, promulgated by the NAIC or other recognized insurance regulatory bodies or associations.

i. A registered insurer subject to this section shall be liable for and shall pay the reasonable expenses of the commissioner's participation in the administration of this section, including the engagement of attorneys, actuaries and any other professionals and all reasonable travel expenses.

L.2014, c.81, s.8.