26-3-116. Suspension and revocation of certificate of authority; discretionary and special grounds.

(a) The commissioner may refuse to continue or may suspend or revoke an insurer's certificate of authority if he finds after a hearing that the insurer has:

(i) Violated or failed to comply with any lawful order of the commissioner;

(ii) Willfully violated or failed to comply with any lawful regulation of the commissioner; or

(iii) Violated any provision of this code other than those for violation of which suspension or revocation is mandatory.

(b) The commissioner shall suspend or revoke an insurer's certificate of authority on any of the following grounds if he finds after a hearing that the insurer:

(i) Is in unsound condition, or in such condition or using any methods and practices in the conduct of its business as to render its further transaction of insurance in this state injurious to policyholders or to the public;

(ii) With such frequency as to indicate its general business practice in this state has without just cause:

(A) Failed to pay claims arising under its policies, whether the claim is in favor of an insurer or is in favor of a third person with respect to the liability of an insured to that third person;

(B) Delayed payment of claims; or

(C) Compelled insureds or claimants to accept less than the amount due them, or to employ attorneys or to bring suit against the insurer or an insured to secure full payment or settlement of claims.

(iii) Is affiliated with and under the same general management, or interlocking directorate, or ownership as another insurer which transacts direct insurance in this state without having a certificate of authority therefor, except as permitted under this code;

(iv) Refuses to be examined, or if its directors, officers, employees or representatives refuse to:

(A) Submit to examination relative to its affairs;

(B) Produce its accounts, records and files for the commissioner's examination when required; or

(C) Perform any legal obligation relative to the examination.

(v) Failed to pay any final judgment rendered against it in this state upon any policy, bond, recognizance or undertaking issued or guaranteed by it, within thirty (30) days after the judgment became final, or within thirty (30) days after dismissal of an appeal before final determination, whichever date is later.

(c) In determining whether the continued operation of any insurer transacting insurance business in this state is hazardous or injurious to policyholders, creditors or the general public the commissioner may consider any of the following:

(i) Adverse findings reported in financial condition and market conduct examination reports, audit reports and actuarial opinions, reports or summaries;

(ii) The National Association of Insurance Commissioners' Insurance Regulatory Information System and its other financial analysis solvency tools and reports;

(iii) Repealed By Laws 2012, Ch. 38, § 3.

(iv) Whether the insurer has made adequate provision, according to presently accepted actuarial standards of practice, for the anticipated cash flows required by the contractual obligations and related expenses of the insurer, when considered in light of the assets held by the insurer with respect to such reserves and related actuarial items including, but not limited to, the investment earnings on such assets, and the considerations anticipated to be received and retained under such policies and contracts;

(v) The ability of any assuming reinsurer of the insurer to perform and whether the insurer's reinsurance program provides sufficient protection for the insurer's remaining surplus after taking into account the insurer's cash flow and the classes of business written and the financial condition of the assuming reinsurer;

(vi) Whether the insurer's operating loss in the last twelve (12) month period or any shorter period of time is greater than fifty percent (50%) of the insurer's remaining surplus as regards policyholders in excess of the minimum required. For purposes of this paragraph, "operating loss" shall include, but not be limited to net capital gain or loss, change in nonadmitted assets and cash dividends paid to shareholders;

(vii) Any affiliate's, subsidiary's, parent's, obligor's or reinsurer's insolvency, threatened insolvency or delinquency in payment of its monetary or other obligations and which in the opinion of the commissioner may affect the solvency of the insurer;

(viii) Contingent liabilities, pledges or guaranties which either individually or collectively involve a total amount which in the opinion of the commissioner may affect the solvency of the insurer;

(ix) The delinquency of any "controlling person" of an insurer in transmitting or paying net premiums to the insurer. For purposes of this paragraph, "controlling person" means any person who directly or indirectly has the power to direct the management, control or activities of the insurer;

(x) The age of receivables and the ability to collect receivables;

(xi) The failure of an insurer's management, including officers, directors, or any other person who directly or indirectly controls the operation of the insurer, to possess and demonstrate the competence, fitness and reputation necessary to serve the insurer in such position;

(xii) An insurer's management's failure to respond to inquiries relative to the condition of the insurer or an insurer's management's furnishing false and misleading information concerning an inquiry;

(xiii) An insurer's management's:

(A) Filing of any false or misleading sworn financial statement;

(B) Release of false or misleading financial statements to lending institutions or to the general public; or

(C) Making of a false or misleading entry, or omitting an entry of material amount in the books of the insurer.

(xiv) An insurer's rapid growth to such an extent that it lacks adequate financial and administrative capacity to meet its obligations in a timely manner;

(xv) An insurer's past or foreseeable future experience of cash flow or liquidity problems;

(xvi) Whether the insurer's operating loss in the last twelve (12) month period or any shorter period of time, excluding net capital gains, is greater than twenty percent (20%) of the insurer's remaining surplus as regards policyholders in excess of the minimum required;

(xvii) Whether the insurer has failed to meet financial and holding company filing requirements in the absence of a reason satisfactory to the commissioner;

(xviii) Whether management has established reserves that do not comply with minimum standards established by state insurance laws, regulations, statutory accounting standards, sound actuarial principles or standards of practice;

(xix) Whether management persistently engages in material underreserving that results in adverse development;

(xx) Whether transactions among affiliates, subsidiaries or controlling persons for which the insurer receives assets or capital gains, or both, do not provide sufficient value, liquidity or diversity to assure the insurer's ability to meet its outstanding obligations as they mature;

(xxi) Any other finding determined by the commissioner to be hazardous to the insurer's policyholders, creditors or general public.

(d) The standards set forth in subsection (c) of this section are in addition to those set forth in other laws or regulations of this state and shall not be construed to limit any other standards.

(e) The commissioner, without advance notice or hearing, may immediately suspend the certificate of authority of any insurer as to which proceedings for receivership, conservatorship, rehabilitation or other delinquency proceedings have been commenced in any state by the public insurance supervisory official of that state.