3 Colo. Code Regs. § 702-3-3-1-5

Current through Register Vol. 47, No. 24, December 25, 2024

Section 3 CCR 702-3-3-1-5 - Notice Requirements

A. Notice to Policyholders, Agents and Brokers

1. The transferring insurer shall provide or cause to be provided to each policyholder a Notice of Transfer by first-class mail, addressed to the policyholder's last known address or to the address to which premium notices or other policy documents are sent or, with respect to home service business, by personal delivery with acknowledged receipt. A Notice of Transfer shall also be sent to the transferring insurer's agents or brokers of record on the affected policies.

2. The Notice of Transfer shall state or provide:

a. The date the transfer and novation of the policyholder's contract of insurance is proposed to take place;

b. The name, address, and telephone number of the assuming and transferring insurer;

c. That the policyholder has the right to either consent to or reject the transfer and novation;

d. The procedures and time limit for consenting to or rejecting the transfer and novation;

e. A summary of any effect that consenting to or rejecting the transfer and novation will have on the policyholder's rights;

f. A statement that the assuming insurer is licensed to write the type of business being assumed in the state where the policyholder resides, or is otherwise authorized, as provided herein, to assume such business;

g. The name and address of the person at the transferring insurer to whom the policyholder should send its written statement of acceptance or rejection of the transfer and novation;

h. The address and phone number of the insurance department where the policyholder resides so that the policyholder may write or call the insurance department for further information regarding the financial condition of the assuming insurer; and

i.The following financial data for both companies:

(1) Ratings for the last five (5) years if available or for such lesser period as is available from two (2) nationally recognized insurance rating services acceptable to the commissioner including the rating service's explanation of the meaning of the ratings. If ratings are unavailable for any year of the five-year period, this shall also be disclosed;

(2) A balance sheet as of December 31 for the previous three (3) years if available or for such lesser period as is available and as of the date of the most recent quarterly statement;

(3) A copy of the Management's Discussion and Analysis that was filed as a supplement to the previous year's annual statement; and

(4) An explanation of the reason for the transfer.

3. Notice in a form identical or substantially similar to Appendix A attached shall be deemed to comply with the requirements of Section 5.A.2.

4. The Notice of Transfer shall include a pre-addressed, postage-paid response card which a policyholder may return as its written statement of acceptance or rejection of the transfer and novation.

B. Regulatory Filing and Approval Requirements

1. Prior written approval by the Commissioner is required for any transaction where an insurer domiciled in this state assumes or transfers obligations or risks, or both, on contracts of insurance under an assumption reinsurance agreement. An insurer domiciled in this state shall not assume obligations or risks, or both, on contracts of insurance issued to or owned by policyholders residing in any other state unless it is licensed in the other state, or the insurance regulatory official of that state has approved the assumption. The following items shall be filed with the Corporate Affairs section of the Division of Insurance to obtain the required approval:

a. A petition to the Commissioner for approval of the proposed transaction. The petition must be executed by an officer of each insurer and contain the following:

(1) The full and complete names and addresses of the ceding and assuming insurers, and their states(s) of domicile;

(2) A description of the type of business transferred, e.g., life, accident and health, annuity, workers' compensation, professional liability, etc.

(3) An analysis of the five (5) considerations delineated in Section 5.B.3. of this regulation;

(4) Disclosure of any remuneration paid; and

(5) Disclosure of all states in which risks, subject to this transfer, reside and whether the assuming insurer is licensed in each state.

b. A complete copy of the Notice of Transfer including all attachments;

c. A copy of the executed assumption reinsurance agreement;

d. A copy of the proposed assumption certificate to be mailed to all policyholders, which includes a description of the transaction, the name and address of the assuming company, the policyholder name and policy number, and a statement that the certificate should be attached to and become part of the policy;

e. The following financial information for each company;

(1) The latest annual financial statement if the statement has not been filed with the National Association of Insurance Commissioners;

(2) The total number of policyholders affected and the reserves for such risks;

(3) The number of Colorado policyholders affected and the reserves for such risks;

(4) Pro forma risk based capital results prior to and after the transaction.

f. Any other documents or information which the Commissioner deems pertinent by the particular terms or circumstances of the reinsurance transaction.

2. No insurer licensed in this state shall transfer obligations or risks, or both, on contracts of insurance written in this state or covering risks or property located in this state, or owned by residents of this state, to any insurer that is not licensed in this state. Any licensed foreign insurer that enters into an assumption reinsurance agreement with another foreign insurer shall file or cause to be filed the following with the Corporate Affairs section of the Division of Insurance:

a. A copy of the executed reinsurance agreement and the proposed assumption certificate;

b. A complete copy of the Notice of Transfer, including all attachments;

c. A copy of the approval of each of the states of domicile;

d. The number of Colorado policyholders affected by the transfer; and

e. An affidavit that the transaction is subject to substantially similar requirements in the state of domicile of both the transferring and assuming insurer. If no such requirements exist in the domicile of either the transferring or assuming insurers, then the prior approval requirements of Section 5.B.1. of this regulation shall apply.

3. The following factors, along with such other factors as the Commissioner deems appropriate under the circumstances, shall be considered by the Commissioner in reviewing a request for approval:

a. The financial condition of the transferring and assuming insurers and the affect the transaction will have on the financial condition of each company;

b. The competence, experience and integrity of those persons who control the operation of the assuming insurer;

c. The plans or proposals the assuming party has with respect to the administration of the policies subject to the proposed transfer;

d. Whether the transfer is fair and reasonable to the policyholders of both companies; and

e. Whether the notice of transfer to be provided by the insurer is fair, adequate and not misleading.

4. Provided the provisions of Section 5.B.1. of this regulation do not apply, and if the Commissioner does not approve or deny the transaction within 60 days of receipt of all the required information, the transaction will be deemed approved after 60 days of receipt by the Commissioner. The Notice of Transfer may not be mailed to Colorado policyholders until formally approved by the Commissioner or the transaction is deemed approved. The assuming and transferring insurers are required to maintain sufficient records to document that the provisions of this regulation have been met, including the detail of all policyholders who have consented to, rejected or have been deemed transferred.

5. If the assumption reinsurance agreement involves the transfer of health insurance obligations or risks, or both, the assuming insurer must submit a rate filing within 60 calendar days after the assumption reinsurance agreement's approval as required by Colorado Insurance Regulation 4-2-11.

3 CCR 702-3-3-1-5

37 CR 20, October 25,2014, effective 11/15/2014

37 CR 20, October 25,2014, effective 1/1/2015

37 CR 23, December 10, 2014, effective 1/1/2015

38 CR 17, September 10, 2015, effective 10/1/2015

39 CR 05, March 10, 2016, effective 4/1/2016

39 CR 14, July 25, 2016, effective 8/15/2016

39 CR 23, December 10, 2016, effective 1/1/2017

40 CR 03, February 10, 2017, effective 3/15/2017

40 CR 05, March 10, 2017, effective 4/1/2017

40 CR 13, July 10, 2017, effective 8/1/2017

40 CR 17, September 10, 2017, effective 11/1/2017

43 CR 06, March 25, 2020, effective 4/15/2020

44 CR 03, February 10, 2021, effective 3/15/2021

44 CR 23, December 10, 2021, effective 1/1/2022

46 CR 03, February 10, 2023, effective 3/2/2023