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Bill Detail: HB20-1136

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Title Insurance Investment Regulation Modernization
Status Sent to the Governor (03/23/2020)
Bill Subjects
  • Business & Economic Development
  • Health Care & Health Insurance
  • Insurance
House Sponsors M. Snyder (D)
Senate Sponsors J. Tate (R)
C. Hansen (D)
House Committee Business Affairs and Labor
Senate Committee Business, Labor and Technology
Date Introduced 01/16/2020
Description

Current law regulates the types and amounts of investments a
domestic insurer may make, including investments in bonds and other
evidences of indebtedness. Section 1 of the bill clarifies the types of
indebtedness that may be invested in and allows the domestic insurer to
invest in the debts of an issuer that is in default in the payment of interest
on the debt.

Current law allows a domestic insurer to invest in first-priority
mortgage loans in the United States and Canada. In connection with this,
section 2:
  • Authorizes investment in lower-priority loans if the holder
of the lower-priority loan holds the first-priority loan;
  • Repeals the requirement that a mortgage loan be evidenced
by a written appraisal;
  • Repeals the requirement that the mortgaged land have a
building, be used for agriculture or pasture, or be
income-producing;
  • Repeals the requirement that improvements to the land be
insured against fire loss;
  • Repeals mortgage loan documentation requirements; and
  • Authorizes domestic insurers to acquire mortgage loans for
land located in other foreign jurisdictions that have a
sovereign debt rating of 1 from the securities valuation
office of the National Association of Insurance
Commissioners if these assets do not exceed 10% of the
domestic insurer's investments.
Current law allows a domestic insurer to invest in real estate for
income. In connection with this, section 3 broadens the current definition
of real estate, which covers fee simple ownership and leasehold estates,
to include all interests in property, including mineral estates.
Current law allows a domestic insurer to invest in preferred or
common stock in businesses within the United States and Canada. In
connection with this, section 4:
  • Broadens current law to allow investment in equity
interests of businesses other than preferred or common
stock;
  • Repeals the requirement that the business not be in arrears
as to dividends for the last 3 years;
  • Repeals the requirement that any sinking fund for preferred
stock must be current;
  • Repeals the requirement that common stock must be
registered on a national securities exchange or regularly
traded on a national or regional basis;
  • Limits the amount of equity that is not listed on a nationally
registered securities exchange or securities market to 5% of
the domestic insurer's assets; and
  • Authorizes a domestic insurer to invest in equity interests
in businesses created in other foreign jurisdictions that have
a sovereign debt rating of 1 from the securities valuation
office of the National Association of Insurance
Commissioners if these assets do not exceed 3% of the
domestic insurer's investments.
Current law allows a domestic insurer to invest in money market
mutual funds. Section 9 requires the funds to comply with certain federal
regulations and requires government-backed funds to meet certain
standards of the National Association of Insurance Commissioners.
Sections 5 through 8 make conforming amendments.

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Fiscal Notes Fiscal Notes (02/07/2020) (most recent)  
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