Financial Solvency, Reinsurance, Actuarial Opinions and Holding Companies¶

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Idaho Code Title 41 (Insurance)¶

Chapter 3¶

I.C. § 41-301: "Stock" insurer defined¶

For the purposes of this code a "stock" insurer is an incorporated insurer with its capital divided into shares and owned by its stockholders.

Legislative History: [41-301, added 1961, ch. 330, sec. 64, p. 645.]

I.C. § 41-302: "Deposit guarantee" corporation defined¶

41-302A. "Deposit guarantee" corporation defined. A deposit guarantee corporation is an incorporated insurer without capital stock, the members of which are policy holders and the governing body of which is elected by its members.

Legislative History: [41-302A, added 1983, ch. 177, sec. 1, p. 484.]

I.C. § 41-303: "Reciprocal" insurer defined¶

A "reciprocal" insurer is as defined in section 41-2902 .

Legislative History: [41-303, added 1961, ch. 330, sec. 66, p. 645.]

I.C. § 41-304: "Charter" defined¶

"Charter" means articles of incorporation, articles of agreement, articles of association or other basic constituent document of a corporation, or the power of attorney of a reciprocal insurer.

Legislative History: [41-304, added 1961, ch. 330, sec. 67, p. 645.]

I.C. § 41-305: Certificate of authority required¶

(1) No person shall act as an insurer and no insurer or its agents, attorneys, subscribers, or representatives shall directly or indirectly transact insurance in this state except as authorized by a subsisting certificate of authority issued to the insurer by the director, except as to such transactions as are expressly otherwise provided for in this code.

(2) No insurer shall from offices or by personnel or facilities located in this state solicit insurance applications or otherwise transact insurance in another state or country unless it holds a subsisting certificate of authority issued to it by the director authorizing it to transact the same kind or kinds of insurance in this state.

Legislative History: [41-305, added 1961, ch. 330, sec. 69, p. 645.]

I.C. § 41-306: interstate insurance sales¶

41-306A. interstate insurance sales. (1) A foreign insurer subject to the jurisdiction of another state’s insurance department or insurance commissioner and licensed and authorized to transact health or disability insurance in its state of domicile may offer and sell an individual or group accident and sickness insurance policy as defined in section 41-516 , Idaho Code, in Idaho as long as that individual or group accident and sickness policy provides the mandatory coverages this title requires for insurers.

(2) The director may issue a certificate of authority to a foreign insurer to sell individual or group accident and sickness insurance policies in this state as long as that insurer is licensed in good standing in another state to sell individual or group accident and sickness insurance, remains licensed in good standing in that state to sell individual or group accident and sickness insurance and complies with the provisions of subsection (3) of this section. If an insurer is no longer licensed in good standing to sell individual or group accident and sickness insurance by its domiciled state, it shall be ineligible to do business in this state and its certificate of authority shall terminate immediately unless it obtains an independent certificate of authority in this state pursuant to chapter 3, title 41 , Idaho Code, and complies with the provisions of this title.

(3) In order for a foreign insurer to offer and sell individual or group accident and sickness insurance policies to residents of this state, the foreign insurer agrees that any dispute regarding its policies, benefits, contracts or coverages purchased by Idaho residents shall be governed by Idaho law, shall be either litigated in Idaho or have an alternative dispute resolution conducted in Idaho and shall appoint the director as its agent for service of process pursuant to section 41-333 , Idaho Code. The foreign insurer submits to the jurisdiction of the department of insurance for all purposes under this title and is subject to all provisions of this title and rules promulgated thereunder applicable to insurers transacting accident and sickness insurance in Idaho. The foreign insurer must pay all fees and assessments provided by law under this title. The department of insurance may ensure that the forms used by a foreign insurer are appropriate and not misleading. Agents used by such foreign insurers are required to be licensed in Idaho.

(4) Insurers selling policies in Idaho pursuant to this section shall comply with the provisions of section 41-402 , Idaho Code, and remit the tax as provided in that section. Insurers selling policies in Idaho pursuant to this section shall be required to participate in the high risk reinsurance pool pursuant to chapter 55, title 41 , Idaho Code.

(5) The department of insurance shall promulgate, adopt and enforce such rules and such methods of administration as may be necessary or proper to carry out the provisions of this section.

(6) The department of insurance is authorized to enter into compacts with other states for purposes of this section.

Legislative History: [41-306A, added 2018, ch. 166, sec. 2, p. 340.]

I.C. § 41-307: Authorization for investment purposes only¶

A foreign insurer may make investments in this state without certificate of authority as provided by section 30-21-502 , Idaho Code. Such an insurer shall not be subject to any other provision of this code.

Legislative History: [41-307, added 1961, ch. 330, sec. 70, p. 645; am. 1980, ch. 197, sec. 27, p. 453; am. 1999, ch. 65, sec. 2, p. 169; am. 2017, ch. 58, sec. 20, p. 116.]

I.C. § 41-308: General eligibility for certificate of authority¶

To qualify for and hold authority to transact insurance in this state an insurer must be otherwise in compliance with this code and with its charter powers, and must be an incorporated stock insurer, or an incorporated mutual insurer, or a reciprocal insurer, of the same general type as may be formed as a domestic insurer under this code; except that:

(1) No insurer shall be authorized to transact insurance in this state which does not maintain reserves as required by chapter 6 (assets and liabilities) of this code applicable to the kind or kinds of insurance transacted by such insurer, wherever transacted in the United States.

(2) Before granting authority to an insurer to transact insurance in this state, the director shall take into consideration the length of time the insurer has been transacting insurance; the net profit or loss experienced over the previous five (5) years; or any other factor which for good reason he believes could make the admittance of the insurer not in the best interest of the insurance-buying public.

(3) The director shall not grant or continue authority to transact insurance in this state as to any insurer the management of which is found by him to be untrustworthy, or so lacking in insurance experience as to make the proposed operation hazardous to the insurance-buying public; or which he has good reason to believe is affiliated directly or indirectly through ownership, control, reinsurance transactions or other insurance or business relations, with any person or persons whose business operations are or have been marked, to the detriment of policyholders or stockholders or investors or creditors or of the public, by manipulation or dissipation of assets, or manipulation of accounts, or of reinsurance, or by similar injurious actions.

Legislative History: [41-308, added 1961, ch. 330, sec. 71, p. 645; am. 1986, ch. 42, sec. 1, p. 126; am. 2006, ch. 49, sec. 2, p. 142.]

I.C. § 41-309: Government-owned insurers not to be authorized¶

No insurer the voting control or ownership of which is held in whole or substantial part by any government or governmental agency, or which is operated for or by any such government or agency, other than the Idaho state insurance fund, shall be authorized to transact insurance in this state. Membership in a mutual insurer, or subscribership in a reciprocal insurer, or ownership of stock of an insurer by the alien property custodian or similar official of the United States, or supervision of an insurer by public insurance supervisory authority shall not be deemed to be an ownership, control, or operation of the insurer for the purposes of this section.

Legislative History: [41-309, added 1961, ch. 330, sec. 72, p. 645; am. 1998, ch. 428, sec. 10, p. 1359; am. 2003, ch. 377, sec. 2, p. 1009; repeal and new section added 2003, ch. 377, secs. 3 & 4, p. 1010.]

I.C. § 41-310: Payment of back taxes¶

(1) In addition to other applicable requirements therefor, no insurer formerly an authorized insurer in this state and again seeking admission to this state as an authorized insurer shall be so authorized unless the insurer, as part of its application for such authority, includes a written statement duly sworn to by at least two (2) of its executive officers of all premiums received by the insurer with respect to insurance on subjects of insurance resident, located, or to be performed in this state, subsequent to its previous withdrawal for any cause from this state, and pays to the state premium tax thereon at the same rate and in the same amount as the insurer would have paid on such premiums had it continued to be an authorized insurer in this state during the period interim its withdrawal and its re-application for authority.

(2) Any insurer not theretofore authorized in this state which, within three (3) years prior to its application for authority to transact insurance in Idaho has transacted insurance in this state in violation of the laws of Idaho, shall not be granted such authority unless it is otherwise fully qualified therefor, files with the director a written statement sworn to by two (2) of its executive officers of all premiums received by it during such three (3) years with respect to insurance on subjects resident, located or to be performed in Idaho, and pays to the director as an additional fee for the filing of its application for certificate of authority, an amount of money equal to the premium tax which it would have paid to this state with respect to such premiums if it had been an authorized insurer in this state throughout such period.

Legislative History: [41-310, added 1961, ch. 330, sec. 73, p. 645.]

I.C. § 41-311: Name of insurer¶

(1) No insurer shall be formed, authorized or otherwise allowed to transact insurance in this state which has or uses a name or principal identifying name factor which is the same as or deceptively similar to that of another insurer earlier authorized or allowed to transact insurance in this state.

(2) No life insurer shall be authorized or otherwise allowed to transact insurance in this state which has or uses a name deceptively similar to that of another insurer authorized or otherwise allowed to transact insurance in this state within the preceding ten (10) years if life insurance policies originally issued by such other insurer are still outstanding in this state.

(3) No insurer shall hereafter be formed, newly authorized or otherwise allowed to transact insurance in this state which has or uses a name the same as or deceptively similar to the name of any foreign insurer doing business elsewhere than in this state if such foreign insurer has within the last preceding twelve (12) months signified its intention to secure incorporation in this state under such name, or do business as a foreign insurer in this state under such name by filing notice of such intention with the director, unless the written consent to the use of such name or deceptively similar name has been given by such foreign insurer.

(4) No insurer shall be authorized or otherwise allowed to transact insurance in this state which has or uses a name which tends to deceive or mislead as to the type of organization of the insurer.

(5) In case of conflict of names hereafter between two (2) insurers, or a conflict otherwise prohibited under this section, the director may permit, or shall require as a condition to the issuance of an original certificate of authority or other approval to transact insurance in this state to an applicant insurer, the insurer to use in this state such supplementation or modification of its name or such business name as may reasonably be necessary to avoid the conflict. No such name, supplementation or modification shall contain the principal identifying factor of the name of any other insurer already authorized or otherwise allowed to transact insurance in this state.

Legislative History: [41-311, added 1961, ch. 330, sec. 74, p. 645; am. 2004, ch. 91, sec. 1, p. 331.]

I.C. § 41-312: Combinations of insuring powers — One insurer¶

An insurer which otherwise qualifies therefor may be authorized to transact any one (1) kind or combination of kinds of insurance as defined in chapter 5 of this code, except:

(1) A life insurer may grant annuities and may be authorized to transact in addition only disability insurance; except, that the commissioner shall, if the insurer otherwise qualifies therefor, continue so to authorize any life insurer which immediately prior to the effective date of this code was lawfully authorized to transact in this state a kind or kinds of insurance in addition to life, and disability, insurances and annuity business.

(2) A reciprocal insurer shall not transact life insurance.

(3) A title insurer shall be a stock insurer, and shall not transact any other kind of insurance. This provision shall not prohibit the ceding of reinsurance by a title insurer to insurers other than mutual or reciprocal insurers.

Legislative History: [41-312, added 1961, ch. 330, sec. 75, p. 645.]

I.C. § 41-313: Domestic reciprocal insurers with fewer than seven subscribers¶

41-313A. Domestic reciprocal insurers with fewer than seven subscribers. Domestic reciprocal insurers with fewer than seven (7) subscribers which insure only worker’s compensation risks and which only issue fully assessable policies are required, in lieu of the paid-up capital stock or basic surplus and additional surplus requirements of section 41-313 , Idaho Code, to meet the security for payment of compensation standards set forth in section 72-301 , Idaho Code; provided however, the securities required pursuant to this section shall be deposited with the director of the department of insurance as opposed to the industrial commission; provided further, all other rules, regulations or statutory requirements applicable to domestic reciprocal insurers administered by the director of the department of insurance remain applicable to reciprocal insurers meeting the requirements of this section.

Legislative History: [41-313A, added 1993, ch. 279, sec. 5, p. 948.]

I.C. § 41-315: Permissible insuring combinations without additional capital funds¶

(1) A life insurer may also grant annuities without additional capital or additional surplus.

(2) A disability insurer may also issue insurance against congenital defects, as defined in section 41-506 (1) (l), without additional capital or additional surplus.

(3) A casualty insurer may be authorized to transact also disability insurance without additional capital or additional surplus.

(4) A property insurer may without additional capital or additional surplus include such amount and kind of insurance against legal liability or injury, damage, or loss to the person or property of others, and for medical, hospital, and surgical expense related to such injury, as the director deems to be reasonably incidental to insurance of real property against fire and other perils under policies covering farm properties, or residential properties designated for occupancy by not more than four (4) families, with or without incidental office, professional, private school or studio occupancy by an insured whether or not the premium or rate charged for certain perils so covered is specified in the policy. Any provision of section 41-509 (limit of risk) to the contrary notwithstanding, no insurer authorized as to property insurance only shall pursuant to this subsection retain risk as to any one (1) subject of insurance as to hazards other than property insurance hazards, in an amount exceeding five per cent (5%) of its surplus to policyholders.

Legislative History: [41-315, added 1961, ch. 330, sec. 78, p. 645; am. 1969, ch. 214, sec. 7, p. 625.]

I.C. § 41-316: Deposit — General requirement — Domestic insurers¶

41-316A. Deposit — General requirement — Domestic insurers. This section shall apply to all domestic insurers.

(1) The director shall not authorize the formation of a new domestic insurer or the redomestication to this state of an insurer unless it makes and thereafter maintains in trust in this state through the director for the protection of all its policyholders and creditors, a deposit of cash or securities eligible for deposit under section 41-803 , Idaho Code, in an amount of the minimum capital for a stock insurer and basic surplus of a mutual or reciprocal insurer, as required in sections 41-313 and 41-2652 , Idaho Code.

(2) A domestic insurer holding a valid certificate of authority to transact insurance in this state immediately prior to January 1, 1994, shall have a period of three (3) years from and after that date within which to comply with any increase in deposit requirements.

Legislative History: [41-316A, added 1994, ch. 240, sec. 3, p. 754.]

I.C. § 41-318: Cooperation with the department of health and welfare¶

(1) A health insurer that provides disability insurance as defined in section 41-503 , Idaho Code, including self-insured plans, group health plans as defined in section 607(1) of the employee retirement income security act of 1974, service benefit plans, managed care organizations, pharmacy benefit managers or other parties that are by statute, contract or agreement legally responsible for payment of a claim for a health care item or service with respect to medical assistance programs under chapter 2, title 56 , Idaho Code, shall, as a condition of doing business in the state of Idaho, cooperate with the Idaho department of health and welfare by doing the following:

(a) Provide, with respect to an individual who is eligible for or who is or has been provided medical assistance under chapter 2, title 56 , Idaho Code, within sixty (60) days of a request of the department, information to determine the period the individual or the individual’s spouse or dependents are, or have been, covered by the insurer and the nature of that coverage. The information shall include the name and address of the insurer and the identifying number of the health care insurance plan. The format of the information provided shall include the data elements, medium and frequency of reporting, any costs of the insurer to be reimbursed and procedures that will be followed when a data match is found;

(b) Accept the department’s right of recovery on behalf of the state of Idaho, and the assignment to the department of any right of an individual or other entity to payment from the party for an item or service for which payment has been made under chapter 2, title 56 , Idaho Code;

(c) Respond to any inquiry by the department regarding a claim for payment for any health care item or service submitted not later than three (3) years after the date of the provision of the health care item or service; and

(d) Agree not to deny a claim submitted by the department solely on the basis of the date of submission of the claim, the type or format of the claim form, or a failure to present proper documentation at the point-of-sale that is the basis of the claim, if:

(i) The claim is submitted by the department within the three (3) year period beginning on the date on which the item or service was furnished; and

(ii) Any action by the department to enforce its rights with respect to the claim is commenced within six (6) years after the department’s submission of the claim.

(2) Failure to cooperate with the department as set forth in subsection (1) of this section shall subject the insurer to suspension or revocation of its certificate of authority pursuant to section 41-326 , Idaho Code.

Legislative History: [41-318, added 2008, ch. 147, sec. 1, p. 432.]

I.C. § 41-319: Application for certificate of authority¶

To apply for an original certificate of authority an insurer shall file with the director its application therefor, accompanied by the applicable fees set forth by rule pursuant to section 41-401 , Idaho Code, showing its name, location of its home office or principal office in the United States (if an alien insurer), the kinds of insurance to be transacted, date of organization or incorporation, form of organization, state or country of domicile, and such additional information as the director may reasonably require, together with the following documents, as applicable:

(1) If a foreign corporation, one (1) copy (photostatic copy or similar form of reproduction) of its corporate charter, articles of incorporation or other charter documents, with all amendments thereto, currently certified by the public official with whom the originals are on file in the state or country of domicile. If a domestic corporation, three (3) copies pursuant to section 41-2804 , Idaho Code.

(2) If a foreign corporation, one (1) copy (photostatic copy or similar form of reproduction) of its bylaws as amended, certified by the insurer’s corporate secretary. If a domestic corporation, three (3) copies (photostatic copies or similar form of reproduction) of its bylaws as amended, certified by the insurer’s corporate secretary.

(3) If a reciprocal insurer, a copy of the power of attorney of its attorney in fact, and a copy of its subscribers’ agreement, if any, both certified by the attorney in fact; and if a domestic reciprocal insurer, the declaration provided for in section 41-2908 , Idaho Code.

(4) A complete copy of its financial statement as of not earlier than the December 31 next preceding in form as customarily used in the United States by like insurers, sworn to by at least two (2) executive officers of the insurer, or certified by the public insurance supervisory official of the insurer’s state of domicile or of entry into the United States.

(5) Copy of report of last examination, if any, made of the insurer within not more than three (3) years next preceding, certified by the public insurance supervisory official of the insurer’s state of domicile or of entry into the United States; or, in the case of newly formed insurers, copy of the report of the "qualifying" examination of the insurer, similarly certified. Provided, however, that if the law of the applicant’s state of domicile requires that examinations shall be completed in a period of more than three (3) years or does not specify any period of time for examinations, then the applicant shall provide a copy of a report within not more than the five (5) years next preceding.

(6) Appointment of the director pursuant to section 41-333 , Idaho Code, as its attorney to receive service of legal process.

(7) If a foreign insurer, a certificate of the public insurance supervisory official of its state or country of domicile showing that it is authorized to transact in such state or country the kind or kinds of insurance proposed to be transacted in this state.

(8) If an alien insurer, a copy of the appointment and authority of its United States manager, certified by its officer having custody of its records.

(9) If a foreign insurer, certificate as to deposit if to be tendered pursuant to section 41-316 , Idaho Code.

(10) If a life or disability insurer, one (1) copy of the insurer’s rate book and of each form of policy proposed to be issued in this state. [1]

Legislative History: [41-319, added 1961, ch. 330, sec. 82, p. 645; am. 1963, ch. 120, sec. 1, p. 348; am. 1983, ch. 188, sec. 1, p. 508; am. 2001, ch. 85, sec. 3, p. 213; am. 2004, ch. 89, sec. 1, p. 324; am. 2004, ch. 90, sec. 3, p. 327.]

I.C. § 41-320: Consideration of application¶

An application for a certificate of authority shall be examined by the director, and if he finds the application to be complete and that the documents included therewith are otherwise in proper order, he shall forward the applicant insurer’s articles of incorporation and by-laws, if any, or copy of the power of attorney if a reciprocal insurer, and the insurer’s appointment of the director as process agent to the attorney general for examination. The attorney general shall examine the documents, and if found by him to be in accordance with the requirements of this code and not inconsistent with the constitution of this state he shall so certify in an opinion to the director.

Legislative History: [41-320, added 1961, ch. 330, sec. 83, p. 645.]

I.C. § 41-322: Issuance or refusal of certificate of authority¶

(1) If upon completion of its application the director finds, from the application, the attorney general’s opinion referred to in section 41-320 , and such other investigation and information as he may make or acquire, that the insurer is fully qualified for and entitled thereto under this code, he shall issue to the insurer a proper certificate of authority; if he does not so find, the director shall issue his order refusing such authority.

(2) The director and attorney general shall take all necessary action therefor as specified in section 41-320 and this section, and shall either issue or refuse to issue a certificate of authority within a reasonable time after the completion of the application for such authority.

(3) The certificate of authority, if issued, shall specify the kind or kinds of insurance the insurer is authorized to transact in this state. At the insurer’s request, the director may issue authority limited to particular types of insurance or insurance coverages within the scope of a kind of insurance as defined in chapter 5 of this code.

Legislative History: [41-322, added 1961, ch. 330, sec. 85, p. 645.]

I.C. § 41-323: What certificate evidences — Ownership of certificate¶

(1) An insurer’s subsisting certificate of authority is evidence of its authority to transact in this state the kind or kinds of insurance specified therein, either as direct insurer or as reinsurer or as both.

(2) Although issued to the insurer the certificate of authority is at all times the property of the state of Idaho. Upon any expiration, suspension, or termination thereof the insurer shall promptly deliver the certificate of authority to the director.

Legislative History: [41-323, added 1961, ch. 330, sec. 86, p. 645.]

I.C. § 41-324: Continuance, expiration, or reinstatement of certificate of authority¶

(1) A certificate of authority shall continue in force as long as the insurer is entitled thereto under this code and until suspended or revoked by the director, or terminated at the request of the insurer; subject, however, to continuance of the certificate by the insurer each year by:

(a) Payment prior to March 1 of the continuation fee as required by regulation of the department of insurance; and

(b) Due filing by the insurer of its annual statement for the calendar year preceding as required under section 41-335 , Idaho Code; and

(c) Payment by the insurer of premium taxes with respect to the preceding calendar year as required by sections 41-402 and 41-403 , Idaho Code.

(2) If not so continued by the insurer, its certificate of authority shall expire as at midnight on the March 31 next following such failure of the insurer to continue it in force. The director shall promptly notify the insurer of the occurrence of any failure resulting in impending expiration of its certificate of authority.

(3) The director may, in his discretion, upon the insurer’s request made within three (3) months after expiration, reinstate a certificate of authority which the insurer has inadvertently permitted to expire, after the insurer has fully cured all its failures which resulted in the expiration, and upon payment by the insurer of the fee for reinstatement specified in section 41-401 , Idaho Code (fee schedule). Otherwise the insurer shall be granted another certificate of authority only after filing application therefor and meeting all other requirements as for an original certificate of authority in this state.

Legislative History: [41-324, added 1961, ch. 330, sec. 87, p. 645; am. 1991, ch. 277, sec. 3, p. 719.]

I.C. § 41-325: Amendment of certificate of authority¶

The director may at any time amend an insurer’s certificate of authority to accord with changes in the insurer’s charter or insuring powers.

Legislative History: [41-325, added 1961, ch. 330, sec. 88, p. 645.]

I.C. § 41-326: Suspension or revocation of certificate of authority — Mandatory grounds¶

(1) The director shall refuse to continue, or shall suspend or revoke, an insurer’s certificate of authority:

(a) If such action is required by any provision of this code; or

(b) If a foreign insurer, it no longer meets the requirements for the authority, on account of deficiency of assets or otherwise; or if a domestic insurer, it has failed to cure an impairment of capital or surplus within the time allowed therefor by the director under this code; or

(c) If the insurer knowingly exceeds its charter powers or powers granted under its certificate of authority; or

(d) If the insurer’s certificate of authority to transact insurance therein is suspended or revoked by its state of domicile, or state of entry into the United States if an alien insurer.

(2) Except in cases of insolvency or impairment of required capital or surplus, or suspension or revocation by another state as referred to in subdivision (d) above, the director shall so refuse, suspend, or revoke the certificate of authority only after a hearing granted to the insurer thereon, unless the insurer waives such hearing in writing.

Legislative History: [41-326, added 1961, ch. 330, sec. 89, p. 645.]

I.C. § 41-327: Administrative penalty — Suspension or revocation of certificate of authority — Discretionary and special grounds¶

(1) The director may, in his discretion, impose an administrative penalty not to exceed five thousand dollars ($5,000) for deposit in the general fund of the state of Idaho, or refuse to continue or suspend or revoke an insurer’s certificate of authority if he finds after a hearing thereon that the insurer has violated or failed to comply with any lawful order of the director, or any provision of this code other than those for which suspension or revocation is mandatory.

(2) The director shall suspend or revoke an insurer’s certificate of authority on any of the following grounds if he finds after a hearing thereon that the insurer:

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

(b) Has failed, after written request therefor by the director, to remove or discharge an officer or director who has been convicted of any crime involving fraud, dishonesty, or that is otherwise deemed relevant in accordance with section 67-9411 (1), Idaho Code.

(c) With such frequency as to indicate its general business practice in this state, has without just cause refused to pay claims arising under coverages provided by its policies, whether the claim is in favor of an insured or is in favor of a third person with respect to the liability of an insured to such third person, or, with like frequency, without just cause compels insureds or claimants to accept less than the amount due them or to employ attorneys or to bring suit against the insurer or such an insured to obtain full payment or settlement of such claims.

(d) 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.

(e) Refuses to be examined, or if its directors, officers, employees, or representatives refuse to submit to examination relative to its affairs, or to produce its accounts, records, and files for examination by the director when required, or refuses to perform any legal obligation relative to the examination.

(f) Has 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 time for taking an appeal has expired, or within thirty (30) days after dismissal of an appeal before final determination, whichever date is latest.

(3) The director may, in his discretion and without advance notice or a hearing thereon, 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 such state.

Legislative History: [41-327, added 1961, ch. 330, sec. 89, p. 645; am. 1975, ch. 246, sec. 1, p. 658; am. 2020, ch. 175, sec. 6, p. 509.]

I.C. § 41-328: Order and notice of suspension, revocation or refusal — Effect upon agents’ authority¶

(1) All suspensions or revocations of, or refusals to continue, an insurer’s certificate of authority shall be by the director’s order given to the insurer as provided by section 41-212 .

(2) Upon suspending or revoking or refusing to continue the insurer’s certificate of authority the director shall forthwith give notice thereof to the insurer’s agents in this state of record in the department, and shall likewise suspend or revoke the authority of such agents to represent the insurer.

(3) In his discretion the director may likewise publish notice of such suspension, revocation or refusal in one or more newspapers of general circulation in this state.

Legislative History: [41-328, added 1961, ch. 330, sec. 91, p. 645.]

I.C. § 41-329: Duration of suspension — Insurer’s obligations during suspension period — Reinstatement¶

(1) Suspension of an insurer’s certificate of authority shall be for such period as the director specifies in the order of suspension, but not to exceed one (1) year. During the suspension the director may rescind or shorten the suspension by his further order.

(2) During the suspension period the insurer shall not solicit or write any new business in this state, but shall file its annual statement, pay fees, licenses, and taxes as required under this code, and may service its business already in force in this state, as if the certificate of authority had continued in full force.

(3) Upon expiration of the suspension period, if within such period the certificate of authority has not terminated, the insurer’s certificate of authority shall automatically reinstate unless the director finds that the causes of the suspension have not terminated, or that the insurer is otherwise not in compliance with the requirements of this code, and of which the director shall give the insurer notice not less than thirty (30) days in advance of the expiration of the suspension period after which time the director may issue a new order of suspension. If not reinstated or if a new order of suspension is not issued, the certificate of authority shall be deemed to have terminated as of the end of the suspension period.

(4) Upon reinstatement of the insurer’s certificate of authority, the authority of its agents in this state to represent the insurer shall likewise reinstate. The director shall promptly notify the insurer and its agents in this state of record in the department, of such reinstatement. If pursuant to section 41-328 (3), Idaho Code, the director has published notice of such suspension he shall in like manner publish notice of the reinstatement.

Legislative History: [41-329, added 1961, ch. 330, sec. 92, p. 645; am. 2004, ch. 88, sec. 1, p. 323.]

I.C. § 41-330: Impaired insurers — Notice to agents — Penalty¶

(1) Upon suspension, revocation or refusal to continue the certificate of authority of an insurer on account of deficiency of assets (if a foreign insurer) or failure to cure an impairment of the capital stock (if a stock insurer) or surplus (if a mutual or reciprocal) of a domestic insurer, as provided under section 41-326 (1)(b), every officer and director of the insurer must, either separately or jointly with one or more of the others and within four (4) days after notice of such suspension, revocation or refusal was given to the insurer by the director, notify by any available means every person authorized by the insurer, as of immediately prior to such suspension, revocation or refusal, to write business for the insurer in Idaho, immediately to cease such writing; and each such person so notified shall immediately cease to write any further business for the insurer in Idaho.

(2) Each individual made responsible for such notification under the foregoing subsection, who fails so to notify, and every person so authorized who, after being so notified or otherwise being informed as to such impairment or suspension, revocation, or refusal, solicits or writes further business for the insurer, is guilty of a felony and upon conviction shall be punished by a fine of not exceeding ten thousand dollars ($10,000) or by imprisonment in the Idaho state penitentiary for a term of not exceeding ten (10) years, or by both such fine and imprisonment.

(3) This section does not apply to any person or persons, whomsoever, who has been appointed as and is acting as rehabilitator or receiver of the insurer in judicial proceedings in a court of the United States or of the state of Idaho.

Legislative History: [41-330, added 1961, ch. 330, sec. 93, p. 645.]

I.C. § 41-331: Impaired insurers — Liability of officers¶

The president and each director of a stock insurer who, after knowing that the insurer’s capital is impaired, permits or assents in the writing of new business by the insurer in this state during the existence of such impairment, shall, together with their respective estates, be severally and jointly liable for the amount of any loss or losses which may be incurred by the insured under any such new insurance.

Legislative History: [41-331, added 1961, ch. 330, sec. 94, p. 645.]

I.C. § 41-332: Foreign insurers exempt from corporation laws governing admission of foreign corporations¶

A foreign insurer authorized to transact insurance in this state and fully complying with this code shall be exempt from complying with the provisions of sections 30-21-501 through 30-21-512 , Idaho Code.

Legislative History: [41-332, added 1961, ch. 330, sec. 95, p. 645; am. 1980, ch. 197, sec. 28, p. 453; am. 1999, ch. 65, sec. 3, p. 170; am. 2017, ch. 58, sec. 21, p. 116.]

I.C. § 41-333: Director as process agent for foreign insurers and domestic reciprocal insurers¶

(1) Before the director shall issue to it a certificate of authority to transact insurance in this state each foreign and alien insurer and each domestic reciprocal insurer shall appoint the director and his successors in office, as its attorney to receive service of legal process issued against the insurer in this state. The appointment shall be made on a form as designated and furnished by the director. The appointment shall be irrevocable, shall bind the insurer and any successor in interest or to the assets or liabilities of the insurer, and shall remain in effect as long as there is in force any contract of the insurer in this state or any obligation of the insurer arising out of its transactions in this state.

(2) Service of such process against a foreign or alien insurer shall be made only by service thereof upon the director, or his deputy, or other person in charge of his office during his absence.

(3) At time of application for a certificate of authority the insurer shall file the appointment with the director, together with designation of the person to whom process against it served upon the director is to be forwarded. The insurer may change such designation by a new filing.

Legislative History: [41-333, added 1961, ch. 330, sec. 96, p. 645.]

I.C. § 41-334: Serving process — Time to plead¶

(1) Duplicate copies of legal process against an insurer for whom the director is attorney, shall be served upon him either by a person competent to serve a summons or by registered or certified mail. At the time of service the plaintiff shall pay to the director an appropriate fee not in excess of thirty dollars ($30.00) which fee shall be determined by rule and regulation.

(2) The director shall forthwith send one (1) of the copies of the process, by registered or certified mail with return receipt requested, to the person designated for the purpose by the insurer in its most recent such designation filed with the director.

(3) The director shall keep a record of the day of service upon him of all legal process. No proceedings shall be had against the insurer, and the insurer shall not be required to appear, plead, or answer until the expiration of thirty (30) days after the date of service upon the director.

(4) Process served upon the director and copy thereof forwarded as in this section provided shall for all purposes constitute valid and binding service thereof upon the insurer.

Legislative History: [41-334, added 1961, ch. 330, sec. 97, p. 645; am. 1972, ch. 369, sec. 5, p. 1072; am. 1977, ch. 142, sec. 1, p. 303; am. 1979, ch. 122, sec. 1, p. 375; am. 1988, ch. 345, sec. 1, p. 1024.]

I.C. § 41-335: Annual statement¶

(1) Each authorized insurer shall annually on or before March 1, or within any extension of time therefor, not to exceed thirty (30) days, which the director for good cause may have granted, file with the director a full and true statement of its financial condition, transactions and affairs as of the preceding December 31. Unless otherwise required by the director, the statement is to be prepared in accordance with the national association of insurance commissioners’ (NAIC) annual statement instructions and the NAIC’s accounting practices and procedures manual, utilizing the version of the manual effective January 1, 2004, and any subsequent revisions that are adopted for use by the director by rule, administrative order or bulletin, and is to be submitted on the NAIC annual statement blank form, and any statement, form or other information relating to the compensation of any officer, director or employee will be deemed confidential. At the seasonable request of a domestic insurer the director shall furnish to the insurer the blank form of annual statement to be used by it. The statement shall be verified by the oath of the insurer’s president or vice president, and secretary or actuary as applicable, or if a reciprocal insurer, by the oath of the attorney in fact or its like officers if a corporation.

(2) The statement of an alien insurer shall be verified by its United States manager or other officer duly authorized, and shall relate only to the insurer’s transactions and affairs in the United States unless the director requires otherwise. If the director requires a statement as to the insurer’s affairs throughout the world, the insurer shall file such statement with the director as soon as reasonably possible.

(3) Any insurance company licensed to do business in this state which neglects to file or fails to file in the time prescribed by statute its annual statement or supplemental summary statement requested by the director shall be subject to a penalty of twenty-five dollars ($25.00) per day for each day in default. This penalty will be in addition to any administrative penalty which may be assessed pursuant to sections 41-327 and 41-324 , Idaho Code.

(4) Each domestic insurer authorized to do business in this state shall annually, on or before March 1 of each year, file with the NAIC its annual financial statement in a form prescribed by the director along with any additional filings prescribed by the director for the preceding year. The information filed with the NAIC shall be in the same format and scope as that required by this code. Any amendments or addenda to the annual statement shall also be filed with the NAIC.

(5) At time of filing, the insurer shall pay to the director the fee for filing its statement as prescribed by rule of the department of insurance.

(6) The financial statements filed with the director pursuant to this section, with the exception of information relating to officer, director, or employee compensation referred to in subsection (1) of this section, are public records and available to the public, notwithstanding the exemptions from disclosure provided in chapter 1, title 74 , Idaho Code.

Legislative History: [41-335, added 1961, ch. 330, sec. 98, p. 645; am. 1991, ch. 277, sec. 1, p. 717; am. 1995, ch. 289, sec. 2, p. 969; am. 1996, ch. 68, sec. 1, p. 212; am. 1999, ch. 30, sec. 11, p. 54; am. 2004, ch. 93, sec. 1, p. 338; am. 2005, ch. 75, sec. 1, p. 254; am. 2015, ch. 141, sec. 108, p. 456.]

I.C. § 41-336: Review of annual statement — Additional information¶

(1) As soon as reasonably possible after the insurer has filed its annual statement with him, the director shall review the same and require correction of such errors or omissions in the statement as appear from such review.

(2) Any company transacting business in this state may be required by the director, when he considers such action to be necessary for the protection of policyholders, creditors, shareholders or claimants, to file a supplementary summary financial statement in a format prescribed by the director. Supplementary summary financial statements shall be due within sixty (60) days after notice is mailed to the company by the director requesting such statement. No company shall be required to file more than four (4) supplementary summary statements during any consecutive twelve (12) month period. The director may, at his discretion, require the annual statement be certified by an independent actuary deemed competent by the director or by an independent certified public accountant.

(3) In addition to information called for and furnished in connection with its annual statement, an insurer shall promptly furnish to the director such other or further information with respect to any of its transactions or affairs as the director may from time to time request in writing.

Legislative History: [41-336, added 1961, ch. 330, sec. 99, p. 645; am. 1991, ch. 277, sec. 2, p. 719.]

I.C. § 41-337: Resident agent, countersignature law¶

(1) Except as provided in section 41-338 , Idaho Code, no authorized insurer shall make, write, place or cause to be made, written or placed, any policy or contract of insurance or indemnity of any kind or character, or a general or floating policy covering risks on property located in Idaho, liability created by or accruing under the laws of this state, or undertakings to be performed in this state, except through its resident insurance agents licensed as provided in this code, who shall countersign or cause a facsimile of his signature to be placed on all policies or indemnity contracts so issued, and who shall keep a record of the same, containing the usual and customary information concerning the risk undertaken and the full premium paid or to be paid therefor, to the end that the state may receive the taxes required by law to be paid on premiums collected for insurance on property or undertakings located in this state. When two (2) or more insurers issue a single policy of insurance the policy may be countersigned on behalf of all insurers appearing thereon by a licensed agent, resident in this state, of any one such insurer.

(2) The agent may grant a power of attorney in writing to an individual who is twenty-one (21) years or more of age authorizing such person to countersign or cause a facsimile of the agent’s signature to be placed on policies and indorsements in his name and behalf. The power of attorney shall be acknowledged by the agent under oath before a notary public and shall be kept on file in the agent’s office.

Legislative History: [41-337, added 1961, ch. 330, sec. 100, p. 645; am. 1969, ch. 214, sec. 8, p. 625; am. 1977, ch. 142, sec. 2, p. 304; am. 1978, ch. 90, sec. 1, p. 167; am. 1984, ch. 60, sec. 1, p. 109.]

I.C. § 41-338: Exceptions to resident agent, countersignature law¶

(1) Nothing in section 41-337 , Idaho Code, shall be construed as preventing the free and unlimited right to negotiate wholly outside of this state contracts of insurance by licensed nonresident agents or brokers, provided the policies, endorsements or evidence of insurance covering properties or insurable interests in this state are countersigned by a resident agent of this state, in which event the countersigning agent shall receive a commission of not less than five per cent (5%) of the premium paid or one-third (1/3) of the commission paid to the licensed nonresident agent or broker, whichever is less; provided, however, the payment to the countersigning agent shall not exceed the sum of two hundred fifty dollars ($250) per policy, and when the countersigning commission to be paid is less than five dollars ($5.00), the countersigning agent may waive any commission due him.

(2) Section 41-337 , Idaho Code, shall not apply to the following contracts:

(a) Life insurance and annuities;

(b) Disability insurance;

(c) Title insurance; countersignature of title insurance policies is as provided in section 41-2702 , Idaho Code;

(d) Policies covering property in transit while in the possession or custody of any common carrier, or the rolling stock or other property of any common carrier used and employed by it as a common carrier of freight or passengers, or both;

(e) Reinsurance or retrocessions made by or for authorized insurers;

(f) Contracts issued by domestic reciprocal insurers writing workmen’s compensation for employers commonly known as self-insurers; nor, with respect to countersignature, to policies issued by a reciprocal insurer not using agents compensated by commissions in the general solicitation of business;

(g) Bid bonds issued by a surety insurer in connection with any public or private contract; or

(h) Ocean marine insurance.

(3) Notwithstanding section 41-337 , Idaho Code, and the provisions of subsection (1) of this section, if the law of another state does not require the countersignature of a licensed agent who resides in that state for policies and contracts of insurance or indemnity made, written or placed in that state by a licensed agent who resides in the state of Idaho, the countersignature of a licensed agent who resides in the state of Idaho is not required for policies and contracts of insurance or indemnity made, written or placed in the state of Idaho by a licensed agent who resides in that other state.

Legislative History: [41-338, added 1961, ch. 330, sec. 101, p. 645; am. 1975, ch. 261, sec. 1, p. 708; am. 1977, ch. 142, sec. 3, p. 305; am. 1988, ch. 242, sec. 1, p. 473.]

I.C. § 41-340: Retaliatory provision¶

(1) The purpose of this section is to aid in the protection of insurers formed under the laws of Idaho and transacting insurance in other states or countries against discriminatory or onerous requirements under the laws of such states or countries or the administration thereof.

(2) When by or pursuant to the laws of any other state or foreign country or province any taxes in the aggregate, are or would be imposed upon Idaho insurers, or upon the agents or representatives of such insurers, which are in excess of such taxes in the aggregate, directly imposed upon similar insurers, or upon the agents or representatives of such insurers, of such other state or country under the statutes of this state, so long as such laws of such other state or country continue in force or are so applied, the same taxes in the aggregate, shall be imposed by the director upon the insurers, or upon the agents or representatives of such insurers, of such other state or country doing business or seeking to do business in Idaho. Any tax imposed by any city, county, or other political subdivision or agency of such other state or country on Idaho insurers or their agents or representatives shall be deemed to be imposed by such state or country within the meaning of this section.

(3) When pursuant to the laws of a state, foreign country or province any obligation is or would be imposed upon Idaho insurers or their agents or representatives, in excess of obligations imposed upon similar insurers or their agents or representatives of another state or country, so long as the laws of the state or country imposing the obligation continue in force or are applied, the same obligation may be imposed by the director upon insurers or their agents or representatives of such other states or countries doing business or seeking to do business in Idaho. Any obligation imposed by any city, county, or other political subdivision or agency of another state or country on Idaho insurers or their agents or representatives shall be deemed to be imposed by the other state or country within the meaning of this section. For purposes of this section, the term "obligation" shall mean any license, fee, fine, penalty, deposit requirement or other obligation, prohibition or restriction.

(4) This section shall not apply as to personal income taxes, nor as to ad valorem taxes on real or personal property nor as to special purpose obligations or assessments imposed by another state in connection with particular kinds of insurance; except that deductions, from premium taxes or other taxes otherwise payable, allowed on account of real estate or personal property taxes paid shall be taken into consideration by the director in determining the propriety and extent of retaliatory action under this section.

(5) For the purposes of this section the domicile of an alien insurer, other than insurers formed under the laws of Canada, or a province thereof, shall be that state designated by the insurer in writing filed with the director at time of admission to this state or within six (6) months after the effective date of this code, whichever date is the later, and may be any one (1) of the following states:

(a) That in which the insurer was first authorized to transact insurance;

(b) That in which is located the insurer’s principal place of business in the United States;

(c) That in which is held the largest deposit of trusteed assets of the insurer for the protection of its policyholders in the United States.

If the insurer makes no such designation its domicile shall be deemed to be that state in which is located its principal place of business in the United States.

(6) The domicile of an insurer formed under the laws of Canada or a province thereof shall be as provided in section 41-108 (1), Idaho Code.

Legislative History: [41-340, added 1961, ch. 330, sec. 103, p. 645; am. 1997, ch. 354, sec. 1, p. 1045.]

I.C. § 41-341: Operational standards between insurer, its parent corporation, subsidiary or affiliated person¶

(1) No insurer shall engage directly or indirectly in any transaction or agreement with its parent corporation, or with any subsidiary or affiliated person which shall result or tend to result in:

(a) Substitution through any method of any asset of the insurer with an asset or assets of inferior quality or lower fair market value; or

(b) Deception as to the true operating results of the insurer; or

(c) Deception as to the true financial condition of the insurer; or

(d) Allocation to the insurer of a proportion of the expense of combined facilities or operations which is unfair and unfavorable to the insurer; or

(e) Unfair, unnecessary or excessive charges against the insurer for services, or facilities, or supplies, or reinsurance; or

(f) Unfair and inadequate charges by the insurer for reinsurance, services, facilities, or supplies furnished by the insurer to others; or

(g) Payment by the insurer for services, facilities, supplies, or reinsurance not reasonably needed by the insurer.

(2) In all transactions between the insurer and its parent corporation, or involving the insurer and any subsidiary or affiliated person, full recognition shall be given to the paramount duty and obligation of the insurer to protect the interests of policyholders, both existing and future.

(3) For the purposes of this section a "subsidiary" is a person of which either the insurer and/or the parent corporation holds practical control, and an "affiliated person" is a person controlled by any combination of the insurer, the parent corporation, a subsidiary, or the principal stockholders or officers or directors of any of the foregoing.

Legislative History: [I.C., sec. 41-341, as added by 1969, ch. 214, sec. 9, p. 625.]

I.C. § 41-342: Redomestication as a domestic insurer — Conversion to foreign insurer¶

(1) Any insurer which is organized under the laws of any other state and is admitted to do business in this state for the purpose of writing insurance may become a domestic insurer by complying with all of the requirements of law relative to the organization and licensing of a domestic insurer of the same type and by designating its principal place of business at a place in Idaho in compliance with section 41-2839 , Idaho Code. Such a domestic insurer shall be entitled to a certificate of redomestication and a certificate of authority to transact business in this state and shall have the same rights and obligations as other domestic insurers of this state.

(2) Any domestic insurer may, upon the approval of the director, transfer its domicile to any other state in which it is admitted to transact the business of insurance. Upon such a transfer, the insurer shall cease to be a domestic insurer. If the insurer is otherwise qualified, the director shall admit the insurer to this state as a foreign insurer. The director shall approve any such proposed transfer unless he determines that such a transfer is not in the interest of the policyholders of the insurer in this state. After the director has approved the transfer, the director shall provide written notice to the secretary of state that the insurer has transferred its domicile to another state, stating the effective date of the transfer and the state to which the insurer has transferred its domicile. Upon receipt of the written notice from the director and the payment of the fee required in section 30-21-214 , Idaho Code, the secretary of state shall file the notice and, on the effective date of the transfer, terminate the existence of the insurance company as a domestic corporation.

(3) The certificate of authority, appointment of statutory agent and licenses, policy forms, rates, authorizations and other filings and approvals in existence at the time an insurer admitted to transact insurance in this state transfers its corporate domicile to this or any other state, continue in effect upon the transfer of corporate domicile. All rates and outstanding policies of any transferring insurer shall remain in full force and effect and policies need not be endorsed as to the new domicile unless so ordered by the director. Every transferring insurer shall either file new policy forms for use in this state with the director on or before the effective date of the transfer, or use existing policy forms in this state with appropriate endorsements as allowed by and under such conditions as may be approved by the director. Every transferring insurer shall notify the director of the proposed transfer and shall promptly file any resulting amendments to its corporate documents required to be filed with the director.

Legislative History: [41-342, added 1987, ch. 302, sec. 1, p. 641; am. 1999, ch. 65, sec. 4, p. 170; am. 2016, ch. 92, sec. 1, p. 282; am. 2017, ch. 58, sec. 22, p. 116.]

I.C. § 41-343: Articles of redomestication¶

(1) Upon receiving approval under section 41-342 , Idaho Code, articles of redomestication shall be executed in duplicate by an insurance corporation by its president or a vice president and by its secretary or an assistant secretary and verified by one (1) of the officers of the corporation and shall set forth:

(a) The date of approval of the director of the Idaho department of insurance of the redomestication; and

(b) The state in which the insurer was originally incorporated, the date the insurer was incorporated in that state, and the date the insurer was authorized to do business as an insurer in the state in which it was originally incorporated.

(2) The insurer shall attach to the articles of redomestication:

(a) Articles of incorporation including such amendments as may be required to comply with the requirements of part 10, chapter 29, title 30 , Idaho Code;

(b) A copy of the certificate of redomestication issued by the director of the Idaho department of insurance.

(3) Duplicate originals of the articles of redomestication shall be delivered to the secretary of state. If the secretary of state finds that such articles conform to law, he shall, when all fees have been paid as prescribed in chapter 21, title 30 , Idaho Code:

(a) Endorse on each of such duplicate originals the word "Filed," and the month, day and year of the filing, together with the date from which the insurer has existed and operated as an insurer which shall be the date the insurer was originally incorporated in the state in which the insurer was originally incorporated;

(b) File one (1) of such duplicate originals in his office; and

(c) Issue a certificate of redomestication setting forth the date on which the articles of redomestication were filed and the date from which the insurer has existed and operated as an insurer which shall be the date the insurer was originally incorporated in the state in which the insurer was originally incorporated.

(4) The certificate of redomestication, together with the duplicate original of the articles of redomestication affixed thereto by the secretary of state, shall be returned to the insurer or to its representative.

Legislative History: [41-343, added 1987, ch. 302, sec. 2, p. 642; am. 2017, ch. 58, sec. 23, p. 117.]

I.C. § 41-344: Effective date of redomestication¶

A redomestication under section 41-342 , Idaho Code, shall become effective upon the issuance of a certificate of redomestication by the secretary of state, or such later date as may be set forth in the notice from the director; provided, however, that an insurer which has redomesticated in the state of Idaho pursuant to section 41-342 , Idaho Code, shall be considered to be the same corporation as that corporation which existed under the laws of the state in which it was formerly domiciled and shall be considered as having been an operating insurer from the date that the corporation was authorized to do business as an insurer in its original state of incorporation.

Legislative History: [41-344, added 1987, ch. 302, sec. 3, p. 642.]

I.C. § 41-345: Report¶

(1) Every insurer domiciled in this state shall file a report with the director disclosing material acquisitions and dispositions of assets or material nonrenewals, cancellations or revisions of ceded reinsurance agreements unless such acquisitions and dispositions of assets or material nonrenewals, cancellations or revisions of ceded reinsurance agreements have been submitted to the director for review, approval or information purposes pursuant to other provisions of the insurance code, laws, rules or other requirements.

(2) The report required in subsection (1) of this section is due within fifteen (15) days after the end of the calendar month in which any of the foregoing transactions occur.

(3) One (1) complete copy of the report, including any exhibits or other attachments filed as part thereof, shall be filed with the Idaho department of insurance.

(4) All reports obtained by or disclosed to the director pursuant to sections 41-345 through 41-347 , Idaho Code, shall be given confidential treatment and shall not be subject to subpoena and shall not be made public by the director, the national association of insurance commissioners, or any other person, except to insurance departments of other states, without the prior written consent of the insurer to which it pertains unless the director, after giving the insurer who would be affected thereby, notice and an opportunity to be heard, determines that the interest of policyholders, shareholders or the public will be served by the publication thereof, in which event the director may publish all or any part thereof in such manner as he may deem appropriate.

Legislative History: [41-345, added 1995, ch. 68, sec. 1, p. 174; am. 1999, ch. 65, sec. 5, p. 171; am. 2004, ch. 310, sec. 1, p. 871.]

I.C. § 41-346: Acquisitions and dispositions of assets¶

(1) Materiality. No acquisitions or dispositions of assets need be reported pursuant to section 41-345 , Idaho Code, if the acquisitions or dispositions are not material. For purposes of sections 41-345 through 41-347 , Idaho Code, a material acquisition (or the aggregate of any series of related acquisitions during any thirty (30) day period) or disposition (or the aggregate of any series of related dispositions during any thirty (30) day period) is one that is nonrecurring and not in the ordinary course of business and involves more than five percent (5%) of the reporting insurer’s total admitted assets as reported in its most recent statutory statement filed with the insurance department of the insurer’s state of domicile.

(2) Scope.

(a) Asset acquisitions subject to sections 41-345 through 41-347 , Idaho Code, include every purchase, lease, exchange, merger, consolidation, succession or other acquisition other than the construction or development of real property by or for the reporting insurer or the acquisition of materials for such purpose.

(b) Asset dispositions subject to sections 41-345 through 41-347 , Idaho Code, include every sale, lease, exchange, merger, consolidation, mortgage, hypothecation, assignment (whether for the benefit of creditors or otherwise), abandonment, destruction or other disposition.

(3) Information to be reported.

(a) The following information is required to be disclosed in any report of a material acquisition or disposition of assets:

(i) Date of the transaction;

(ii) Manner of acquisition or disposition;

(iii) Description of the assets involved;

(iv) Nature and amount of the consideration given or received;

(v) Purpose of, or reason for, the transaction;

(vi) Manner by which the amount of consideration was determined;

(vii) Gain or loss recognized or realized as a result of the transaction; and

(viii) Name(s) of the person(s) from whom the assets were acquired or to whom they were disposed.

(b) Insurers are required to report material acquisitions and dispositions on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers which utilizes a pooling arrangement or one hundred percent (100%) reinsurance agreement that affects the solvency and integrity of the insurer’s reserves and such insurer ceded substantially all of its direct and assumed business to the pool. An insurer is deemed to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than one million dollars ($1,000,000) total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than five percent (5%) of the insurer’s capital and surplus.

Legislative History: [41-346, added 1995, ch. 68, sec. 2, p. 174.]

I.C. § 41-347: Nonrenewals, cancellations or revisions of ceded reinsurance agreements¶

(1) Materiality and scope. No nonrenewals, cancellations or revisions of ceded reinsurance agreements need be reported pursuant to section 41-345 , Idaho Code, if the nonrenewals, cancellations or revisions are not material. For purposes of sections 41-345 through 41-347 , Idaho Code, a material nonrenewal, cancellation or revision is one that affects:

(a) As respects property-casualty business, including accident and health business written by a property-casualty insurer:

(i) More than fifty percent (50%) of the insurer’s total ceded written premium; or

(ii) More than fifty percent (50%) of the insurer’s total ceded indemnity and loss adjustment reserves.

(b) As respects life, annuity and accident and health business more than fifty percent (50%) of the total reserve credit taken for business ceded, on an annualized basis, as indicated in the insurer’s most recent annual statement.

(c) As respects either property-casualty or life, annuity and accident and health business, either of the following events shall constitute a material revision which must be reported:

(i) An authorized reinsurer representing more than ten percent (10%) of a total cession is replaced by one (1) or more unauthorized reinsurers; or

(ii) Previously established collateral requirements have been reduced or waived as respects one (1) or more unauthorized reinsurers representing collectively more than ten percent (10%) of a total cession.

(2) No filing shall be required, however, if:

(a) As respects property-casualty business, including accident and health business written by a property-casualty insurer, the insurer’s total ceded written premium represents, on an annualized basis, less than ten percent (10%) of it total written premium for direct and assumed business; or

(b) As respects life, annuity and accident and health business, the total reserve credit taken for business ceded represents, on an annualized basis, less than ten percent (10%) of the statutory reserve requirement prior to any cession.

(3) Information to be reported.

(a) The following information is required to be disclosed in any report of a material nonrenewal, cancellation or revision of ceded reinsurance agreements:

(i) Effective date of the nonrenewal, cancellation or revision;

(ii) The description of the transaction with an identification of the initiator thereof;

(iii) Purpose of, or reason for, the transaction; and

(iv) If applicable, the identity of the replacement reinsurers.

(b) Insurers are required to report all material nonrenewals, cancellations or revisions of ceded reinsurance agreements on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers which utilizes a pooling arrangement or one hundred percent (100%) reinsurance agreement that affects the solvency and integrity of the insurer’s reserves and the insurer ceded substantially all of its direct and assumed business to the pool. An insurer is deemed to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than one million dollars ($1,000,000) total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than five percent (5%) of the insurer’s capital and surplus.

Legislative History: [41-347, added 1995, ch. 68, sec. 3, p. 175.]

I.C. § 41-348: Prohibited acts — Service providers¶

(1) It is unlawful for a person:

(a) Knowing that the payment is for the referral of a claimant to a service provider, either to accept payment from a service provider or, being a service provider, to pay another; or

(b) To provide or claim or represent to have provided services to a claimant, knowing the claimant was referred in violation of paragraph (a) of this subsection.

(2) It is unlawful for a service provider to engage in a regular practice of waiving, rebating, giving, paying, or offering to waive, rebate, give or pay all or part of a claimant’s deductible or claim for casualty, disability insurance, worker’s compensation insurance, health insurance or property insurance.

(3) As used in this section:

(a) "Health care services" means a service provided to a claimant for treatment of physical or mental illness or injury arising in whole or substantial part from trauma.

(b) "Service provider" means a person who directly or indirectly provides, advertises, or otherwise claims to provide services.

(c) "Services" means health care services, motor vehicle body or other motor vehicle repair and preparing, processing, presenting or negotiating an insurance claim against an insurance company.

(4) Any person or service provider violating the provisions of this section shall be subject to the monetary civil penalties provided in section 41-327 , Idaho Code, as if the person or service provider were an insurer.

Legislative History: [41-348, added 1996, ch. 402, sec. 1, p. 1335.]

I.C. § 41-349: pharmacy benefit managers¶

(1) As used in this section:

(a) "Brand name or generic effective rate" means the contractual rate set forth by a pharmacy benefit manager for the reimbursement of covered brand name or generic drugs, calculated using the total payments in the aggregate, by drug type, during the performance period. The effective rates are typically calculated as a discount from industry benchmarks, such as average wholesale price or wholesale acquisition cost.

(b) "Dispensing fee" means a fee intended to cover reasonable costs associated with providing a drug to a covered person. This cost includes but is not limited to the pharmacist’s services and the overhead associated with maintaining the facility and equipment necessary to operate the pharmacy.

(c) "Effective rate guarantee" means the minimum ingredient cost reimbursement a pharmacy benefit manager guarantees it will pay for pharmacist services during the applicable measurement period.

(d) "Maximum allowable cost" means the maximum amount that a pharmacy benefit manager will reimburse a pharmacy for the cost of a generic drug.

(e) "Maximum allowable cost appeal pricing adjustment" means a retrospective positive payment adjustment made to a pharmacy by the pharmacy benefits plan or program or by the pharmacy benefit manager pursuant to an approved maximum allowable cost appeal request submitted by the same pharmacy to dispute the amount reimbursed for a drug based on the pharmacy benefit manager’s listed maximum allowable cost price.

(f) "Participation contract" means any agreement between a pharmacy benefit manager and pharmacy for the provision and reimbursement of pharmacist services and any exhibits, attachments, amendments, or addendums to such agreement.

(g) "Pass-through pricing model" means a payment model used by a pharmacy benefit manager in which the payments made by the pharmacy benefits plan or program to the pharmacy benefit manager for the covered outpatient drugs are:

(i) Equivalent to the payments the pharmacy benefit manager makes to a dispensing pharmacy or provider for such drugs, including any contracted professional dispensing fee between the pharmacy benefit manager and its network of pharmacies. Such dispensing fee would be paid if the pharmacy benefits plan or program was making the payments directly; and

(ii) Passed through in their entirety by the pharmacy benefits plan or program or by the pharmacy benefit manager to the pharmacy or provider that dispenses the drugs, and the payments are made in a manner that is not offset by any reconciliation.

(h) "Pharmacy benefit manager" means a person or entity doing business in this state that contracts with pharmacies on behalf of an insurer, third-party administrator, or managed care organization to administer prescription drug benefits to residents of this state.

(i) "Spread pricing" means the practice in which a pharmacy benefit manager charges a pharmacy benefits plan or program a different amount for pharmacist services than the amount the pharmacy benefit manager reimburses a pharmacy for such pharmacist services.

(j) "Usual and customary price" means the amount charged to cash customers for a pharmacist service exclusive of sales tax or other amounts claimed.

(2) A person may not perform, offer to perform, or advertise any pharmacy benefit management service in this state unless the person is registered as a pharmacy benefit manager with the department of insurance. A person may not utilize the services of another person as a pharmacy benefit manager if the person knows or has reason to know that the other person does not have a registration with the department. Such registration must occur annually no later than April 1 of each year and shall be on a form prescribed by the director. The department may utilize applicable sections of this title to administer registration as provided in this subsection.

(3) A pharmacy benefit manager shall not prohibit a pharmacist or retail pharmacy from providing a covered person information on the amount of the cost share for a prescription drug and the clinical efficacy of a more affordable alternative drug if one is available, and a pharmacy benefit manager may not penalize a pharmacist or retail pharmacy for disclosing such information to a covered person or for selling to a covered person a more affordable alternative if one is available.

(4) A pharmacy benefit manager shall not directly or indirectly charge a pharmacy benefits plan or program a different amount for a prescription drug’s ingredient cost or dispensing fee than the amount the pharmacy benefit manager reimburses a pharmacy for the prescription drug’s ingredient cost or dispensing fee where the pharmacy benefit manager retains the amount of any such difference.

(5) The pharmacy benefit manager shall pass along or return one hundred percent (100%) of any manufacturer rebate to a pharmacy benefits plan or program, including any payment, discount, incentive, fee, price concession, or other remuneration.

(6) The pharmacy benefit manager shall provide full and complete disclosure of:

(a) The cost, price, and reimbursement of the prescription drug to each health plan, payer, and pharmacy with which the pharmacy benefit manager has a contract or agreement to provide pharmacy benefit management services;

(b) Each fee, markup, and discount charged or imposed by the pharmacy benefit manager to each health plan, payer, and pharmacy with which the pharmacy benefit manager has a contract or agreement for pharmacy benefit management services; or

(c) The aggregate amount of all remuneration the pharmacy benefit manager receives from a prescription drug manufacturer for a prescription drug, including any rebate, discount, administration fee, and any other payment or credit obtained or agreement for pharmacy benefit management services to a health plan or payer.

(7) A pharmacy benefit manager using maximum allowable cost pricing may place a drug on a maximum allowable cost list if the pharmacy benefit manager does the following:

(a) Ensures that the drug:

(i) 1. Is listed as A-rated or B-rated in the most recent version of the United States food and drug administration’s approved drug products with therapeutic equivalence evaluations, also known as the "orange book"; or

1. Has an NR or NA rating or a similar rating by a nationally recognized reference; and

(ii) Is available for purchase by pharmacies in the state from national or regional wholesalers and is not obsolete;

(b) Provides to a network pharmacy, at the time a contract is entered into or renewed with the network pharmacy, the sources used to determine the maximum allowable cost pricing for the maximum allowable cost list specific to that provider;

(c) Reviews and updates maximum allowable cost price information at least once every seven (7) business days to reflect any modification of maximum allowable cost pricing;

(d) Establishes a process for eliminating products from the maximum allowable cost list or modifying maximum allowable cost prices in a timely manner to remain consistent with pricing changes and product availability in the marketplace;

(e) Establishes a process by which a network pharmacy, or a network pharmacy’s contracting agent, may appeal the reimbursement for a generic drug no later than thirty (30) days after such reimbursement is made; and

(f) Provides a process for each of its network pharmacies to readily access the maximum allowable cost list specific to that provider.

(8) No pharmacy benefit manager may retroactively deny or reduce a claim for reimbursement of the cost of services after the claim has been adjudicated by the pharmacy benefit manager unless:

(a) The adjudicated claim was submitted fraudulently or improperly; or

(b) The pharmacy benefit manager’s payment on the adjudicated claim was incorrect because the pharmacy or pharmacist had already been paid for the services.

(9) If the director finds a pharmacy benefit manager has violated this section or any provision of title 41 , Idaho Code, then the director may subject the pharmacy benefit manager to any or all of the actions, penalties, and remedies referenced in sections 41-117 , 41-1016 , and 41-1026 , Idaho Code.

(10)(a) No later than January 1, 2025, and each year thereafter, each licensed pharmacy benefit manager shall report to the director of the department of insurance the following information:

(i) The aggregate amount of the difference between the amount the pharmacy benefit manager paid each pharmacy on behalf of the health plan for prescription drugs; and

(ii) If at any time during the reporting year the pharmacy benefit manager moved or reassigned a prescription drug to a formulary tier that has a higher cost, higher copayment, higher coinsurance, higher deductible to a consumer, or lower reimbursement to a pharmacy, an explanation of the reason why the drug was moved or reassigned, including whether the move or reassignment was determined or requested by a prescription drug manufacturer or other entity.

(b) Any pharmacy benefit manager that owns, controls, or is affiliated with a pharmacy shall also report any difference in reimbursement rates or practices, direct and indirect remuneration fees or other price concessions, and clawbacks between a pharmacy that is owned, controlled, or affiliated with the pharmacy benefit manager and any other pharmacy.

(11) In addition to any other requirements in this title, all contractual arrangements executed, amended, adjusted, or renewed between a pharmacy benefit manager and a pharmacy benefits plan or program must include, in substantial form, requirements, to the extent allowable by law, to:

(a) Use a pass-through pricing model;

(b) Exclude terms that allow for the direct or indirect engagement in the practice of spread pricing;

(c) Ensure that funds received in relation to providing services for a pharmacy benefits plan or program or a pharmacy are used or distributed only pursuant to the pharmacy benefit manager’s contract with the pharmacy benefits plan or program or with the pharmacy or as otherwise required by applicable law;

(d) Require the pharmacy benefit manager to pass one hundred percent (100%) of all prescription drug manufacturer rebates, including nonresident prescription drug manufacturer rebates, received to the pharmacy benefits plan or program, if the contractual arrangement delegates the negotiation of rebates to the pharmacy benefit manager, for the sole purpose of offsetting defined cost-sharing and reducing premiums of covered persons. Rebates include any payment, discount, incentive, fee, price concession, or other remuneration. Any excess rebate revenue after the pharmacy benefit manager and the pharmacy benefits plan or program have taken all actions required pursuant to this section must be used for the sole purpose of offsetting copayments and deductibles of covered persons;

(e) Include network adequacy requirements that meet or exceed medicare part D program standards for convenient access to the network pharmacies and that:

(i) Do not limit a network to solely include affiliated pharmacies;

(ii) Do not require a covered person to receive a prescription drug by United States mail, common carrier, local courier, third-party company or delivery service, or pharmacy direct delivery unless the prescription drug cannot be acquired at any retail pharmacy in the pharmacy benefit manager’s network for the covered person’s pharmacy benefits plan or program. The provisions of this subparagraph do not prohibit a pharmacy benefit manager from operating mail order or delivery programs on an opt-in basis at the sole discretion of a covered person, provided that the covered person is not penalized through the imposition of any additional retail cost-sharing obligations or a lower allowed-quantity limit for choosing not to select the mail order or delivery programs;

(iii) For the in-person administration of covered prescription drugs, prohibit requiring a covered person to receive pharmacist services from an affiliated pharmacy or an affiliated health care provider; and

(iv) Prohibit offering or implementing pharmacy networks that require or provide a promotional item or an incentive to a covered person to use an affiliated pharmacy or an affiliated health care provider for the in-person administration of covered prescription drugs or advertising, marketing, or promoting an affiliated pharmacy to covered persons. Provided, however, a pharmacy benefit manager may include an affiliated pharmacy in communications to covered persons regarding network pharmacies and prices as long as the pharmacy benefit manager includes information, such as links to all nonaffiliated network pharmacies, in such communications and that the information provided is accurate and of equal prominence. The provisions of this subparagraph may not be construed to prohibit a pharmacy benefit manager from entering into an agreement with an affiliated pharmacy to provide pharmacist services to covered persons;

(f) Prohibit a pharmacy benefit manager from conditioning participation in one (1) pharmacy network based on participation in any other pharmacy network or from penalizing a pharmacy for exercising its prerogative not to participate in a specific pharmacy network;

(g) Prohibit a pharmacy benefit manager from instituting a network that requires a pharmacy to meet accreditation standards inconsistent with or more stringent than applicable federal and state requirements for licensure and operation as a pharmacy in this state. However, a pharmacy benefit manager may specify additional specialty networks that require enhanced standards related to safety and competency necessary to meet the United States food and drug administration’s limited distribution requirements for dispensing any drug that, on a drug-by-drug basis, requires extraordinary special handling, provider coordination, or clinical care or monitoring when such extraordinary requirements cannot be met by a retail pharmacy. For purposes of this paragraph, drugs requiring extraordinary special handling are limited to drugs that are subject to a risk evaluation and mitigation strategy approved by the United States food and drug administration and that:

(i) Require special certification of a health care provider to prescribe, receive, dispense, or administer; or

(ii) Require special handling due to the molecular complexity or cytotoxic properties of the biologic or biosimilar product or drug. For participation in a specialty network, a pharmacy benefit manager may not require a pharmacy to meet requirements for participation beyond those necessary to demonstrate the pharmacy’s ability to dispense the drug in accordance with the United States food and drug administration’s approved manufacturer labeling;

(h) At a minimum, require the pharmacy benefit manager or pharmacy benefits plan or program to, upon revising its formulary of covered prescription drugs during a plan year, provide a ninety (90) day continuity-of-care period in which the covered prescription drug that is being revised from the formulary continues to be provided at the same cost for the patient for a period of ninety (90) days. The ninety (90) day continuity-of-care period commences upon notification to the patient. This requirement does not apply if the covered prescription drug:

(i) Has been approved and made available over the counter by the United States food and drug administration and has entered the commercial market as such;

(ii) Has been removed or withdrawn from the commercial market by the manufacturer;

(iii) Is subject to an involuntary recall by state or federal authorities and is no longer available on the commercial market; or

(iv) Has a generic, biosimilar, or interchangeable biologic approved by the United States food and drug administration;

(i) Require that in-network pharmacies receive dispensing fees that reasonably cover the costs of dispensing medications; and

(j) Prohibit a pharmacy benefit manager from directly or indirectly charging or holding a pharmacist or pharmacy responsible for a fee for any step of or component or mechanism related to the claim adjudication process, including:

(i) The adjudication of a pharmacy benefit claim;

(ii) The processing or transmission of a pharmacy benefit claim;

(iii) The development or management of a claim processing or adjudication network; or

(iv) Participation in a claim processing or adjudication network.

(12) The requirements of subsection (11) of this section shall not apply to specialty drugs. For the purposes of this section, "specialty drug" means:

(a) A drug that is subject to restricted distribution by the United States food and drug administration; or

(b) A drug that requires special handling, provider coordination, or patient education that a retail pharmacy cannot provide.

(13) In addition to other requirements in this title, a participation contract executed, amended, adjusted, or renewed between a pharmacy benefit manager and one (1) or more pharmacies or pharmacists must include, in substantial form, to the extent allowable by law, terms that ensure compliance with the provisions of this subsection.

(a) The pharmacy benefit manager shall provide a reasonable administrative appeal procedure to allow a pharmacy or pharmacist to challenge the maximum allowable cost pricing information and the reimbursement made under the maximum allowable cost as defined in subsection (1)(d) of this section for a specific drug as being below the acquisition cost available to the challenging pharmacy or pharmacist.

(b) The administrative appeal procedure must include a telephone number and email address, or a website, for the purpose of submitting the administrative appeal. The appeal may be submitted by the pharmacy or an agent of the pharmacy directly to the pharmacy benefit manager or through a pharmacy service administration organization. The pharmacy or pharmacist must be given at least thirty (30) business days after a maximum allowable cost update or after an adjudication for an electronic claim or reimbursement for a nonelectronic claim to file the administrative appeal.

(c) The pharmacy benefit manager must respond to the administrative appeal within thirty (30) business days after receipt of the appeal.

(i) If the appeal is upheld, the pharmacy benefit manager must:

1. Update the maximum allowable cost pricing information to at least the acquisition cost available to the pharmacy;

2. Permit the pharmacy or pharmacist to reverse and rebill the claim in question;

3. Provide to the pharmacy or pharmacist the national drug code on which the increase or change is based; and

4. Make the increase or change effective for each similarly situated pharmacy or pharmacist who is subject to the applicable maximum allowable cost pricing information; or

(ii) If the appeal is denied, the pharmacy benefit manager must provide to the pharmacy or pharmacist the national drug code and the name of the national or regional pharmaceutical wholesalers operating in this state that have the drug currently in stock at a price below the maximum allowable cost pricing information.

(d) Every ninety (90) days, a pharmacy benefit manager shall report to the department the total number of appeals received and denied in the preceding ninety (90) day period, with an explanation or reason for each denial, for each specific drug for which an appeal was submitted pursuant to this subsection.

(14) In addition to other prohibitions in this section, a pharmacy benefit manager may not do any of the following:

(a) Prohibit, restrict, or penalize in any way a pharmacy or pharmacist from disclosing to any person any information that the pharmacy or pharmacist deems appropriate, including but not limited to information regarding any of the following:

(i) The nature of treatment, risks, or alternatives thereto;

(ii) The availability of alternate treatment, consultations, or tests;

(iii) The decision of utilization reviewers or similar persons to authorize or deny pharmacist services;

(iv) The process used to authorize or deny pharmacist services or benefits;

(v) Information on financial incentives and structures used by the pharmacy benefits plan or program;

(vi) Information that may reduce the costs of pharmacist services;

(vii) Whether the cost-sharing obligation exceeds the retail price for a covered prescription drug and the availability of a more affordable alternative drug;

(viii) A decision by the pharmacy to refuse to accept pharmacy benefit manager payment for the dispensing of an individual prescription on the basis of an aggregate pharmacy benefit manager payment of less than the pharmacy’s costs to provide the service; or

(ix) The financial details of a prescription claim;

(b) Prohibit, restrict, or penalize in any way a pharmacy or pharmacist from disclosing information to the department, law enforcement, or state and federal governmental officials, provided that the recipient of the information represents that it has the authority, to the extent provided by state or federal law, to maintain proprietary information as confidential and before disclosure of information designated as confidential, the pharmacist or pharmacy marks as confidential any document in which the information appears or requests confidential treatment for any oral communication of the information;

(c) Communicate at the point-of-sale, or otherwise require, a cost- sharing obligation for the covered person in an amount that exceeds the lesser of:

(i) The applicable cost-sharing amount under the applicable pharmacy benefits plan or program; or

(ii) The amount that will be retained by the pharmacy;

(d) Transfer or share records relative to prescription information containing patient-identifiable or prescriber-identifiable data to an affiliated pharmacy for any commercial purpose other than the limited purposes of facilitating pharmacy reimbursement, formulary compliance, or utilization review on behalf of the applicable pharmacy benefits plan or program;

(e) Fail to make any payment due to a pharmacy for an adjudicated claim with a date of service before the effective date of a pharmacy’s termination from a pharmacy benefit network, unless payments are withheld because of fraud, waste, or abuse on the part of the pharmacy or except as otherwise required by law; or

(f) Terminate the contract of, penalize, or disadvantage a pharmacist or pharmacy solely due to a pharmacist or pharmacy:

(i) Disclosing information about pharmacy benefit manager practices in accordance with this section;

(ii) Exercising any of its prerogatives pursuant to this section; or

(iii) Sharing any portion, or all, of the pharmacy benefit manager contract with the department of insurance pursuant to a complaint or a query regarding whether the contract is in compliance with the provisions of this section.

(15) In complying with the requirements of this section, a pharmacy benefit manager or its agents, and the director or the director’s agents, shall not directly or indirectly publish or otherwise disclose any information reported to the director under this section that would reveal: the identity of a specific pharmacy benefits plan, program, or pharmaceutical manufacturer; the prices charged for a specific drug or class of drugs; the amount of any rebates provided for a specific drug or class of drugs or the pharmaceutical manufacturer; or information that would otherwise have the potential to compromise the financial, competitive, or proprietary nature of such information. Any such information shall be protected from disclosure as confidential and proprietary and shall not be regarded as a public record pursuant to section 74-101 , Idaho Code. A pharmacy benefit manager shall impose the confidentiality protections and requirements of this section on any agent or downstream third party that performs health care or administrative services on behalf of the pharmacy benefit manager that may receive or have access to such information, and the director shall impose the confidentiality protections and requirements of this section on any agent or downstream third party directly or indirectly involved in the administration of this section that may receive or have access to such information.

Legislative History: [41-349, added 2020, ch. 117, sec. 1, p. 368; am. 2023, ch. 232, sec. 1, p. 717; am. 2024, ch. 247, sec. 1, p. 873.]

I.C. § 41-350: END ORGAN HARVESTING ACT¶

41-350 END ORGAN HARVESTING ACT. (1) This section shall apply only to a health benefit plan that provides benefits for medical or surgical expenses incurred as a result of a health condition, accident, or sickness, including an individual, group, blanket, or franchise insurance policy or insurance agreement, a group hospital service contract, or an individual group evidence of coverage or similar coverage document that is offered by:

(a) An insurance company;

(b) A group hospital service corporation operating pursuant to chapter 34, title 41 , Idaho Code;

(c) A managed care organization operating pursuant to chapter 39, title 41 , Idaho Code;

(d) A multiple employer welfare arrangement that holds a certificate of registration pursuant to section 41-4002 (8), Idaho Code;

(e) A fraternal benefit society operating pursuant to chapter 32, title 41 , Idaho Code; or

(f) An exchange operating pursuant to chapter 61, title 41 , Idaho Code.

(2) Notwithstanding any other law to the contrary, this chapter applies to:

(a) A small employer health benefit plan subject to chapter 47, title 41 , Idaho Code;

(b) A standard health benefit plan issued pursuant to chapter 52, title 41 , Idaho Code;

(c) The state medicaid program pursuant to section 56-263 , Idaho Code;

(d) The children’s health insurance program pursuant to sections 56-238 and 56-239 , Idaho Code; and

(e) Health and accident coverage provided by a risk retention group pursuant to chapter 48, title 41 , Idaho Code.

(3) A health benefit plan issuer shall not cover a human organ transplant or post-transplant care if:

(a) The transplant operation is performed in the People’s Republic of China or another country known to have participated in forced organ harvesting, as designated by the administrator of the division of public health in the department of health and welfare; or

(b) The human organ to be transplanted was procured by sale or donation originating in the People’s Republic of China or another country known to have participated in forced organ harvesting, as designated by the administrator of the division of public health in the department of health and welfare.

(4) The administrator of the division of public health in the department of health and welfare may designate additional countries with governments that fund, sponsor, or otherwise facilitate forced organ harvesting and shall provide written notice to the director of the department of health and welfare when the administrator of the division of public health designates an additional country.

(5) For the purposes of this section, "forced organ harvesting" means the removal of one (1) or more organs from a living person, or from a person killed for the purpose of removal of one (1) or more organs, by means of coercion, abduction, deception, fraud, or abuse of power over a position of vulnerability.

Legislative History: [41-350, added 2024, ch. 318, sec. 2, p. 1052.]

I.C. § 41-351: 340b drug pricing program reporting¶

(1) As used in this section, "340B covered entity" means an entity authorized to participate in the federal 340B drug pricing program under section 340B(a)(4) of the federal public health service act.

(2) Before April 1 of each year, a 340B covered entity shall report the following information to the state department of health and welfare, the state controller’s office, and the attorney general concerning the 340B covered entity’s participation in the federal 340B drug pricing program for the previous calendar year:

(a) The name of the covered 340B entity;

(b) The aggregate acquisition cost for prescription drugs obtained under the 340B program;

(c) The aggregate payment amount received for drugs obtained under the 340B program and dispensed to patients;

(d) The aggregate payment made to pharmacies under contract to dispense drugs obtained under the 340B program;

(e) The number of claims for prescription drugs described in paragraph (c) of this subsection; and

(f) How the 340B covered entity uses any savings from participating in the 340B program, including the amount of savings used for the provision of charity care, community benefits, or a similar program of providing unreimbursed health care to the indigent.

(3) The information required to be reported pursuant to subsection (2) of this section shall be reported by payer type, including the following:

(a) Commercial;

(b) Medicaid; and

(c) Medicare.

(4) The data submitted in the reports required pursuant to subsection (2) of this section is confidential and shall not be made available for public inspection.

(5) Before November 15 of each year, the state controller’s office shall prepare a report that aggregates the data submitted pursuant to subsection (2) of this section and:

(a) Submit the report to the legislative council in an electronic format; and

(b) Make such report available on the transparent Idaho website.

(6) The attorney general may use the information in the reports required pursuant to subsection (2) of this section for the purposes of investigating medicaid fraud and ensuring compliance with health resources and service administration requirements.

Legislative History: [41-351, added 2025, ch. 246, sec. 1, p. 1098.]

Chapter 4¶

I.C. § 41-401: Fees — Licenses — Miscellaneous charges¶

(1) The director shall collect, and persons so served shall pay to the director fees, licenses, and miscellaneous charges as provided for from time to time by rule promulgated by the director. The director may adjust fees, licenses and miscellaneous charges as necessary to allow the department to meet the appropriation as provided for by law.

(2) Any rule setting fees, licenses and miscellaneous charges shall adhere to the Idaho administrative procedure act except that the effective date of such rule shall be July 1 of the calendar year of enactment or change. If the appropriation is not known or set by April 1, the director shall be authorized to use emergency rulemaking procedures to maintain an effective date of July 1.

(3) Insurance Administrative Account:

(a) There is hereby created an account in the dedicated fund in the state treasury, to be designated the "Insurance Administrative Account" to provide for the expenses of the department of insurance as provided for by law.

(b) The insurance administrative account shall be effective December 31, 1984, and be in existence for a period of at least six (6) months prior to the dedicated account appropriation becoming effective and shall consist of the following:

1. All moneys appropriated by the legislature.

2. All fees, licenses and miscellaneous charges collected pursuant to this section.

(c) All moneys placed in the account shall be examined, audited and allowed in the manner now or hereafter provided by law.

(d) Pending use for purposes of the provisions of the laws of this state, moneys in the insurance administrative account shall be invested by the state treasurer in the same manner as provided under section 67-1210 , Idaho Code, with respect to other surplus or idle moneys in the state treasury.

(e) At the beginning of each fiscal year, those moneys in the insurance administrative account which exceed the current year’s appropriation plus any residual encumbrances made against prior years’ appropriations by twenty-five percent (25%) or more shall be transferred to the general account. The balance in this account shall not be considered excessive until such a transfer is required pursuant to the provisions of this subsection.

Legislative History: [41-401, added 1984, ch. 23, sec. 2, p. 39; am. 1993, ch. 124, sec. 1, p. 315; am. 1998, ch. 225, sec. 1, p. 774.]

I.C. § 41-402: Premium tax¶

(1) Each authorized insurer, and each formerly authorized insurer with respect to insurance transacted while an authorized insurer, shall file with the director, on or before the dates in each year set forth in subsections (3) and (4) of this section, a statement (on forms as prescribed and furnished by the director) under oath, for the period set forth in subsections (3) and (4) of this section, and pay the director a tax at the rate set forth in subsection (2) of this section, on the following amounts:

(a) As to life insurers, the amount of all gross premiums received by the insurer on direct risks resident in this state, and also, if a domestic insurer, on direct risks resident in any other jurisdiction or jurisdictions in which the insurer is not licensed and upon which no premium tax is otherwise paid or payable, less returned coupons and dividends paid to or credited to policyholders.

(b) As to all insurers other than life insurers, the amount of gross direct premiums written on policies covering subjects of insurance resident, located or performed in this state, and also, if a domestic insurer, on such premiums in any other jurisdiction or jurisdictions in which the insurer is not licensed and upon which no premium tax is otherwise paid or payable, less returned premiums, premiums on policies not taken and dividends paid or credited to policyholders. As to title insurance, "gross premium" means the insurance risk portion of the amount charged for title insurance.

(2) Subject to section 41-403 , Idaho Code, as that section applies through calendar year 2009, the rate of tax shall be as follows:

(a) As to title insurance, the rate of tax shall be one and five-tenths percent (1.5%).

(b) As to all other kinds of insurance, the rate of tax shall be:

(i) For calendar year 2004 and before, two and seventy-five hundredths percent (2.75%);

(ii) For calendar year 2005, two and five-tenths percent (2.5%);

(iii) For calendar year 2006, two and three-tenths percent (2.3%);

(iv) For calendar year 2007, two and one-tenth percent (2.1%);

(v) For calendar year 2008, one and nine-tenths percent (1.9%);

(vi) For calendar year 2009, one and seven-tenths percent (1.7%); and

(vii) For calendar year 2010 and thereafter, one and five-tenths percent (1.5%).

(3) (a) Every insurer with a tax obligation under this section shall make prepayment of the tax obligations for the current calendar year’s business if the sum of the tax obligations for the preceding calendar year’s business is four hundred dollars ($400) or more.

(b) The director shall credit the prepayments toward the appropriate tax obligations of the insurer for the current calendar year.

(c) The minimum amounts of the prepayments shall be percentages of the insurer’s tax obligation based on the preceding calendar year’s business and the current year’s rate and shall be paid to the director’s office by the due dates and in the following amounts:

(i) On or before June 15, sixty percent (60%);

(ii) On or before September 15, twenty percent (20%); and

(iii) On or before December 15, fifteen percent (15%).

(4) On or before March 1, any balance of tax due for the preceding calendar year shall be paid to the director.

(5) The effect of transferring policies of insurance from one insurer to another insurer is to transfer the tax prepayment obligation with respect to the policies.

(6) This section shall not apply as to any reciprocal insurer doing exclusively a worker’s compensation business and complying with the provisions of the worker’s compensation law of this state and writing worker’s compensation only for members under that law, if its representatives or agents or the attorney in fact executing such contracts are not compensated on a commission basis.

(7) This section shall not apply as to life insurance policies issued under pension plans or profit-sharing plans exempt or qualified under section 401(a), 403, 404, 408 or 501(a) of the Internal Revenue Code, as hereafter amended or renumbered from time to time, nor to annuity contracts in general.

(8) This section shall not apply to any reciprocal insurer that exclusively insures members who are governmental entities, as defined by section 6-902 (1), (2) and (3), Idaho Code.

(9) Except as otherwise provided in this subsection, this section shall not apply as to any dental care services or as to any dental insurance authorized by title 41 , Idaho Code. A tax is hereby imposed upon each contract for dental care services and dental insurance at the rate of four cents (4¢) per contract, per month, such amount to be computed each month. Tax payments shall be made consistent with the documentation requirements and payment dates set forth in this section. The tax imposed in this subsection shall be in lieu of the premium tax provided in this section and in lieu of all other taxes, licenses and fees as provided by section 41-405 , Idaho Code; provided however, that this subsection shall not apply to entities governed by chapter 34, title 41 , Idaho Code.

(10) The amount of tax due for the current year shall be paid in full in the manner and at the times required in this section without any credit or offset for refunds or other amounts due or claimed to be due by the insurer.

(11) An insurer shall round to the nearest whole dollar any amount shown or required to be shown on any return, form, statement, or other document submitted to the director. Any record or other document prepared or maintained by the director shall express any dollar amount rounded to the nearest whole dollar.

Legislative History: [41-402, added 1977, ch. 303, sec. 2, p. 849; am. 1979, ch. 318, sec. 1, p. 854; am. 1982, ch. 352, sec. 1, p. 872; am. 1983, ch. 4, sec. 12, p. 12; am. 1987, ch. 340, sec. 1, p. 720; am. 1988, ch. 366, sec. 1, p. 1077; am. 1994, ch. 383, sec. 1, p. 1229; am. 2001, ch. 111, sec. 1, p. 400; am. 2004, ch. 356, sec. 1, p. 1063; am. 2007, ch. 151, sec. 1, p. 461; am. 2019, ch. 45, sec. 1, p. 124.]

I.C. § 41-404: Penalty for failure to pay tax¶

Any insurer failing to render the statement and pay the tax required under section 41-402 , Idaho Code, on or before the date due, including any extension of time granted by the director pursuant to section 41-335 (1), Idaho Code, shall be liable to a fine of twenty-five dollars ($25.00) for each additional day of delinquency; and the taxes may be collected by distraint and recovered by an action to be instituted by the attorney general in the name of the state in any court of competent jurisdiction. The director shall suspend or revoke the certificate of authority of the delinquent insurer until the statement is filed and the taxes and fine, if any, are fully paid.

Legislative History: [41-404, added 1961, ch. 330, sec. 107, p. 645; am. 1969, ch. 214, sec. 13, p. 625; am. 1988, ch. 366, sec. 7, p. 1081.]

I.C. § 41-405: Premium tax in lieu of other taxes — Local taxes prohibited¶

(1) Payment to the director by an insurer of the tax upon its premiums as in this chapter required, shall be in lieu of all other taxes upon premiums, taxes upon income, franchise or other taxes measured by income, and upon the personal property of the insurer and the shares of stock or assets thereof; provided, that all real property, if any, of the insurer shall be listed, assessed and taxed the same as real property of like character of individuals.

(2) The state of Idaho hereby preempts the field of imposing excise, privilege, franchise, income, license, permit, registration, and similar taxes, licenses and fees upon insurers and their agents and other representatives as such; and no county, city, municipality, district, or other political subdivision or agency in this state shall levy upon insurers, or upon their agents and representatives as such, any such tax, license or fee; nor shall any such county, city, municipality, district, political subdivision or agency require of any such insurer, agent or representative, duly authorized or licensed as such under this code, any additional authorization, license, or permit of any kind for conducting therein transactions otherwise lawful under the authority or license granted under this code.

Legislative History: [41-405, added 1961, ch. 330, sec. 108, p. 645.]

I.C. § 41-406: Deposit and report of fees, licenses and taxes¶

(1) The director shall transmit all taxes, fines and penalties collected by him to the state treasurer as provided under section 59-1014 , Idaho Code. The director shall file with the state controller a statement of each deposit thus made. All such funds received shall be deposited into the department of insurance suspense account.

Such funds shall be distributed as follows:

(a) The director may deposit up to twenty percent (20%) of the funds received in the insurance refund account which is hereby created for the purpose of repaying overpayments of any taxes, fines, and penalties or other erroneous receipts. There is hereby appropriated out of the insurance refund account so much thereof as shall be necessary for the payment of refunds. Any unencumbered balance remaining in the insurance refund account on June 30 of each and every year in excess of forty thousand dollars ($40,000) shall be transferred to the general fund and the state controller is hereby authorized and directed on such dates to make such transfers unless the board of examiners, which is hereby authorized to do so, changes the date of transfer or sum to be transferred.

(b) That portion of the premium tax, payable to the public employee retirement fund as provided in section 59-1394 , Idaho Code, shall be distributed to that fund.

(c) That portion of the premium tax necessary to cover administrative costs incurred by the department in placing insurance companies or any other insurance entities into receivership or under administrative supervision, and such costs cannot be satisfied from the assets of these companies or entities, shall be distributed to the insurance insolvency administrative fund which is hereby created. There is hereby appropriated out of the insurance insolvency administrative fund so much thereof as shall be necessary, but not to exceed two hundred thousand dollars ($200,000) in any one (1) fiscal year, for the payment of the department’s administrative expenses incurred in carrying out such receiverships or supervision. A balance of one hundred thousand dollars ($100,000) shall be maintained in this fund on June 30 of each year.

(d) After all other deductions authorized in this section have been made, if the premium tax remaining exceeds forty-five million dollars ($45,000,000), one-fourth (1/4) of such excess is hereby appropriated and shall be paid to the Idaho individual high risk reinsurance pool established in chapter 55, title 41 , Idaho Code.

(e) The balance of the premium tax, fines and penalties shall be distributed to the general fund of the state of Idaho.

(f) All moneys received for fees, licenses and miscellaneous charges collected shall be distributed to the insurance administrative account.

(2) The director shall make and file with the state controller an itemized statement of the fees, licenses, taxes, fines and penalties collected by him during the preceding month.

Legislative History: [41-406, added 1984, ch. 23, sec. 3, p. 40; am. 1987, ch. 340, sec. 5, p. 723; am. 1993, ch. 118, sec. 1, p. 296; am. 1994, ch. 180, sec. 82, p. 481; am. 2000, ch. 64, sec. 1, p. 144; am. 2000, ch. 472, sec. 18, p. 1642; am. 2003, ch. 308, sec. 8, p. 848; am. 2012, ch. 158, sec. 1, p. 433; am. 2013, ch. 90, sec. 1, p. 221; am. 2016, ch. 361, sec. 1, p. 1067.]

Chapter 6¶

I.C. § 41-601: "Assets" defined¶

In any determination of the financial condition of an insurer, there shall be allowed as assets only such assets as are owned by the insurer and which consist of:

(1) Cash in the possession of the insurer, or in transit under its control, and including the true balance of any deposit in a solvent bank or trust company.

(2) Investments, securities, properties and loans acquired or held in accordance with this code, and in connection therewith the following items:

(a) Interest due or accrued on any bond or evidence of indebtedness which is not in default and which is not valued on a basis including accrued interest.

(b) Declared and unpaid dividends on stock and shares, unless such amount has otherwise been allowed as an asset.

(c) Interest due or accrued upon a collateral loan in an amount not to exceed one (1) year’s interest thereon.

(d) Interest due or accrued on deposits in solvent banks and trust companies, and interest due or accrued on other assets, if such interest is in the judgment of the director a collectible asset.

(e) Interest due or accrued on a mortgage loan, not in default of the contractual principal payments and the contractual interest payments, pursuant to the contractual terms of the loan, in an amount not exceeding in any event the amount, if any, of the excess of the value of the property less delinquent taxes thereon over the unpaid principal; but in no event shall interest accrued for a period in excess of eighteen (18) months be allowed as an asset.

(f) Rent due or accrued on real property if such rent is not in arrears for more than three (3) months, and rent more than three (3) months in arrears if the payment of such rent be adequately secured by property held in the name of the tenant and conveyed to the insurer as collateral.

(g) The unaccrued portion of taxes paid prior to the due date on real property.

(3) Premium notes, policy loans, and other policy assets and liens on policies and certificates of life insurance and annuity contracts and accrued interest thereon, in an amount not exceeding the legal reserve and other policy liabilities carried on each individual policy.

(4) The net amount of uncollected and deferred premiums and annuity considerations in the case of a life insurer.

(5) Premiums in the course of collection, other than for life insurance, not more than three (3) months past due, less commissions payable thereon. The foregoing limitation shall not apply to premiums payable directly or indirectly by the state of Idaho, any department, board, agency, or institution thereof, or any other political subdivision of the state of Idaho, including municipalities or specially chartered subdivisions, or by the United States government or by any of its instrumentalities.

(6) Installment premiums other than life insurance premiums to the extent of the unearned premium reserve carried on the policy to which premiums apply.

(7) Notes and like written obligations not past due, taken for premiums other than life insurance premiums, on policies permitted to be issued on such basis, to the extent of the unearned premium reserves carried thereon.

(8) The full amount of reinsurance recoverable by a ceding insurer from a solvent reinsurer and which reinsurance is authorized under section 41-511 , Idaho Code.

(9) Amounts receivable by an assuming insurer representing funds withheld by a solvent ceding insurer under a reinsurance treaty.

(10) Deposits or equities recoverable from underwriting associations, syndicates and reinsurance funds, or from any suspended banking institution, to the extent deemed by the director available for the payment of losses and claims and at values to be determined by him.

(11) Electronic and mechanical machines constituting a data processing and accounting system if the cost of such system is at least twenty-five thousand dollars ($25,000), which cost shall be amortized in full over a period not to exceed ten (10) calendar years.

(12) All office equipment, office furniture, private passenger automobiles, deemed necessary for conduct of insurance business, the aggregate amount of which shall not at any one time exceed one percent (1%) of the other assets of the insurer.

(13) All assets, whether or not consistent with the provisions of this section, as may be allowed pursuant to the annual statement form approved by the director for the kinds of insurance to be reported upon therein.

(14) Other assets, not inconsistent with the provisions of this section, deemed by the director to be available for the payment of losses and claims, at values to be determined by him.

Legislative History: [41-601, added 1961, ch. 330, sec. 122, p. 645; am. 1969, ch. 214, sec. 14, p. 625; am. 1971, ch. 122, sec. 1, p. 408; am. 2003, ch. 219, sec. 1, p. 567.]

I.C. § 41-602: Assets as deductions from liabilities¶

Assets may be allowed as deductions from corresponding liabilities, and liabilities may be charged as deductions from assets, and deductions from assets may be charged as liabilities, in accordance with the form of annual statement applicable to the insurer as prescribed by the director, or otherwise in his discretion.

Legislative History: [41-602, added 1961, ch. 330, sec. 123, p. 645.]

I.C. § 41-603: Assets not allowed¶

In addition to assets impliedly excluded by the provisions of section 41-601 , Idaho Code, the following expressly shall not be allowed as assets in any determination of the financial condition of an insurer:

(1) Good will, trade names and other like intangible assets, except as expressly permitted and as prescribed by the national association of insurance commissioners’ accounting practices and procedures.

(2) Advances to officers (other than policy loans) whether secured or not, and advances to employees, agents and other persons on personal security only.

(3) Stock of such insurer, owned by it, or any material equity therein or loans secured thereby, or any material proportionate interest in such stock acquired or held through the ownership by such insurer of an interest in another firm, corporation or business unit.

(4) Furniture, fixtures, furnishings, safes, vehicles (except as authorized in paragraph (12), section 41-601 , Idaho Code), libraries, stationery, literature, and other equipment, machines, and supplies (other than data processing and accounting systems authorized under section 41-601 (11), Idaho Code), except in the case of title insurers such materials and plants as the insurer is expressly authorized to invest in under section 41-726 , Idaho Code, and except, in the case of any insurer, such personal property as the insurer is permitted to hold pursuant to chapter 7, title 41 , Idaho Code, or which is reasonably necessary for the maintenance and operation of real estate lawfully acquired and held by the insurer other than real estate used by it for home office, branch office and similar purposes.

(5) The amount, if any, by which the aggregate book value of investments is carried in the ledger assets of the insurer exceeds the aggregate value thereof as determined under this code.

Legislative History: [41-603, added 1961, ch. 330, sec. 124, p. 645; am. 1971, ch. 122, sec. 2, p. 408; am. 2006, ch. 207, sec. 1, p. 636.]

I.C. § 41-604: Disallowance of "wash" transactions¶

(1) The director shall disallow as an asset or as a credit against liabilities any reinsurance found by him after a hearing thereon to have been arranged for the purpose principally of deception as to the ceding insurer’s financial condition as of the date of any financial statement of the insurer. Without limiting the general purport of the foregoing provision, reinsurance of any substantial part of the insurer’s outstanding risks contracted for in fact within four (4) months prior to the date of any such financial statement and canceled in fact within four (4) months after the date of such statement, or reinsurance under which the reinsurer bears no substantial insurance risk or substantial risk of net loss to itself, shall prima facie be deemed to have been arranged for the purpose principally of deception within the intent of this provision.

(2) The director shall disallow as an asset any deposit, funds or other assets of the insurer found by him after a hearing thereon:

(a) Not to be in good faith the property of the insurer, and

(b) Not freely subject to withdrawal or liquidation by the insurer at any time for the payment or discharge of claims or other obligations arising under its policies, and

(c) To be resulting from arrangements made principally for the purpose of deception as to the insurer’s financial condition as of the date of any financial statement of the insurer.

(3) No such disallowance of assets or credits shall be valid unless made by the director after a hearing of which notice was given the insurer within six (6) months after the date the financial statement of the insurer as to which such deception is claimed was filed with the director.

(4) The director may suspend or revoke the certificate of authority of any insurer which has knowingly been a party to any such deception or attempt thereat.

Legislative History: [41-604, added 1961, ch. 330, sec. 125, p. 645.]

I.C. § 41-605: Liabilities, in general¶

In any determination of the financial condition of an insurer, capital stock and liabilities to be charged against its assets shall include:

(1) The amount of its capital stock outstanding, if any.

(2) The amount, estimated consistent with the provisions of this code, necessary to pay all of its unpaid losses and claims incurred on or prior to the date of statement, whether reported or unreported, together with the expenses of adjustment or settlement thereof.

(3) With reference to life and disability insurance and annuity contracts:

(a) The amount of reserves on life insurance policies and annuity contracts in force, valued according to the tables of mortality, rates of interest, and methods adopted pursuant to this code which are applicable thereto.

(b) Reserves for disability benefits, for both active and disabled lives.

(c) Reserves for accidental death benefits.

(d) Any additional reserves which may be required by the director consistent with applicable customary and general practice in insurance accounting.

(4) With reference to insurance other than specified in subsection (3) of this section, and other than title insurance, the amount of reserves equal to the unearned portions of the gross premiums charged on policies in force, computed in accordance with this chapter.

(5) Taxes, expenses and other obligations due or accrued at the date of the statement.

Legislative History: [41-605, added 1961, ch. 330, sec. 126, p. 645.]

I.C. § 41-606: Unearned premium reserve¶

(1) As to insurance against loss or damage to property (except as provided in section 41-607 ), and as to all general casualty insurance and surety insurance, every insurer shall maintain an unearned premium reserve on all policies in force.

(2) The director may require that such reserves shall be equal to the unearned portions of the gross premiums in force after deducting applicable reinsurance in solvent insurers as computed on each respective risk from the policy’s date of issue. If the director does not so require, the portions of the gross premium in force, less applicable reinsurance in solvent insurers, to be held as an unearned premium reserve, shall be computed according to the following table:

(3) In lieu of computation according to the foregoing table, the insurer at its option may compute all of such reserves on a monthly or more frequent pro rata basis.

(4) After adopting a method for computing such reserve, an insurer shall not change methods without approval of the insurance supervisory official of the insurer’s domicile.

(5) This section does not apply to title insurance.

Legislative History: [41-606, added 1961, ch. 330, sec. 127, p. 645.]

I.C. § 41-607: Unearned premium reserve for marine and transportation insurance¶

As to marine and transportation insurance, the entire amount of premiums on trip risks not terminated shall be deemed unearned; and the director may require the insurer to carry a reserve equal to one hundred per cent (100%) of premiums on trip risks written during the month ended as of the date of statement.

Legislative History: [41-607, added 1961, ch. 330, sec. 128, p. 645.]

I.C. § 41-608: Reserve for disability insurance¶

For all disability insurance policies the insurer shall maintain an active life reserve which shall place a sound value on its liabilities under such policies and be not less than the reserve according to appropriate standards set forth in regulations issued by the director and, in no event, less in the aggregate than the pro rata gross unearned premiums for such policies.

Legislative History: [41-608, added 1961, ch. 330, sec. 129, p. 645.]

I.C. § 41-609: Loss reserves, liability insurance and worker’s compensation¶

Where called for by the form of annual statement required of the insurer, the reserve for outstanding losses under insurance against loss or damage from accident to or injuries suffered by an employee or other person and for which the insured is liable, shall be computed in accordance with the annual statement instructions and the accounting and procedures manual adopted by the national association of insurance commissioners, as provided in section 41-335 , Idaho Code.

Legislative History: [41-609, added 1961, ch. 330, sec. 130, p. 645; am. 1993, ch. 194, sec. 4, p. 498.]

I.C. § 41-610: Increase of inadequate loss reserves¶

If loss experience shows that an insurer’s loss reserves, however computed or estimated, are inadequate, the director shall require the insurer to maintain loss reserves in such additional amount as is needed to make them adequate. This section does not apply as to life insurance.

Legislative History: [41-610, added 1961, ch. 330, sec. 131, p. 645.]

I.C. § 41-611: Reserve for losses and unearned premiums — Title insurers¶

(1) Each title insurer shall maintain a special reserve in adequate amount to cover its liability as to losses incurred under policies issued by it.

(2) Each domestic title insurer shall establish and maintain a reserve for unearned premiums on its policies and guaranties in force. Such reserve shall at all times and for all purposes be considered a separate and distinct trust fund and shall be deemed and considered and shall constitute unearned portions of the original premiums and shall be charged as a reserve liability of the insurer in determining its financial condition. On all title insurance policies heretofore issued by the insurer, an unearned premiums reserve shall be set up and hereafter maintained in the amount which would have accumulated, as of the effective date of this code, if the foregoing requirement had been in existence ever since the date of the policy. Such reserve shall be computed as follows:

(a) With respect to owners and/or purchasers policies perpetual in term, monthly at the close of each month beginning as of July 1, 1947, the insurer shall set aside into the reserve ten per cent (10%) of the risk portion of the gross premium or fees received or to be received on account of policies written during the next preceding calendar month. After any such policy has been in force for ten (10) years, or upon earlier termination thereof for any cause, that portion of the reserve related thereto shall be released and may be used by the insurer thereafter for any lawful purpose.

(b) With respect to mortgage policies having a term, it shall be assumed for the purposes of this provision that all such policies have an average term of five (5) years from date of issue, and the unearned premium reserve thereon, commencing as of July 1, 1947, shall be computed upon the risk portion of the gross premium or fees charged for the policy according to the table for five (5) year term policies as provided in section 41-606 (2) (unearned premium reserve). If such reserve is determined as at any date other than December 31 of any year, the reserve shall be computed on a pro rata basis for the elapsed months of the calendar year in which the computation is made.

(c) If at any time, after examination of the insurer, the director determines that its reserve for unearned premiums computed as hereinabove provided is inadequate for the reasonable protection of its policy holders, the director may by order made after hearing thereon require such reserve to be computed upon such reasonable basis as may be prescribed in the order. No such order shall be retroactively effective.

(3) The unearned premium reserve of a foreign insurer shall be as prescribed or permitted by the laws of the insurer’s domicile, unless found by the director to be inadequate for the reasonable protection of the insurer’s Idaho policy holders. In event of such a finding, the insurer shall maintain unearned premium reserves upon business thereafter written in an amount not less than the reserves which would then be required of a domestic title insurer hereunder writing the same business.

Legislative History: [41-611, added 1961, ch. 330, sec. 132, p. 645.]

I.C. § 41-612: Standard valuation law — Life insurance¶

(1) (a) This section shall be known as the standard valuation law.

(b) For the purposes of this section the following definitions shall apply on or after the operative date of the valuation manual:

(i) "Accident and health insurance" means contracts that incorporate morbidity risk and provide protection against economic loss resulting from accident, sickness or medical conditions and as may be specified in the valuation manual. As used in this section and in the valuation manual, this term is synonymous with disability insurance as defined in section 41-503 , Idaho Code.

(ii) "Appointed actuary" means a qualified actuary who is appointed in accordance with the valuation manual to prepare the actuarial opinion required in subsection (12)(b) of this section.

(iii) "Company" means an entity, which (a) has written, issued or reinsured life insurance contracts, accident and health insurance contracts or deposit-type contracts in this state and has at least one (1) such policy in force or on claim or (b) has written, issued or reinsured life insurance contracts, accident and health insurance contracts or deposit-type contracts in any state and is required to hold a certificate of authority to write life insurance, accident and health insurance or deposit-type contracts in this state.

(iv) "Deposit-type contract" means contracts that do not incorporate mortality or morbidity risks, and as may be specified in the valuation manual.

(v) "Life insurance" means contracts that incorporate mortality risk, including annuity and pure endowment contracts, and as may be specified in the valuation manual.

(vi) "NAIC" means the national association of insurance commissioners.

(vii) "Policyholder behavior" means any action a policyholder, contract holder or any other person with the right to elect options, such as a certificate holder, may take under a policy or contract subject to this section including, but not limited to, lapse, withdrawal, transfer, deposit, premium payment, loan, annuitization, or benefit elections prescribed by the policy or contract, but excluding events of mortality or morbidity that result in benefits prescribed in their essential aspects by the terms of the policy or contract.

(viii) "Principle-based valuation" means a reserve valuation that uses one (1) or more methods or one (1) or more assumptions determined by the insurer and is required to comply with subsection (15) of this section as specified in the valuation manual.

(ix) "Qualified actuary" means an individual who is qualified to sign the applicable statement of actuarial opinion in accordance with the American academy of actuaries qualification standards for actuaries signing such statements and who meets the requirements specified in the valuation manual.

(x) "Tail risk" means a risk that occurs either where the frequency of low probability events is higher than expected under a normal probability distribution or where there are observed events of very significant size or magnitude.

(xi) "Valuation manual" means the manual of valuation instructions adopted by the NAIC as specified in this section or as subsequently amended.

(2) Annual valuation.

(a) Policies and contracts issued prior to the operative date of the valuation manual.

(i) The director shall annually value, or cause to be valued, the reserve liabilities (hereinafter "reserves") for all outstanding life insurance policies and annuity and pure endowment contracts of every life insurer doing business in this state, and issued on or after the operative date specified in section 41-1927 , Idaho Code, and prior to the operative date of the valuation manual. In the case of an alien insurer, such valuation shall be limited to its insurance transactions in the United States. In calculating such reserves, the director may use group methods and approximate averages for fractions of a year or otherwise. He may accept in his discretion the insurer’s calculation of such reserves. In lieu of the valuation of the reserves required of any foreign or alien insurer, he may accept any valuation made or caused to be made by the insurance supervisory official of any state or other jurisdiction when such valuation complies with the minimum standard provided in this section. Where any such valuation is made by the director, he may use the actuary of the department or employ an actuary for the purpose, and the reasonable compensation and expenses of the actuary, at a rate approved by the director, upon demand by the director supported by an itemized statement of such compensation and expenses, shall be paid by the insurer. When a domestic insurer furnishes the director with a valuation of its outstanding policies as computed by its own actuary or by an actuary deemed satisfactory for the purpose by the director, the valuation shall be verified by the actuary of the department without costs to the insurer.

(ii) The provisions set forth in subsections (4), (4a), (4b), (5), (6), (7), (8), (9), (10), (11) and (13) of this section shall apply to all policies and contracts, as appropriate, subject to this section, issued on or after the operative date specified in section 41-1927 , Idaho Code, and prior to the operative date of the valuation manual, and the provisions set forth in subsections (14) and (15) of this section shall not apply to any such policies and contracts.

(iii) The minimum standard for the valuation of policies and contracts issued prior to January 1, 1914, shall be that provided by the laws in effect immediately prior to that date.

(b) Policies and contracts issued on or after the operative date of the valuation manual.

(i) The director shall annually value, or cause to be valued, the reserve liabilities (hereinafter "reserves") for all outstanding life insurance contracts, annuity and pure endowment contracts, accident and health contracts, and deposit-type contracts of every company issued on or after the operative date of the valuation manual. In lieu of the valuation of the reserves required of a foreign or alien company, the director may accept a valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when the valuation complies with the minimum standard provided in this section.

(ii) The provisions set forth in subsections (14) and (15) of this section shall apply to all policies and contracts issued on or after the operative date of the valuation manual.

(3) Except as provided in subsections (4) and (4a) of this section, the minimum standard for the valuation of such policies and contracts issued on and after January 1, 1914, and prior to the operative date of section 41-1927 , Idaho Code, (standard nonforfeiture law) shall be the American experience table of mortality and interest at three and one-half percent (3 1 / 2 %) per annum. Not more than one (1) year shall be used as a preliminary term. Extra charges may be made in particular cases of invalid lives and other extra hazards, policies may be valued in groups, and approximate averages may be used for fractions of a year. Policies other than ordinary and twenty (20) payment life may be valued according to the modified preliminary term, with twenty (20) payment life policies as a basis for such valuation. This subsection applies only as to policies and contracts issued prior to the operative date of section 41-1927 , Idaho Code.

(4) Except as otherwise provided in subsections (4a) and (4b) of this section, the minimum standard for the valuation of all such policies and contracts issued on or after the operative date of section 41-1927 , Idaho Code, (standard nonforfeiture law) shall be the commissioners reserve valuation methods defined in subsections (5), (6) and (10) of this section, three and one-half percent (3 1 / 2 %) interest for all other such policies and contracts, except that the rate shall be four and one-half percent (4 1 / 2 %) for individual annuity contracts, or in the case of policies and contracts, other than annuity and pure endowment contracts, issued on or after July 1, 1973, four percent (4%) interest for such policies issued prior to July 1, 1977, five and one-half percent (5 1 / 2 %) interest for single premium life insurance policies and four and one-half percent (4 1 / 2 %) interest for all other such policies issued on or after July 1, 1977, but prior to the operative date of subsection (9)(d) of the standard nonforfeiture law for life insurance as amended, seven percent (7%) interest for such policies issued on and after the operative date of subsection (9)(d) of the standard nonforfeiture law for life insurance as amended, and the following tables:

(a) For ordinary policies of life insurance issued on the standard basis, excluding any disability and accidental death benefits in such policies, the commissioners 1941 standard ordinary mortality table for such policies issued prior to the operative date of subsection (9)(b) of section 41-1927 , Idaho Code; the commissioners 1958 standard ordinary mortality table for such policies issued on or after the operative date of subsection (9)(b) of the standard nonforfeiture law for life insurance as amended and prior to the operative date of subsection (9)(d) of the standard nonforfeiture law for life insurance as amended; except, that for any category of such policies issued on female risks, all modified net premiums and present values, referred to in subsections (5) and (10) of this section, may be calculated according to an age not more than six (6) years younger than the actual age of the insured; and for such policies issued on or after the operative date of subsection (9)(d) of the standard nonforfeiture law for life insurance as amended:

(i) The commissioners 1980 standard ordinary mortality table, or

(ii) At the election of the company for any one (1) or more specified plans of life insurance, the commissioners 1980 standard ordinary mortality table with ten-year select mortality factors, or

(iii) Any ordinary mortality table, adopted after 1980 by the NAIC, which is approved by rule promulgated by the director for use in determining the minimum standard of valuation for such policies.

(b) For all industrial life insurance policies issued on the standard basis, excluding any disability and accidental death benefits in such policies, the 1941 standard industrial mortality table for such policies issued prior to the operative date of subsection (9)(c) of section 41-1927 , Idaho Code, and for such policies issued on or after such operative date the commissioners 1961 standard industrial mortality table or any industrial mortality table, adopted after 1980 by the NAIC, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for such policies.

(c) For individual annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies, the 1937 standard annuity mortality table or, at the insurer’s option, the annuity mortality table for 1949, ultimate, or any modification of either of these tables approved by the director.

(d) For group annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies, the group annuity mortality table for 1951, any modification of such table approved by the director, or, at the insurer’s option, any of the tables or modifications of tables specified for individual annuity and pure endowment contracts.

(e) For total and permanent disability benefits in or supplementary to ordinary policies or contracts, for policies or contracts issued on or after January 1, 1966, the tables of period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 disability study of the Society of Actuaries, with due regard to the type of benefit, or any tables of disablement rates and termination rates, adopted after 1980 by the NAIC, that are approved by regulation promulgated by the director for use in determining the minimum standard of valuation for such policies; for policies or contracts issued on or after the operative date of section 41-1927 , Idaho Code, (standard nonforfeiture law) and prior to January 1, 1966, either such tables or, at the insurer’s option, the class (3) disability table (1926). Any such table shall, for active lives, be combined with a mortality table permitted for calculating the reserves for life insurance policies.

(f) For accidental death benefits in or supplementary to policies, for policies issued on or after January 1, 1966, the 1959 accidental death benefits table or any accidental death benefits table, adopted after 1980 by the NAIC, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for such policies; for policies issued on or after the operative date of section 41-1927 , Idaho Code, (standard nonforfeiture law) and prior to January 1, 1966, either such table or, at the insurer’s option, the intercompany double indemnity mortality table. Either table shall be combined with a mortality table permitted for calculating the reserves for life insurance policies.

(g) For group life insurance, life insurance issued on the substandard basis and other special benefits, such tables as may be approved by the director as being sufficient with relation to the benefits provided by such policies.

(4a) Except as provided in subsection (4b) of this section, the minimum standard of valuation for all individual annuity and pure endowment contracts issued on or after the operative date of this subsection, as defined herein, and for all annuities and pure endowments purchased on or after such operative date under group annuity and pure endowment contracts, shall be the commissioners reserve valuation methods defined in subsections (5) and (6) of this section and the following tables and interest rates:

(a) For individual annuity and pure endowment contracts issued prior to July 1, 1977, excluding any disability and accidental death benefits in such contracts, the 1971 individual annuity mortality table, or any modification of this table approved by the director, and six percent (6%) interest for single premium immediate annuity contracts, and four and one-half percent (4 1 / 2 %) interest for all other individual annuity and pure endowment contracts.

(b) For individual single premium immediate annuity contracts issued on or after July 1, 1977, but prior to January 1, 1982, excluding any disability and accidental death benefits in such contracts, the 1971 individual annuity mortality table, or any modification of this table approved by the director, and seven and one-half percent (7 1 / 2 %) interest.

(c) For individual single premium immediate annuity contracts issued on or after January 1, 1982, excluding any disability and accidental death benefits in such contracts, the 1971 individual annuity mortality table or any individual annuity mortality table, adopted after 1980 by the NAIC, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for such contracts, or any modification of these tables approved by the director, and eleven percent (11%) interest.

(d) For individual annuity and pure endowment contracts issued on or after July 1, 1977, but prior to January 1, 1982, other than single premium immediate annuity contracts, excluding any disability and accidental death benefits in such contracts, the 1971 individual annuity mortality table, or any modification of this table approved by the director, and five and one-half percent (5 1 / 2 %) interest for single premium deferred annuity and pure endowment contracts and four and one-half percent (4 1 / 2 %) interest for all other such individual annuity and pure endowment contracts.

(e) For individual annuity and pure endowment contracts issued on or after January 1, 1982, other than single premium immediate annuity contracts, excluding any disability and accidental death benefits in such contracts, the 1971 individual annuity mortality table or any individual annuity mortality table, adopted after 1980 by the NAIC, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for such contracts, or any modification of these tables approved by the director, and eight percent (8%) interest.

(f) For annuities and pure endowments purchased prior to July 1, 1977, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts, the 1971 group annuity mortality table, or any modification of this table approved by the director, and six percent (6%) interest.

(g) For annuities and pure endowments purchased on or after July 1, 1977, but prior to January 1, 1982, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts, the 1971 group annuity mortality table, or any modification of this table approved by the director, and seven and one-half percent (7 1 / 2 %) interest.

(h) For annuities and pure endowments purchased on or after January 1, 1982, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts, the 1971 group annuity mortality table or any group annuity mortality table, adopted after 1980 by the NAIC, that is approved by regulation promulgated by the director for use in determining the minimum standard of valuation for such annuities and pure endowments, or any modification of these tables approved by the director, and eleven percent (11%) interest.

After July 1, 1973, any insurer may file with the director a written notice of its election to comply with the provisions of this subsection after a specified date before January 1, 1979, which shall be the operative date of this subsection for such insurer, provided that an insurer may elect a different operative date for individual annuity and pure endowment contracts from that elected for group annuity and pure endowment contracts. If an insurer makes no such election, the operative date of this subsection for such insurer shall be January 1, 1979.

(4b) For any calendar year on or after the effective date of subsection (9)(d) of the standard nonforfeiture law for life insurance in the case of life insurance policies issued on or after such effective date, and for any calendar year on or after January 1, 1982, in the case of:

(a) Individual annuity and pure endowment contracts issued on or after January 1, 1982;

(b) Annuities and pure endowments purchased on or after January 1, 1982, under group annuity and pure endowment contracts; and

(c) The net increase, if any, in any particular calendar year after January 1, 1982, in amounts held under guaranteed interest contracts, the company may elect, for the purpose of determining the minimum standard for valuation, for any category of policy or contract, the calendar year statutory valuation interest rate as defined in this subsection in lieu of the interest rate specified in subsection (4) or (4a) of this section.

The provisions of this subsection shall be applicable to:

A. The interest rates used in determining the minimum standard for the valuation of:

a. Life insurance policies issued in a particular calendar year, on or after the operative date of subsection (9)(d) of the standard nonforfeiture law for life insurance;

b. Individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1982;

c. Annuities and pure endowments purchased in a particular calendar year on or after January 1, 1982, under group annuity and pure endowment contracts; and

d. The net increase, if any, in a particular calendar year after January 1, 1982, in amounts held under guaranteed interest contracts

shall be the calendar year statutory valuation interest rates as defined in this subsection.

B. Calendar year statutory valuation interest rates:

a. The calendar year statutory valuation interest rates, I, shall be determined as follows and the results rounded to the nearer one-quarter of one percent ( 1 / 4 of 1%).

1. For life insurance,

I =.03 + W(R 1 -.03) + W / 2 (R 2 -.09);

1. For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options,

I =.03 + W (R -.03)

where R 1 is the lesser of R and.09;

R 2 is the greater of R and.09;

R is the reference interest rate defined in this subsection and W is the weighting factor defined in this subsection,

1. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis, except as stated in 2. above, the formula for life insurance stated in 1. above shall apply to annuities and guaranteed interest contracts with guarantee durations in excess of ten (10) years and the formula for single premium immediate annuities stated in 2. above shall apply to annuities and guaranteed interest contracts with guarantee duration of ten (10) years or less,

2. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single premium immediate annuities stated in 2. above shall apply,

3. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the formula for single premium immediate annuities stated in 2. above shall apply.

b. However, if the calendar year statutory valuation interest rate for any life insurance policies issued in any calendar year determined without reference to this sentence differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than one-half of one percent ( 1 / 2 of 1%), the calendar year statutory valuation interest rate for such life insurance policies shall be equal to the corresponding actual rate for the immediately preceding calendar year. For purposes of applying the immediately preceding sentence, the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year shall be determined for 1980 (using the reference interest rate defined for 1979) and shall be determined for each subsequent calendar year regardless of when subsection (9)(d) of the standard nonforfeiture law for life insurance becomes operative.

C. Weighting factors

a. The weighting factors referred to in the formulas stated above are given in the following tables:

1. Weighting factors for life insurance:

For life insurance, the guarantee duration is the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates or nonforfeiture values, or both, which are guaranteed in the original policy;

1. Weighting factor for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options:

2. Weighting factors for other annuities and for guaranteed interest contracts, except as stated in 2. above, shall be as specified in tables (i), (ii) and (iii) below, according to the rules and definitions in (iv), (v) and (vi) below:

(i) For annuities and guaranteed interest contracts valued on an issue year basis:

(iv) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the guarantee duration is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance policies with guarantee duration in excess of twenty (20) years. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the guarantee duration is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence.

(v) Plan type as used in the above tables is defined as follows:

Plan Type A: At any time policyholder may withdraw funds only:

(1) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer; or

(2) without such adjustment but in installments over five (5) years or more; or

(3) as an immediate life annuity; or

(4) no withdrawal permitted.

Plan Type B: Before expiration of the interest rate guarantee, policyholder may withdraw funds only:

(1) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer; or

(2) without such adjustment but in installments over five (5) years or more; or

(3) no withdrawal permitted.

At the end of interest rate guarantee, funds may be withdrawn without such adjustment in a single sum or installments over less than five (5) years.

Plan Type C: Policyholder may withdraw funds before expiration of interest rate guarantee in a single sum or installments over less than five (5) years, either:

(1) without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer; or

(2) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.

(vi) An insurer may elect to value guaranteed interest contracts with cash settlement options and annuities with cash settlement options on either an issue year basis or on a change in fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with no cash settlement options must be valued on an issue year basis. As used in this subsection, an issue year basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract, and the change in fund basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.

D. Reference interest rate

a. The reference interest rate referred to in paragraph B. of this subsection shall be defined as follows:

1. For life insurance, the lesser of the average over a period of thirty-six (36) months and the average over a period of twelve (12) months, ending on June 30 of the calendar year next preceding the year of issue, of Moody’s corporate bond yield average — monthly average corporates, as published by Moody’s Investors Service, Inc.

b. For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the average over a period of twelve (12) months, ending on June 30 of the calendar year of issue or year of purchase, of Moody’s corporate bond yield average — monthly average corporates, as published by Moody’s Investors Service, Inc.

c. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options valued on a year of issue basis, except as stated in b. above, with guarantee duration in excess of ten (10) years, the lesser of the average over a period of thirty-six (36) months and the average over a period of twelve (12) months, ending on June 30 of the calendar year of issue or purchase, of Moody’s corporate bond yield average — monthly average corporates, as published by Moody’s Investors Service, Inc.

d. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in b. above, with guarantee duration of ten (10) years or less, the average over a period of twelve (12) months, ending June 30 of the calendar year of issue or purchase, of Moody’s corporate bond yield average — monthly average corporates, as published by Moody’s Investors Service, Inc.

e. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the average over a period of twelve (12) months, ending on June 30 of the calendar year of issue or purchase, of Moody’s corporate bond yield average — monthly average corporates, as published by Moody’s Investors Service, Inc.

f. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, except as stated in b. above, the average over a period of twelve (12) months, ending on June 30 of the calendar year of the change in the fund, of Moody’s corporate bond yield average — monthly average corporates, as published by Moody’s Investors Service, Inc.

E. Alternative method for determining reference interest rates

a. In the event that Moody’s corporate bond yield average — monthly average corporates is no longer published by Moody’s Investors Service, Inc., or in the event that the NAIC determines that Moody’s corporate bond yield average — monthly average corporates, as published by Moody’s Investors Service, Inc., is no longer appropriate for the determination of the reference interest rate, then an alternative method for determination of the reference interest rate, which is adopted by the NAIC and approved by regulation promulgated by the director, may be substituted.

(5) Commissioners reserve valuation method.

(a) Except as otherwise provided in subsections (6) and (10) of this section reserves according to the commissioners reserve valuation method, for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums, shall be the excess, if any, of the present value, at the date of valuation, of such future guaranteed benefits provided for by such policies, over the then present value of any future modified net premiums therefor. The modified net premiums for any such policy shall be such uniform percentage of the respective contract premiums for such benefits that the present value, at the date of issue of the policy, of all such modified net premiums shall be equal to the sum of the then present value of such benefits provided for by the policy and the excess of (i) over (ii) as follows:

(i) A net level annual premium equal to the present value, at the date of issue, of such benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one (1) per annum payable on the first and each subsequent anniversary of such policy on which a premium falls due; provided, however, that such net level annual premium shall not exceed the net level annual premium on the nineteen (19) year premium whole life plan for insurance of the same amount at an age one (1) year higher than the age at issue of such policy.

(ii) A net one (1) year term premium for such benefits provided for in the first policy year.

Provided that for any life insurance policy issued on or after January 1, 1986, for which the contract premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for such excess and which provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such excess premium, the reserve according to the commissioners reserve valuation method as of any policy anniversary occurring on or before the assumed ending date defined herein as the first policy anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than such excess premium shall, except as otherwise provided in subsection (10) of this section, be the greater of the reserve as of such policy anniversary calculated as described in the preceding paragraph and the reserve as of such policy anniversary calculated as described in that paragraph, but with (a) the value defined in subparagraph (i) of that paragraph being reduced by fifteen percent (15%) of the amount of such excess first year premium, (b) all present values of benefits and premiums being determined without reference to premiums or benefits provided for by the policy after the assumed ending date, (c) the policy being assumed to mature on such date as an endowment, and (d) the cash surrender value provided on such date being considered as an endowment benefit. In making the above comparison the mortality and interest basis stated in subsections (4) and (4b) of this section shall be used.

(b) Reserves according to the commissioners reserve valuation method for:

(i) Life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums,

(ii) Group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under section 408 of the Internal Revenue Code, as now or hereafter amended,

(iii) Disability and accidental death benefits in all policies and contracts, and

(iv) All other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other annuity and pure endowment contracts,

shall be calculated by a method consistent with the principles of subsection (5)(a) of this section, except that any extra premiums charged because of impairments or special hazards shall be disregarded in the determination of modified net premiums.

(6) Individual annuity and pure endowment reserves.

(a) This subsection shall apply to all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under section 408 of the Internal Revenue Code, as now or hereafter amended.

(b) Reserves according to the commissioners annuity reserve method for benefits under annuity or pure endowment contracts, excluding any disability and accidental death benefits in such contracts, shall be the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by such contracts at the end of each respective contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future gross considerations, required by the terms of such contract, that become payable prior to the end of such respective contract year. The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate, or rates, specified in such contracts for determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the terms of such contracts to determine nonforfeiture values.

(7) Minimum aggregate reserves. In no event shall an insurer’s aggregate reserves for all life insurance policies, excluding disability and accidental death benefits, issued on or after the operative date of section 41-1927 , Idaho Code, be less than the aggregate reserves calculated in accordance with the methods set forth in subsections (5), (6), (10) and (11) of this section and the mortality table or tables and rate or rates of interest used in calculating nonforfeiture benefits for such policies.

(8) Optional reserve basis.

(a) Reserves for policies and contracts issued prior to the operative date of section 41-1927 , Idaho Code, may be calculated, at the option of the insurer, according to any standards which produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by the laws in effect immediately prior to such date.

(b) For any category of policies, contracts or benefits specified in subsections (4), (4a) and (4b) of this section, issued on or after the operative date of section 41-1927 , Idaho Code, (the standard nonforfeiture law), reserves may be calculated, at the option of the insurer, according to any standard or standards which produce greater aggregate reserves for such category than those calculated according to the minimum standard herein provided, but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, shall not be greater than the corresponding rate or rates of interest used in calculating any nonforfeiture benefits provided for in the policies or contracts.

(9) Lower valuations. An insurer which at any time had adopted any standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard provided under this section may, with the approval of the director, adopt any lower standard of valuation, but not lower than the minimum provided under this section.

(10) Minimum reserve. If in any contract year the gross premium charged by any life insurer on any policy or contract is less than the valuation net premium for the policy or contract calculated by the method used in calculating the reserve thereon, but using the minimum valuation standards of mortality and rate of interest, the minimum reserve required for such policy or contract shall be the greater of either the reserve calculated according to the mortality table, rate of interest, and method actually used for such policy or contract, or the reserve calculated by the method actually used for such policy or contract but using the minimum valuation standards of mortality and rate of interest and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium. The minimum valuation standards of mortality and rate of interest referred to in this subsection are those standards stated in subsections (4) and (4b) of this section.

Provided that for any life insurance policy issued on or after January 1, 1986, for which the gross premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for such excess and which provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such excess premium, the foregoing provisions of this subsection shall be applied as if the method actually used in calculating the reserve for such policy were the method described in subsection (5) of this section, ignoring the second paragraph of subsection (5) of this section. The minimum reserve at each policy anniversary of such a policy shall be the greater of the minimum reserve calculated in accordance with subsection (5) of this section, including the second paragraph of that subsection, and the minimum reserve calculated in accordance with this subsection.

(11) In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurer based on the then estimates of future experience, or in the case of any plan of life insurance or annuity which is of such a nature that the minimum reserves cannot be determined by the methods described in subsections (5), (6) and (10) of this section, the reserves which are held under any such plan must:

(a) Be appropriate in relation to the benefits and the pattern of premiums for that plan, and

(b) Be computed by a method which is consistent with the principles of this standard valuation law,

as determined by rules promulgated by the director.

(12) Actuarial opinion of reserves.

(a) Actuarial opinion prior to the operative date of the valuation manual.

(i) Every life insurance company doing business in this state shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the director by rule are computed appropriately, are based on assumptions which satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this state. The director by rule shall define the specifics of this opinion and add any other items deemed to be necessary to its scope.

(ii) Actuarial analysis of reserves and assets supporting such reserves.

1. Every life insurance company, except as exempted by or pursuant to rule, shall also annually include in the opinion required by subparagraph (i) of this subparagraph, an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the director by rule, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company’s obligations under the policies and contracts including, but not limited to, the benefits under and expenses associated with the policies and contracts.

2. The director may provide by rule for a transition period for establishing any higher reserves which the qualified actuary may deem necessary in order to render the opinion required in this subsection.

(iii) Requirements for opinion in subparagraph (ii) of this paragraph. Each opinion required in subparagraph (ii) of this paragraph shall be governed by the following provisions:

1. A memorandum, in form and substance acceptable to the director as specified by rule, shall be prepared to support each actuarial opinion.

2. If the insurance company fails to provide a supporting memorandum at the request of the director within a period specified by rule or the director determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the rules or otherwise unacceptable to the director, the director may engage a qualified actuary at the expense of the company to review the opinion and prepare such supporting memorandum as is required by the director.

(iv) Requirements for all opinions subject to paragraph (a) of this subsection. Every opinion subject to paragraph (a) of this subsection shall be governed by the following provisions:

1. The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after December 31, 1995.

2. The opinion shall apply to all business in force including individual and group health insurance plans, in form and substance acceptable to the director as specified by rule.

3. The opinion shall be based on standards adopted from time to time by the actuarial standards board and on such additional standards as the director may by rule prescribe.

4. In the case of an opinion required to be submitted by a foreign or alien company, the director may accept the opinion filed by that company with the insurance supervisory official of another state if the director determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state.

5. For the purposes of this subsection, "qualified actuary" means a member in good standing of the American academy of actuaries who meets the requirements set forth in such regulations.

6. Except in cases of fraud or willful misconduct, the qualified actuary shall not be liable for damages to any person (other than the insurance company and the director) for any act, error, omission, decision or conduct with respect to the actuary’s opinion.

7. Disciplinary action by the director against the company or the qualified actuary shall be defined by rule by the director.

8. Any memorandum in support of the opinion, and any other material provided by the company to the director in connection therewith, shall be kept confidential by the director and shall not be made public and shall not be subject to subpoena, other than for the purpose of defending an action seeking damages from any person by reason of any action required in this subsection or by rule promulgated hereunder; provided however, that the memorandum or other material may otherwise be released by the director (A) with the written consent of the company or (B) to the American academy of actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the director for preserving the confidentiality of the memorandum or other material. Once any portion of the confidential memorandum is cited by the company in its marketing or is cited before any governmental agency other than a state insurance department or is released by the company to the news media, all portions of the confidential memorandum shall no longer be confidential.

(b) Actuarial opinion of reserves after the operative date of the valuation manual.

(i) Every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this state and subject to regulation by the director shall annually submit the opinion of the appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this state. The valuation manual will prescribe the specifics of this opinion, including any items deemed to be necessary to its scope.

(ii) Actuarial analysis of reserves and assets supporting reserves. Every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this state and subject to regulation by the director, except as exempted in the valuation manual, shall also annually include in the opinion required by subparagraph (i) of this paragraph, an opinion of the same appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified in the valuation manual, when considered in light of the assets held by the company with respect to the reserves and related actuarial items including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company’s obligations under the policies and contracts including, but not limited to, the benefits under and expenses associated with the policies and contracts.

(iii) Requirements for opinions subject to paragraph (b)(ii) of this subsection. Each opinion required by paragraph (b)(ii) of this subsection shall be governed by the following provisions:

1. A memorandum, in form and substance as specified in the valuation manual, and acceptable to the director, shall be prepared to support each actuarial opinion.

2. If the insurance company fails to provide a supporting memorandum at the request of the director within a period specified in the valuation manual or the director determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the valuation manual or is otherwise unacceptable to the director, the director may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the director.

(iv) Requirements for opinions subject to this paragraph. Every opinion shall be governed by the following provisions:

1. The opinion shall be in form and substance as specified in the valuation manual and acceptable to the director.

2. The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after the operative date of the valuation manual.

3. The opinion shall apply to all policies and contracts subject to subparagraph (ii) of this paragraph, plus other actuarial liabilities as may be specified in the valuation manual.

4. The opinion shall be based on standards adopted from time to time by the actuarial standards board or its successor, and on such additional standards as may be prescribed in the valuation manual.

5. In the case of an opinion required to be submitted by a foreign or alien company, the director may accept the opinion filed by that company with the insurance supervisory official of another state if the director determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state.

6. Except in cases of fraud or willful misconduct, the appointed actuary shall not be liable for damages to any person, other than the insurance company and the director, for any act, error, omission, decision or conduct with respect to the appointed actuary’s opinion.

7. Disciplinary action by the director against the company or the qualified actuary shall be defined by rule by the director.

(13) Minimum standard for accident and health insurance contracts. For disability insurance contracts issued on or after the operative date specified in section 41-1927 , Idaho Code, and prior to the operative date of the valuation manual, the minimum standard of valuation is the standard adopted by the director by regulation. For accident and health insurance contracts issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the minimum standard of valuation required under subsection (2)(b) of this section.

(14) Valuation manual for policies issued on or after the operative date of the valuation manual.

(a) For policies issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the minimum standard of valuation required under subsection (2)(b) of this section, except as provided under paragraph (e) or (g) of this subsection.

(b) The operative date of the valuation manual is January 1 of the first calendar year following the first July 1 as of which all of the following have occurred:

(i) The valuation manual has been adopted by the NAIC by an affirmative vote of at least forty-two (42) members, or three-fourths (3/4) of the members voting, whichever is greater.

(ii) The standard valuation law, as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by states representing greater than seventy-five percent (75%) of the direct premiums written as reported in the following annual statements submitted for 2008: life, accident and health annual statements; health annual statements; or fraternal annual statements.

(iii) The standard valuation law, as amended by the NAIC in 2009, or legislation, including substantially similar terms and provisions, has been enacted by at least forty-two (42) of the following fifty-five (55) jurisdictions: the fifty (50) states of the United States, American Samoa, the American Virgin Islands, the District of Columbia, Guam and Puerto Rico.

The director may confirm the operative date of the valuation manual by bulletin or otherwise.

(c) Unless a change in the valuation manual specifies a later effective date, changes to the valuation manual shall be effective on January 1 following the date when both of the following have occurred:

(i) The change to the valuation manual has been adopted by the NAIC by an affirmative vote representing:

1. At least three-fourths (3/4) of the members of the NAIC voting, but not less than a majority of the total membership; and

2. Members of the NAIC representing jurisdictions totaling greater than seventy-five percent (75%) of the direct premiums written as reported in the following annual statements most recently available prior to the vote specified in this paragraph: life, accident and health annual statements; health annual statements; or fraternal annual statements;

(ii) The change to the valuation manual has been adopted by the director by rule, administrative order or bulletin.

(d) The valuation manual must specify all of the following:

(i) Minimum valuation standards for and definitions of the policies or contracts subject to subsection (2)(b) of this section. Such minimum valuation standards shall be:

1. The commissioner’s reserve valuation method for life insurance contracts, other than annuity contracts, subject to subsection (2)(b) of this section;

2. The commissioners annuity reserve valuation method for annuity contracts subject to subsection (2)(b) of this section; and

3. Minimum reserves for all other policies or contracts subject to subsection (2)(b) of this section.

(ii) Which policies or contracts or types of policies or contracts that are subject to the requirements of a principle-based valuation in subsection (15)(a) of this section and the minimum valuation standards consistent with those requirements;

(iii) For policies and contracts subject to a principle-based valuation under subsection (15) of this section:

1. Requirements for the format of reports to the director under subsection (15)(b)(iii) of this section and which shall include information necessary to determine if the valuation is appropriate and in compliance with this section;

2. Assumptions shall be prescribed for risks over which the company does not have significant control or influence.

3. Procedures for corporate governance and oversight of the actuarial function, and a process for appropriate waiver or modification of such procedures;

(iv) For policies not subject to a principle-based valuation under subsection (15) of this section the minimum valuation standard shall either:

1. Be consistent with the minimum standard of valuation prior to the operative date of the valuation manual; or

2. Develop reserves that quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring.

(v) Other requirements including, but not limited to, those relating to reserve methods, models for measuring risk, generation of economic scenarios, assumptions, margins, use of company experience, risk measurement, disclosure, certifications, reports, actuarial opinions and memorandums, transition rules and internal controls; and

(vi) The data and form of the data required under subsection (16) of this section, with whom the data must be submitted, and may specify other requirements including data analyses and reporting of analyses.

(e) In the absence of a specific valuation requirement or if a specific valuation requirement in the valuation manual is not, in the opinion of the director, in compliance with this section, then the company shall, with respect to such requirements, comply with minimum valuation standards prescribed by the director by rule.

(f) The director may engage a qualified actuary, at the expense of the company, to perform an actuarial examination of the company and opine on the appropriateness of any reserve assumption or method used by the company, or to review and opine on a company’s compliance with any requirement set forth in this section. The director may rely upon the opinion, regarding provisions contained within this section, of a qualified actuary engaged by the commissioner of another state, district or territory of the United States. As used in this paragraph, the term "engage" includes employment and contracting.

(g) The director may require a company to change any assumption or method that in the opinion of the director is necessary in order to comply with the requirements of the valuation manual or this section, and the company shall adjust the reserves as required by the director. The director may take other disciplinary action as permitted pursuant to chapter 2, title 41 , Idaho Code.

(15) Requirements of a principle-based valuation.

(a) A company must establish reserves using a principle-based valuation that meets the following conditions for policies or contracts as specified in the valuation manual:

(i) Quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring during the lifetime of the contracts. Policies or contracts with significant tail risk shall reflect conditions appropriately adverse to quantify the tail risk;

(ii) Incorporate assumptions, risk analysis methods and financial models and management techniques that are consistent with, but not necessarily identical to, those utilized within the company’s overall risk assessment process, while recognizing potential differences in financial reporting structures and any prescribed assumptions or methods;

(iii) Incorporate assumptions that are derived in one (1) of the following manners:

1. The assumption is prescribed in the valuation manual.

2. For assumptions that are not prescribed, the assumptions shall:

(A) Be established utilizing the company’s available experience, to the extent it is relevant and statistically credible; or

(B) To the extent that company data is not available, relevant or statistically credible, be established utilizing other relevant, statistically credible experience;

(iv) Provide margins for uncertainty, including adverse deviation and estimation error, such that the greater the uncertainty the larger the margin and resulting reserve.

(b) A company using a principle-based valuation for one (1) or more policies or contracts subject to this subsection as specified in the valuation manual shall:

(i) Establish procedures for corporate governance and oversight of the actuarial valuation function consistent with those described in the valuation manual;

(ii) Provide to the director and the company’s board of directors an annual certification of the effectiveness of the internal controls with respect to the principle-based valuation. Such controls shall be designed to assure that all material risks inherent in the liabilities and associated assets subject to such valuation are included in the valuation, and that valuations are made in accordance with the valuation manual. The certification shall be based on the controls in place as of the end of the preceding calendar year;

(iii) Develop, and file with the director upon request, a principle-based valuation report that complies with standards prescribed in the valuation manual.

(c) A principle-based valuation may include a prescribed formulaic reserve component.

(16) Experience reporting for policies in force on or after the operative date of the valuation manual. A company shall submit mortality, morbidity, policyholder behavior, or expense experience and other data as prescribed in the valuation manual.

(17) Confidentiality.

(a) For purposes of this subsection, "confidential information" means:

(i) A memorandum in support of an opinion submitted under subsection (12) of this section and any other documents, materials and other information including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the director or any other person in connection with such memorandum;

(ii) All documents, materials and other information including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the director or any other person in the course of an examination made under subsection (14)(f) of this section; provided however, that if an examination report or other material prepared in connection with an examination made under chapter 2, title 41 , Idaho Code, is not held as private and confidential information under chapter 2, title 41 , Idaho Code, an examination report or other material prepared in connection with an examination made under subsection (14)(f) of this section shall not be confidential information to the same extent as if such examination report or other material had been prepared under chapter 2, title 41 , Idaho Code.

(iii) Any reports, documents, materials and other information developed by a company in support of, or in connection with, an annual certification by the company under subsection (15)(b)(ii) of this section evaluating the effectiveness of the company’s internal controls with respect to a principle-based valuation and any other documents, materials and other information including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the director or any other person in connection with such reports, documents, materials and other information;

(iv) Any principle-based valuation report developed under subsection (15)(b)(iii) of this section and any other documents, materials and other information, including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the director or any other person in connection with such report; and

(v) Any documents, materials, data and other information submitted by a company under subsection (16) of this section (collectively, "experience data") and any other documents, materials, data and other information including, but not limited to, all working papers, and copies thereof, created or produced in connection with such experience data, in each case that includes any potentially company-identifying or personally identifiable information, that is provided to or obtained by the director (together with any "experience data," the "experience materials") and any other documents, materials, data and other information including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the director or any other person in connection with such experience materials.

(b) Privilege for, and confidentiality of, confidential information.

(i) Except as provided in this subsection, a company’s confidential information is confidential by law and privileged, and shall not be subject to public disclosure under chapter 1, title 74 , Idaho Code, shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action; provided however, that the director is authorized to use the confidential information in the furtherance of any regulatory or legal action brought against the company as a part of the director’s official duties;

(ii) Neither the director nor any person who received confidential information while acting under the authority of the director shall be permitted or required to testify in any private civil action concerning any confidential information;

(iii) In order to assist in the performance of the director’s duties, the director may share confidential information:

1. With other state, federal and international regulatory agencies and with the NAIC and its affiliates and subsidiaries; and

2. In the case of confidential information specified in paragraph (a)(i) and (iv) of this subsection only, with the actuarial board for counseling and discipline or its successor upon request stating that the confidential information is required for the purpose of professional disciplinary proceedings and with state, federal and international law enforcement officials.

In the case of paragraph (b)(iii)1. and 2. of this subsection, provided that such recipient agrees, and has the legal authority to agree, to maintain the confidentiality and privileged status of such documents, materials, data and other information in the same manner and to the same extent as required for the director.

(iv) The director may receive documents, materials, data and other information, including otherwise confidential and privileged documents, materials, data or information, from the NAIC and its affiliates and subsidiaries, from regulatory or law enforcement officials of other foreign or domestic jurisdictions and from the actuarial board for counseling and discipline or its successor and shall maintain as confidential or privileged any document, material, data or other information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or other information.

(v) The director may enter into agreements governing sharing and use of information consistent with this paragraph.

(vi) No waiver of any applicable privilege or claim of confidentiality in the confidential information shall occur as a result of disclosure to the director under this subsection or as a result of sharing as authorized in subparagraph (iii) of this paragraph.

(vii) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under this paragraph shall be available and enforced in any proceeding in, and in any court of, this state.

(viii) In this subsection, "regulatory agency," "law enforcement agency" and the "NAIC" include, but are not limited to, their employees, agents, consultants and contractors.

(c) Notwithstanding paragraph (b) of this subsection, any confidential information specified in paragraph (a)(i) and (iv) of this subsection:

(i) May be subject to subpoena for the purpose of defending an action seeking damages from the appointed actuary submitting the related memorandum in support of an opinion submitted under subsection (12) of this section or principle-based valuation report developed under subsection (15)(b)(iii) of this section by reason of an action required by this section or by rule promulgated hereunder;

(ii) May otherwise be released by the director with the written consent of the company; and

(iii) Once any portion of a memorandum in support of an opinion submitted under subsection (12) of this section or a principle-based valuation report developed under subsection (15)(b)(iii) of this section is cited by the company in its marketing or is publicly volunteered to or before a governmental agency other than a state insurance department or is released by the company to the news media, all portions of such memorandum or report shall no longer be confidential.

(18) Single state examination:

(a) The director may exempt specific product forms or product lines of a domestic company that is licensed and doing business only in Idaho from the requirements of subsection (14) of this section provided:

(i) The director has issued an exemption in writing to the company and has not subsequently revoked the exemption in writing; and

(ii) The company computes reserves using assumptions and methods used prior to the operative date of the valuation manual, in addition to any requirements established by the director and promulgated by rule.

(b) For any company granted an exemption under this section, subsections (4), (4a), (4b), (5), (6), (7), (8), (9), (10), (11), (12) and (13) of this section shall be applicable. With respect to any company applying this exemption, any reference to subsection (14) found in subsections (4), (4a), (4b), (5), (6), (7), (8), (9), (10), (11), (12) and (13) of this section shall not be applicable.

Legislative History: [41-612, added 1961, ch. 330, sec. 133, p. 645; am. 1965, ch. 307, sec. 1, p. 822; 1969, ch. 214, sec. 15, p. 625; am. 1973, ch. 274, sec. 1, p. 574; am. 1977, ch. 265, sec. 1, p. 773; am. 1982, ch. 205, sec. 1, p. 543; am. 1996, ch. 97, sec. 1, p. 293; am. 1999, ch. 74, sec. 1, p. 197; am. 2016, ch. 68, sec. 1, p. 205.]

I.C. § 41-613: Valuation of bonds¶

(1) All bonds or other evidences of debt having a fixed term and rate of interest held by an insurer may, if amply secured and not in default as to principal or interest, be valued as follows:

(a) If purchased at par, at the par value.

(b) If purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made, or in lieu of such method, according to such generally accepted method of valuation elected by the insurer and approved by the director.

(c) Purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, plus actual brokerage, transfer, postage or express charges paid in the acquisition of such securities.

(d) Unless otherwise provided by valuation established or approved by the director, no such security shall be carried at above the call price for the entire issue during any period within which the security may be so called.

(2) The director shall have full discretion in determining the method of calculating values according to the rules set forth in this section, but no such method or valuation shall be inconsistent with any applicable valuation method used by insurers in general, or any such method then currently formulated or approved by the national association of insurance commissioners or its successor organization.

Legislative History: [41-613, added 1961, ch. 330, sec. 134, p. 645; am. 1993, ch. 194, sec. 5, p. 499.]

I.C. § 41-614: Valuation of other securities¶

(1) Securities, other than those referred to in section 41-613 , Idaho Code, held by an insurer may be valued, in the discretion of the director:

(a) At their market value if market value can be reasonably ascertained, or

(b) If the issuer is an insurer, at their unadjusted book value as determined by the issuer’s convention form financial statement filed with insurance public supervisory officials, or

(c) Any other value which the insurer can substantiate to the satisfaction of the director. In addition to other applicable bases of valuation, the director shall give due consideration to valuation based upon:

(i) The net worth of the issuer as shown by financial statements acceptable to the director.

(ii) The acquisition cost of the security to the insurer, adjusted in accordance with generally accepted accounting principles to reflect changes since such acquisition in the issuer’s financial condition and business.

(2) Preferred or guaranteed stocks or shares while paying full dividends may be carried at a fixed value in lieu of market value, according to a generally accepted method of computation approved by the director.

(3) Stock of a subsidiary corporation of an insurer shall not be valued at an amount in excess of the net value thereof as based upon those assets only of the subsidiary which would be eligible under chapter 7, title 41 , Idaho Code, for investment of the funds of the insurer directly.

(4) No valuations under this section shall be inconsistent with any applicable valuation or method then currently formulated or approved by the national association of insurance commissioners or its successor organization.

Legislative History: [41-614, added 1961, ch. 330, sec. 135, p. 645; am. 1971, ch. 122, sec. 3, p. 408; am. 1972, ch. 369, sec. 7, p. 1072; am. 1993, ch. 194, sec. 6, p. 499.]

I.C. § 41-615: Valuation of property¶

(1) Real property acquired pursuant to a mortgage loan or contract for sale, in the absence of a recent appraisal deemed by the director to be reliable, shall not be valued at an amount greater than the unpaid principal of the defaulted loan or contract at the date of such acquisition, together with any taxes and expenses paid or incurred in connection with such acquisition, and the cost of improvements thereafter made by the insurer and any amounts thereafter paid by the insurer on assessments levied for improvements in connection with the property.

(2) Other real property held by an insurer shall not be valued at an amount in excess of fair value as determined by recent appraisal. If valuation is based on an appraisal more than three years old, the director may at his discretion call for and require a new appraisal in order to determine fair value.

Legislative History: [41-615, added 1961, ch. 330, sec. 136, p. 645.]

I.C. § 41-616: Valuation of purchase money mortgages¶

Purchase money mortgages on real property referred to in subsection (1) of section 41-615 of this chapter shall be valued in an amount not exceeding the acquisition cost of the real property covered thereby or ninety per cent (90%) of the fair value of such real property, whichever is less.

Legislative History: [41-616, added 1961, ch. 330, sec. 137, p. 645.]

Chapter 7¶

I.C. § 41-701: Investments¶

(1) Funds of a domestic insurer shall be invested, reinvested and used in the manner and subject to the conditions, restrictions and limitations set forth in this chapter.

(2) Investments of a foreign or alien insurer which would be authorized for a like domestic insurer shall be allowed as assets in any determination of its financial condition. Other investments of a foreign or alien insurer which are authorized by the laws of its domicile may be so allowed at the discretion of the director.

(3) The director may adopt rules establishing standards and limitations for investments by insurers that are not otherwise specifically permitted or prohibited in this chapter. In the absence of a rule prohibiting such, all assets shall be valued according to rules promulgated by the national association of insurance commissioners (NAIC), NAIC’s valuation of securities office or by NAIC’s financial condition subcommittee.

Legislative History: [41-701, added 1961, ch. 330, sec. 138, p. 645; am. 1994, ch. 240, sec. 5, p. 755.]

I.C. § 41-702: Eligible investments¶

(1) Insurers shall invest in or lend their funds on the security of, and shall hold as invested assets, only cash and eligible investments as prescribed in this chapter.

(2) Any particular investment held by an insurer on the effective date of this code, and which was a legal investment at the time it was made, and which the insurer was legally entitled to possess immediately prior to such effective date, shall be deemed to be an eligible investment.

(3) Eligibility of an investment shall be determined as of the date of its making or acquisition, except as stated in subsection (2) above.

(4) Any investment limitation based upon the amount of the insurer’s assets or particular funds shall relate to such assets or funds as shown by the insurer’s annual statement as of the December 31 next preceding date of making or acquisition of the investment by the insurer, or as shown by a current financial statement.

Legislative History: [41-702, added 1961, ch. 330, sec. 139, p. 645.]

I.C. § 41-703: General qualifications¶

(1) No security or investment (other than real and personal property acquired under section 41-728 , Idaho Code, real property owned) shall be eligible for acquisition unless it is interest bearing or interest accruing or by its character entitled to receive dividends or income when declared or paid, including discounted and zero interest certificates of accrual on public and corporate obligations, is not then in default in any respect, and the insurer is entitled to receive for its exclusive account and benefit the interest or income accruing thereon.

(2) No security or investment shall be eligible for purchase at a price above its market value.

(3) No provision of this chapter shall prohibit the acquisition by an insurer of other or additional securities or property if received as a dividend or as a lawful distribution of assets, or under a lawful and bona fide agreement of bulk reinsurance, merger, or consolidation. Any investment so acquired which is not otherwise eligible under this chapter shall be disposed of pursuant to section 41-730 , Idaho Code, if personal property or securities, or pursuant to section 41-729 , Idaho Code, if real property.

Legislative History: [41-703, added 1961, ch. 330, sec. 140, p. 645; am. 1969, ch. 214, sec. 16, p. 625; am. 1985, ch. 231, sec. 1, p. 551.]

I.C. § 41-704: Authorization of investments¶

An insurer shall not make, sell, or exchange any investment or loan, except as to the policy loans or annuity contract loans of a life insurer, unless the same is authorized or approved by its board of directors or by a committee charged by the board of directors or the by-laws with the duty of making such investment, loan, sale or exchange. The minutes of any such committee shall be recorded and reports thereof shall be submitted to the board of directors for approval or disapproval.

Legislative History: [41-704, added 1961, ch. 330, sec. 141, p. 645.]

I.C. § 41-705: Record of investments¶

(1) The insurer shall make a written record in permanent form showing the authorization as to each investment or loan of its funds, which record shall be signed by an officer of the insurer or by the chairman of the committee authorizing or approving the investment or loan.

(2) As to each such investment or loan, the insurer’s record shall contain:

(a) In the case of loans: The name of the borrower; the location of the property; a physical description and the appraised value of the security; the amount of the loan, rate of interest and terms of repayment.

(b) In the case of securities: The name of the obligor; a description of the security; the amount invested, the rate of interest or dividend, the maturity and yield based upon the purchase price.

(c) In the case of real estate: The location and legal description of the property; a physical description and the appraised value; the purchase price and terms.

(d) In the case of all investments:

(i) The amount of expenses and commissions directly incurred on account of any investment or loan and by whom and to whom payable if not covered by contracts with mortgage loan representatives or correspondents which are part of the insurer’s records.

(ii) The name of any officer or director of the insurer with an interest in the investment and the nature of the interest. For purposes of this subparagraph, an officer or a director of an insurer has an interest in an investment if:

1. The insurer acquires or sells the investment directly or indirectly from or to the officer or director; or

2. The officer or director holds a direct, an indirect, or a contingent interest in the securities or loan representing the investment or in the assets of the person in whose behalf the investment or loan is made.

This paragraph shall not apply to an investment by an officer or a director in common stock, preferred stock, or bonds of a United States publicly traded corporation if the director or officer’s interest in such publicly traded corporation constitutes less than one percent (1%) of the corporation’s total outstanding stock or bonds, in exchange-traded common stock funds or bond funds if listed on a United States regulated exchange, or in mutual funds registered with the securities and exchange commission.

Legislative History: [41-705, added 1961, ch. 330, sec. 142, p. 645; am. 1983, ch. 189, sec. 1, p. 510; am. 2019, ch. 112, sec. 1, p. 369.]

I.C. § 41-706: Diversification of investments¶

An insurer shall invest in or hold as assets categories of investments within applicable limits as follows only:

(1) One (1) person. An insurer shall not, except with the consent of the director, have at any one (1) time any combination of investments in or loans upon the security of the obligations, property, or securities of any one (1) person, institution, corporation, or municipal corporation, aggregating an amount exceeding ten percent (10%) of the insurer’s assets. This restriction shall not apply as to investments or deposits fully insured by the federal deposit insurance corporation or to general obligations of the United States of America or of any state or include policy or annuity contract loans made under section 41-718 , Idaho Code, or to assets subject to section 41-715 or 41-3803 , Idaho Code, or to any one (1) domestic reciprocal insurer which exclusively insures members who are political subdivisions, as defined by section 6-902 2., Idaho Code, provided that all such investments comply with the public depository laws.

(2) Voting stock. An insurer shall not invest in or hold at any one (1) time more than ten percent (10%) of the outstanding voting stock of any corporation, except with the consent of the director given with respect to voting rights of preference stock during default of dividends. This provision does not apply as to stock of subsidiaries of the insurer or a companion company or companies under substantially the same management at the time of purchase, as referred to in section 41-715 or 41-3803 , Idaho Code.

(3) Minimum capital. An insurer (other than title insurer) shall invest and maintain invested funds not less in amount than the minimum paid-in capital stock required under this code of a domestic stock insurer transacting like kinds of insurance, only in cash and the securities provided for under the following sections of this chapter: section 41-707 , Idaho Code, (public obligations), and section 41-721 , Idaho Code, (real estate mortgages and contracts).

(4) Life insurance reserves. A life insurer shall also invest and keep invested its funds in an amount not less than the reserves under its life insurance policies and annuity contracts in force, as prescribed by section 41-612 , Idaho Code, in cash and/or the securities or investments allowed under this chapter, other than in common stocks, insurance stocks and stocks of subsidiaries of the insurer.

(5) Other specific limits. Limits as to investments in the category of real estate shall be as provided in section 41-728 , Idaho Code; and other specific limits shall apply as stated in the sections dealing with other respective kinds of investments.

Legislative History: [41-706, added 1961, ch. 330, sec. 143, p. 645; am. 1971, ch. 122, sec. 4, p. 408; am. 1974, ch. 91, sec. 1, p. 1187; am. 1978, ch. 89, sec. 1, p. 165; am. 1983, ch. 189, sec. 2, p. 511; am. 1993, ch. 194, sec. 7, p. 500; am. 1996, ch. 245, sec. 1, p. 776; am. 2013, ch. 266, sec. 3, p. 679.]

I.C. § 41-707: Public obligations¶

An insurer may invest any of its funds in bonds or other evidences of debt, not in default as to principal or interest, which are valid and legally authorized obligations issued, assumed or guaranteed by the United States or by any state thereof or by any territory or possession of the United States or by the District of Columbia, or of the government of Canada or any provinces thereof, or by any county, city, town, village, municipality or district therein or by any political subdivision thereof or by any civil division or public instrumentality of one or more of the foregoing, if, by statutory or other legal requirements applicable thereto, such obligations are payable, as to both principal and interest, (1) from taxes levied or required to be levied upon all taxable property or all taxable income within the jurisdiction of such governmental unit or, (2) from adequate special revenues pledged or otherwise appropriated or by law required to be provided for the purpose of such payment, but not including any obligation payable solely out of special assessments on properties benefited by local improvements unless adequate security is evidenced by the ratio of assessment to the value of the property or the obligation is additionally secured by an adequate guaranty fund required by law.

Legislative History: [41-707, added 1961, ch. 330, sec. 144, p. 645; am. 1969, ch. 214, sec. 17, p. 625.]

I.C. § 41-708: Obligations and stock of certain federal agencies¶

An insurer may invest in the obligations, and/or stock where stated, of the following agencies of the government of the United States of America, whether or not such obligations are guaranteed by such government:

(1) Commodity credit corporation.

(2) Federal intermediate credit banks.

(3) Federal land banks.

(4) Central bank for cooperatives.

(5) Federal home loan banks, and stock thereof.

(6) Federal national mortgage association, and stock thereof when acquired in connection with sale of mortgage loans to such association.

(7) Any other similar agency of the government of the United States of America and of similar financial quality.

Legislative History: [41-708, added 1961, ch. 330, sec. 145, p. 645.]

I.C. § 41-709: Irrigation district bonds¶

An insurer may invest in the legally issued bonds, not delinquent as to principal or interest, of any solvent irrigation district created as provided by law in this state, or in any other state, whose water rights shall have been legally acquired and finally determined, and shall be fully adequate to supply sufficient water to properly irrigate all the land within such district, and which shall be adequately irrigating not less than thirty per cent (30%) of the lands within such irrigation district.

Legislative History: [41-709, added 1961, ch. 330, sec. 146, p. 645.]

I.C. § 41-710: International bank¶

An insurer may invest in obligations issued, assumed or guaranteed by the International Bank for Reconstruction and Development or the African Development Bank.

Legislative History: [41-710, added 1961, ch. 330, sec. 147, p. 645; am. 1988, ch. 240, sec. 1, p. 469.]

I.C. § 41-711: Corporate obligations¶

An insurer may invest any of its funds in obligations other than those eligible for investment under section 41-721 , Idaho Code, (mortgage loans and contracts), if they are issued, assumed, or guaranteed by any solvent institution created or existing under the laws of the United States or of any state, district or territory thereof, or of the government of Canada or any province thereof, and if said institution is not in default as to principal or interest on any of its obligations.

Legislative History: [41-711, added 1961, ch. 330, sec. 148, p. 645; am. 1969, ch. 214, sec. 18, p. 625; am. 1978, ch. 142, sec. 1, p. 322; am. 1983, ch. 189, sec. 3, p. 511.]

I.C. § 41-712: Certain terms defined¶

(1) Certain terms used are defined for the purposes of this chapter as follows:

(a) "Obligation" includes bonds, debentures, notes or other evidences of indebtedness.

(b) "Institution" includes corporations, joint-stock associations, and business trusts.

Legislative History: [41-712, added 1961, ch. 330, sec. 149, p. 645; am. 1969, ch. 214, sec. 19, p. 625.]

I.C. § 41-713: Preferred stocks — Diversification¶

An insurer may invest any of its funds, in an aggregate amount not exceeding fifteen percent (15%) of its assets in preferred stocks or shares, other than common stocks, of solvent institutions existing under the laws of the United States or of any state, district, or territory thereof, or of the government of Canada or any province thereof, if all of the prior obligations and prior preferred stocks, if any, of such institution at the date of acquisition by the insurer are not then in default as to principal, interest or dividends.

Legislative History: [41-713, added 1961, ch. 330, sec. 150, p. 645; am. 1969, ch. 214, sec. 20, p. 625; am. 1983, ch. 189, sec. 4, p. 512; am. 2006, ch. 27, sec. 1, p. 86.]

I.C. § 41-714: Common stocks¶

After satisfying the requirements of section 41-706 (3) and (4), Idaho Code, (investment of capital and life reserves), an insurer may invest funds in an aggregate amount not in excess of fifteen percent (15%) of its assets in common shares of stock of any solvent institution existing under the laws of the United States or of any state, district or territory thereof, or of the government of Canada or any province thereof, that qualify as a sound investment, in addition to the shares of a substantially owned or wholly owned subsidiary corporation.

For the purpose of determining the investment limitation imposed by this section, the insurer shall value securities subject to the provisions of this section at the cost of the security or at the market value of the security, whichever is lower. However, investments in the shares of subsidiaries or companion insurance companies shall be governed by sections 41-715 and 41-3803 , Idaho Code.

The limitations as to investment in common stocks as provided herein shall not apply to nor limit the right of investments in investment trust securities as provided for in section 41-716 , Idaho Code.

Legislative History: [41-714, added 1961, ch. 330, sec. 151, p. 645; am. 1969, ch. 214, sec. 21, p. 625; am. 1971, ch. 122, sec. 5, p. 408; am. 1993, ch. 194, sec. 8, p. 501; am. 2003, ch. 219, sec. 2, p. 568; am. 2006, ch. 27, sec. 2, p. 86; am. 2013, ch. 266, sec. 4, p. 680.]

I.C. § 41-715: Insurance stocks¶

(1) An insurer may invest in subsidiary and/or companion insurance companies not to exceed fifteen percent (15%) of assets. For the purpose of calculating this fifteen percent (15%) limitation, all investments made under this section and section 41-3803 , Idaho Code, must be valued at market value of the security if actively traded, or at cost if not actively traded.

(2) The limitations on investments in insurance stocks set forth in this section shall not apply to stocks acquired under a plan for merger of the insurers which has been approved by the director or as to shares received as stock dividends upon shares already owned.

(3) Shares acquired and held under this section shall not, for the purposes of the limitations provided under section 41-714 , Idaho Code, be included among other common stocks held by the insurer.

Legislative History: [41-715, added 1961, ch. 330, sec. 152, p. 645; am. 1969, ch. 214, sec. 22, p. 625; am. 1983, ch. 189, sec. 5, p. 512; am. 1993, ch. 194, sec. 9, p. 501; am. 2013, ch. 266, sec. 5, p. 680.]

I.C. § 41-716: Investment trust securities¶

(1) An insurer may invest in the securities of any open-end management type investment company or investment trust registered with the federal securities and exchange commission under the investment company act of 1940 as from time to time amended, if such investment company or trust has been organized for not less than three (3) years and has assets of not less than twenty-five million dollars ($25,000,000) as at the date of investment by the insurer. The aggregate amount invested under this section shall not exceed twenty-five percent (25%) of the insurer’s assets with limitations of five percent (5%) of the insurer’s assets in any one (1) fund and ten percent (10%) of the insurer’s assets in any one (1) fund family.

(2) For the purpose of determining the investment limitation imposed by this section, the insurer shall value securities subject to the provisions of this section at the cost of the security or at the market value of the security, whichever is lower.

Legislative History: [41-716, added 1961, ch. 330, sec. 153, p. 645; am. 1983, ch. 189, sec. 6, p. 513; am. 1997, ch. 226, sec. 1, p. 664; am. 2003, ch. 219, sec. 3, p. 569; am. 2014, ch. 97, sec. 26, p. 288.]

I.C. § 41-717: Equipment trust obligations¶

An insurer may invest any of its funds, in an aggregate amount not exceeding ten per cent (10%) of its assets, in equipment trust obligations or certificates which are adequately secured or in other adequately secured instruments evidencing an interest in transportation equipment wholly or in part within the United States and the right to receive determined portions of rental, purchase or other fixed obligatory payments for the use or purchase of such transportation equipment.

Legislative History: [41-717, added 1961, ch. 330, sec. 154, p. 645.]

I.C. § 41-718: Policy loans¶

A life insurer may lend to its policy holder upon pledge of the policy as collateral security, any sum not exceeding the cash surrender value of the policy; or may lend against pledge or assignment of any of its supplementary contracts or other contracts or obligations, so long as the loan is adequately secured by such pledge or assignment. Loans so made are eligible investments of the insurer.

Legislative History: [41-718, added 1961, ch. 330, sec. 155, p. 645.]

I.C. § 41-719: Collateral loans¶

An insurer may lend and thereby invest its funds upon the pledge of securities eligible for investment under this chapter. As at date made, no such loan shall exceed in amount ninety per cent (90%) of the market value of such collateral pledged. The amount so loaned shall be included pro rata in determining the maximum percentage of funds permitted under this chapter to be invested in the respective categories of securities so pledged.

Legislative History: [41-719, added 1961, ch. 330, sec. 156, p. 645.]

I.C. § 41-720: Savings and share accounts¶

An insurer may invest or deposit any of its funds in time certificates or share or savings accounts of banks, savings and loan associations and credit unions; provided, however, that funds may be deposited in any one (1) such savings and loan association or credit union only to the extent that such an account is insured by either the federal savings and loan insurance corporation or the national credit union insurance fund.

Legislative History: [41-720, added 1961, ch. 330, sec. 157, p. 645; am. 1971, ch. 122, sec. 6, p. 408; am. 1982, ch. 212, sec. 1, p. 586.]

I.C. § 41-721: Mortgage loans and contracts¶

An insurer may invest any of its funds in:

(1) Bonds or evidences of debt which are secured by first mortgages or deeds of trust on improved unencumbered real property located in the United States.

(2) Purchase money mortgages or like securities received by it upon the sale or exchange of real property acquired pursuant to section 41-728 , Idaho Code.

(3) Bonds or notes secured by mortgage or trust deed guaranteed or insured by the federal housing administration under the terms of an act of congress of the United States for June twenty-seventh, nineteen hundred thirty-four, entitled the "National Housing Act," as amended.

(4) Bonds or notes secured by mortgage or trust deed guaranteed or insured as to principal in whole or in part by the administrator of veterans affairs pursuant to the provisions of title III of an act of congress of the United States of June twenty-second, nineteen hundred forty-four, entitled the "Servicemen’s Readjustment Act of 1944," as amended, or by any other similar agency of the government of the United States.

(5) Evidences of debt secured by first mortgages or deeds of trust upon leasehold estates, running for a term of not less than fifteen (15) years beyond the maturity of the loan as made or as extended, in improved real property, otherwise unencumbered, and if the mortgagee is entitled to be subrogated to all the rights under the leasehold.

(6) Bonds or notes secured by mortgage and insured by mortgage guarantee insurance as provided by chapter 26A, title 41 , Idaho Code.

(7) Participation interests in any bond, note or evidence of indebtedness if the entire indebtedness would qualify as an investment under subsections (1) through (6) of this section, and:

(a) Such participation is senior and gives the holder substantially the rights of a first mortgagee; or

(b) Such participation is of equal priority, to the extent of such interest, with other interests therein.

Legislative History: [41-721, added 1961, ch. 330, sec. 158, p. 645; am. 1969, ch. 214, sec. 23, p. 625; am. 1974, ch. 91, sec. 2, p. 1187; am. 2003, ch. 163, sec. 1, p. 459; am. 2006, ch. 26, sec. 1, p. 84.]

I.C. § 41-722: Mortgage loan limited by property value¶

(1) No commercial or residential mortgage loan or investment therein upon any one (1) parcel of real property shall exceed in amount, at the time of acquisition, eighty percent (80%) of the fair value of the property and the loan is required to be amortized within not more than thirty (30) years by payment of installments of principal and interest thereon at regular intervals not less frequent than every year.

(2) The extent to which a mortgage loan made under subsection (3) or (4) of section 41-721 , Idaho Code, is guaranteed by the administrator of veterans affairs may be deducted before application of the limitations contained in subsection (1) of this section.

Legislative History: [41-722, added 1961, ch. 330, sec. 159, p. 645; am. 1969, ch. 214, sec. 24, p. 625; am. 2002, ch. 364, sec. 1, p. 1028; am. 2006, ch. 26, sec. 2, p. 85.]

I.C. § 41-723: Appraisal — Limit of amount loaned¶

(1) The fair value of property shall be determined by appraisal by a competent independent appraiser at the time of the making or acquisition of a mortgage loan or investing in a contract for the deed thereon; except, that as to bonds or notes secured by mortgage or trust deed guaranteed or insured by the federal housing administration, or guaranteed or insured as to principal in full or in part by the administrator of veterans affairs, or guaranteed or insured by the farmers home administration, the valuation made by such administration or administrator shall be deemed to have been made by a competent appraiser for the purposes of this subsection.

(2) An insurer shall not make or acquire a loan or loans upon the security of any one (1) parcel of real property in aggregate amount in excess of ten thousand dollars ($10,000) or more than the amount permissible under section 41-706 (1), Idaho Code, (investment in securities, etc., of any one person), whichever is the greater.

Legislative History: [41-723, added 1961, ch. 330, sec. 160, p. 645; am. 2003, ch. 219, sec. 4, p. 569.]

I.C. § 41-724: "Improved real property" defined¶

For the purpose of section 41-724 , Idaho Code, "improved real property" means:

(1) Farmland used for tillage, crop or pasture;

(2) Real estate on which improvements, or improvements under construction or in process of construction, suitable for residence, institutional, commercial or industrial use, are situated; and

(3) Real estate to be developed for the use or uses set forth in subsection (2) of this section on which durable structural improvements, or durable structural improvements under construction or in process of construction, including but not limited to streets, sidewalks, sewers, and utilities which will become an integral part of such development, are situated or abut.

Legislative History: [I.C., sec. 41-724, as added by 1974, ch. 91, sec. 4, p. 1187.]

I.C. § 41-725: "Encumbrance" defined¶

(1) Real property shall not be deemed to be encumbered within the meaning of section 41-721 by reason of the existence of instruments reserving mineral, oil, timber or similar rights, rights of way, sewer rights, rights in walls, nor by reason of any liens for taxes or assessments not yet due, or on account of liens not delinquent for community recreational facilities, or for the maintenance of community facilities, nor by reason of building restrictions or other restrictive covenants common to the community in which the property is located, nor by liens for service and maintenance of water rights where not delinquent, nor when such real property is subject to lease under which rents or profits are reserved to the owner if in any event the security for the loan or investment is a first lien upon the real property.

(2) If under any of the exceptions set forth in subsection (1) of this section there is any sum owing but not due or delinquent, the total amount of such sum shall be deducted from the amount which otherwise might be loaned on the property. The value of any mineral, oil, timber or similar right reserved shall not be included in the fair value of the property.

Legislative History: [41-725, added 1961, ch. 330, sec. 162, p. 645.]

I.C. § 41-726: Special investments by title insurer¶

(1) In addition to other investments eligible under this chapter, a title insurer may invest in its abstract plant and equipment, and in loans secured by mortgages on abstract plants and equipment, which plant investment shall not exceed fifty per cent (50%) of its paid-in capital stock and paid-in surplus unless a greater amount is approved in advance by the director. Except with the director’s consent, the insurer shall not invest or have invested in stocks of subsidiaries and other corporate stocks an amount in excess of the insurer’s surplus funds exclusive of its paid-in capital stock.

(2) In any determination of the insurer’s financial condition no investment in abstract plant and equipment, or in loans secured by mortgages thereon, shall be valued at an amount in excess of the lesser of (a) the cost thereof to the insurer, or (b) the fair market value.

(3) No investment as determined in subparagraph (2) above shall be credited against the insurer’s unearned premium or loss reserves required under section 41-611 , Idaho Code.

Legislative History: [41-726, added 1961, ch. 330, sec. 164, p. 645; am. 1972, ch. 138, sec. 1, p. 305.]

I.C. § 41-727: Foreign securities¶

(1) Notwithstanding the definitions in chapter 1, title 41 , Idaho Code, for purposes of this section, the following definitions shall apply:

(a) "Business entity" means a sole proprietorship, corporation, limited liability company, association, partnership, joint stock company, joint venture, mutual fund, trust, joint tenancy or other similar form of business organization, whether organized for-profit or not-for-profit.

(b) "Domestic jurisdiction" means the United States, Canada, and a state or political subdivision of the United States or Canada.

(c) "Foreign currency" means a currency other than that of the United States or Canada.

(d) "Foreign investment" means an investment in a foreign jurisdiction or in an asset domiciled in a foreign jurisdiction. An investment shall not be deemed to be foreign if the issuing business entity, qualified primary credit source or qualified guarantor is a domestic jurisdiction or a business entity domiciled in a domestic jurisdiction, unless:

(i) The issuing business entity is a shell business entity; and

(ii) The investment is not assumed, accepted, guaranteed or insured or otherwise backed by a domestic jurisdiction or a business entity that is not a shell business entity domiciled in a domestic jurisdiction.

(e) "Foreign jurisdiction" means a jurisdiction outside of the United States or Canada.

(f) "Qualified guarantor" means a guarantor against which an insurer has a direct claim for full and timely payment evidenced by a contractual right for which an enforcement action can be brought in a domestic jurisdiction.

(g) "Qualified primary credit source" means the credit source to which an insurer looks for payment as to an investment and against which an insurer has a direct claim for full and timely payment evidenced by a contractual right for which an enforcement action can be brought in a domestic jurisdiction.

(h) "Shell business entity" means a business entity having no economic substance except as a vehicle for owning interests in assets issued, owned or previously owned by a business entity domiciled in a foreign jurisdiction.

(i) "SVO" means the securities valuation office of the national association of insurance commissioners or any successor office established by the national association of insurance commissioners.

(2) Any insurance company organized under any law of this state may invest, by loans or otherwise, any of its funds, or any part thereof, in foreign investments of the same types as those that an insurer is permitted to acquire under sections 41-707 , 41-708 , 41-711 , 41-713 , 41-714 , 41-716 and 41-721 (1), Idaho Code, if:

(a) The aggregate amount of foreign investments then held by the insurer does not exceed fifteen percent (15%) of its admitted assets; and

(b) The aggregate amount of foreign investments then held by the insurer in a single foreign jurisdiction does not exceed ten percent (10%) of its admitted assets for jurisdictions that have a sovereign debt rating of SVO 1, or three percent (3%) of its admitted assets for all other jurisdictions.

(3) Any insurance company organized under any law of this state may invest, by loans or otherwise, any of its funds, or any part thereof, in investments of the same types as those that an insurer is permitted to acquire under sections 41-707 , 41-708 , 41-711 , 41-713 , 41-714 , 41-716 and 41-721 (1), Idaho Code, which are denominated in foreign currencies, whether or not they are foreign investments acquired under subsection (2) of this section, if:

(a) The aggregate amount of investments then held by the insurer denominated in foreign currencies does not exceed ten percent (10%) of its admitted assets; and

(b) The aggregate amount of investments then held by the insurer denominated in the foreign currency of a single foreign jurisdiction does not exceed five percent (5%) of its admitted assets for jurisdictions that have a sovereign debt rating of SVO 1, or three percent (3%) of its admitted assets for all other jurisdictions.

(4) The investment limitations in subsections (2) and (3) of this section computed on the basis of an insurer’s admitted assets shall relate to the amount as shown on the insurer’s last annual report as filed with the commissioner of insurance or a more recent quarterly financial statement as filed with the commissioner, on a form prescribed by the national association of insurance commissioners, within forty-five (45) days following the end of the calendar quarter to which the interim statement pertains.

(5) Investments acquired under this section shall be aggregated with investments of the same types made under sections 41-707 , 41-708 , 41-711 , 41-713 , 41-714 , 41-716 and 41-721 (1), Idaho Code, and in a similar manner, for purposes of determining compliance with the limits, if any, contained in this chapter.

Legislative History: [41-727, added 2006, ch. 27, sec. 4, p. 87.]

I.C. § 41-728: Real estate¶

(1) An insurer may acquire, invest in, own, maintain, alter, furnish, improve, manage, lease and convey the following real estate only:

(a) Land and buildings used for home office purposes, including contiguous parcels intended for future home office or corporate campus expansion, together with such other real estate as is required for its accommodation in the convenient transaction of its business.

(b) Real estate acquired in satisfaction in full or in part of or through foreclosure of or judgment obtained upon, loans, mortgages, liens or other evidences of indebtedness previously owing to the insurer in the regular course of its business.

(c) Real estate acquired in part payment of the consideration in the sale of other real estate owned by the insurer.

(d) Real estate acquired by gift or devise.

(e) Real estate acquired through a lawful merger or consolidation of another insurer and not required for its accommodation as provided in paragraph (a) of this subsection.

(f) Real estate for the production of income, under lease, or being constructed under a definite agreement providing for lease, to solvent institutions for commercial or industrial purposes, other than primarily for agricultural, horticultural, ranch, mining, mineral, oil, recreational, amusement, club, motel, or hotel purposes.

(g) Real estate subject to a plan of development other than primarily for agricultural, horticultural, ranch, mining, mineral, oil, recreational, amusement, club, motel, or hotel purposes as limited by subsection (2)(c) of this section.

(2) The aggregate amount so invested by the insurer shall not exceed:

(a) If for home office and its other purposes pursuant to subsection (1)(a) of this section, fifteen percent (15%) of the insurer’s assets, subject to the right of the director to approve an additional amount after hearing and for good cause shown.

(b) If for income purposes pursuant to subsection (1)(f) of this section, ten percent (10%) of the insurer’s admitted assets.

(c) If for properties subject to a plan of development pursuant to subsection (1)(g) of this section, not more than five percent (5%) of its admitted assets of which not more than two percent (2%) of its admitted assets may be in any one (1) parcel or group of contiguous parcels. The director may disapprove the property as an admitted asset if the plan of development is not being pursued in good faith. Factors for review may include, but are not limited to, progress with regard to zoning, roads, utilities, plats and completed development by the insurer of properties.

(d) In all categories and for all purposes, not to exceed twenty percent (20%) of the insurer’s assets.

(3) An insurer may lease to others part of real property otherwise occupied by it for home office and other purposes under subsection (1)(a) of this section, but the value of the entire property must be included for the purposes of the limitation upon aggregate real estate investments provided in subsection (2)(a) of this section.

Legislative History: [41-728, added 1961, ch. 330, sec. 165, p. 645; am. 2001, ch. 174, sec. 1, p. 594; am. 2002, ch. 364, sec. 2, p. 1028; am. 2009, ch. 49, sec. 1, p. 129; am. 2019, ch. 112, sec. 2, p. 370.]

I.C. § 41-729: Time limit for disposal of real estate¶

(1) Except as provided in subsection (4) below, an insurer shall dispose of real estate within time limits as follows:

(a) If acquired under section 41-728 (1)(a) (home office and branch office property), the insurer shall sell and dispose of the property within five (5) years after it ceased to be used or to be necessary for the purposes stated therein.

(b) If acquired under subdivisions (b) (in satisfaction of debts, etc.), (c) (in part payment on other real estate sold), (d) (by gift or devise), or (e) (merger or consolidation) of section 41-728 (1), the insurer shall sell and dispose of the property within five (5) years after the insurer acquired title thereto.

(c) If acquired under section 41-728 (1)(f) (for production of income), the insurer shall within five (5) years after the termination or expiration of the lease, sell and dispose of the property, or re-lease the property for an additional term under the same conditions provided in such section as for an original leasing.

(2) Any real estate otherwise subject to disposal under subdivisions (b) or (c) above, may be retained by the insurer for home office or branch office purposes for so long as so used, and subject to provisions otherwise applicable to such home office and branch office property.

(3) Any real property otherwise subject to disposal under subdivisions (a) and (b) above, may be retained by the insurer for leasing under section 41-728 (1)(f) for so long as so used, and subject to provisions otherwise applicable to such real estate for leasing.

(4) Upon proof satisfactory to him that the interests of the insurer will suffer materially by the forced sale thereof, the commissioner may by certificate grant a reasonable additional period, as specified in the certificate, within which the insurer shall dispose of any particular parcel of real estate.

(5) Real estate held by an insurer beyond the period allowed for its disposal under this section shall not constitute an asset of the insurer in any determination of the insurer’s financial condition.

Legislative History: [41-729, added 1961, ch. 330, sec. 166, p. 645.]

I.C. § 41-730: Disposal of ineligible property and securities¶

(1) Any personal property or securities lawfully acquired by an insurer which it could not otherwise have invested in or loaned its funds upon at the time of such acquisition, shall be disposed of by the insurer within one (1) year from date of acquisition, unless within such period the security has attained to the standard for eligibility. The director, upon application and proof that forced sale of any such property or security would be against the best interests of the insurer, may extend the disposal period for an additional reasonable time.

(2) While any such property or security remains so ineligible it shall not be allowed as an asset of the insurer.

(3) Any ineligible property or security unlawfully acquired by an insurer shall be disposed of forthwith, and for failure so to do within thirty (30) days after order of the director requiring such disposal, the director may suspend or revoke the insurer’s certificate of authority.

(4) For the purposes of subsection (3) above, an investment otherwise eligible shall not be deemed ineligible for the reason that it is in excess of the amount permitted under this chapter to be invested in the category of investments to which it belongs; and any such excess investment shall be disposed of within the time prescribed in subsection (1) of this section.

Legislative History: [41-730, added 1961, ch. 330, sec. 167, p. 645.]

I.C. § 41-731: Prohibited investments and investment underwriting¶

(1) In addition to investments excluded under other provisions of this code, an insurer shall not directly or indirectly invest in or loan its funds upon the security of:

(a) Issued shares of its own capital stock, except for the purpose of mutualization under section 41-2854 , Idaho Code, or in connection with a plan approved by the director for purchase of such shares by the insurer’s officers, employees, or agents, or for other reasonable purposes under a plan filed with and approved by the director. No such stock shall, however, constitute an asset of the insurer in any determination of its financial condition.

(b) Except with the director’s consent, any security issued by any corporation or enterprise the controlling interest of which is, or will after such acquisition by the insurer be, held directly or indirectly by the insurer or any combination of the insurer and the insurer’s directors, officers, parent corporation, subsidiaries, controlling stockholders, and the spouses and children of any of the foregoing individuals. Investments in subsidiaries under sections 41-706 (2), 41-715 and 41-3803 , Idaho Code, shall not be subject to this provision.

(c) Any note or other evidence of indebtedness of any director, officer, or controlling stockholder of the insurer, or the spouse or child of any of the foregoing individuals, except as to policy loans authorized under section 41-718 , Idaho Code.

(d) Any investment or security which is found by the director to be designed to evade any prohibition of this chapter.

(2) No insurer shall underwrite or participate in the underwriting of an offering of securities or property by any other person.

Legislative History: [41-731, added 1961, ch. 330, sec. 168, p. 645; am. 1969, ch. 214, sec. 25, p. 625; am. 1971, ch. 122, sec. 7, p. 408; am. 1993, ch. 194, sec. 10, p. 501; am. 2013, ch. 266, sec. 6, p. 680.]

I.C. § 41-732: Domestic reciprocal insurer¶

Notwithstanding the provisions of chapter 1, title 57 , Idaho Code, and section 67-2328 , Idaho Code, funds of a domestic reciprocal insurer which is comprised of and exclusively insures members who are political subdivisions of the state, as defined in section 6-902 (2), Idaho Code, and which exclusively insures against risk pertaining to property and casualty claims, shall be invested, reinvested and used in the manner and subject to the conditions, restrictions and limitations set forth in this chapter.

Legislative History: [41-732, added 2008, ch. 399, sec. 1, p. 1089.]

I.C. § 41-733: Subsidiary investments¶

An insurer may invest in subsidiaries in accordance with section 41-3803 , Idaho Code.

Legislative History: [I.C., sec. 41-733, as added by 1969, ch. 214, sec. 26, p. 625; am. 1971, ch. 122, sec. 8, p. 408; am. 1974, ch. 91, sec. 5, p. 1187; am. 1983, ch. 189, sec. 7, p. 513; am. 1993, ch. 194, sec. 11, p. 502; am. 2013, ch. 266, sec. 7, p. 681.]

I.C. § 41-734: Separate account funds¶

(1) The amounts allocated to each separate account established by the insurer pursuant to any provision of the Idaho Insurance Code (separate accounts), together with accumulations thereon may be invested and reinvested in any class of investments which may be authorized in the written contract or agreement without regard to any requirements or limitations prescribed by this chapter. The investments in such separate account or accounts shall not be taken into account in applying the investment limitations applicable to other investments of the insurer.

(2) Except with the approval of the director and under such conditions as to investments and other matters as he may prescribe, which shall recognize the guaranteed nature of the benefits provided, reserves for (a) benefits guaranteed as to dollar amount and duration and (b) funds guaranteed as to principal amount or stated rate of interest shall not be maintained in a separate account.

Legislative History: [I.C., sec. 41-734, as added by 1969, ch. 214, sec. 27, p. 625; am. 1971, ch. 272, sec. 1, p. 1078.]

I.C. § 41-735: Miscellaneous investments¶

(1) An insurer may loan or invest its funds in kinds of loans or investments not otherwise specifically made eligible for investment and not specifically prohibited or made ineligible by this or other provisions of the Idaho Code in an aggregate amount not exceeding ten percent (10%) of an insurer’s assets. Investments under this subsection are limited to five percent (5%) of an insurer’s assets in a single investment or in a single entity, its affiliates, and subsidiaries as defined by the first six (6) digits of the committee on uniform security identification procedures (CUSIP) number.

(2) The insurer shall keep a separate record of all investments acquired under this section.

Legislative History: [41-735, added 1975, ch. 207, sec. 2, p. 575; am. 1983, ch. 189, sec. 8, p. 514; am. 2019, ch. 112, sec. 3, p. 371; am. 2026, ch. 180, sec. 1, p. 822.]

I.C. § 41-736: Permitted investments¶

Subject to other limitation in chapter 7, title 41 , Idaho Code, an insurer shall not invest or have invested at any one time more than sixty-five percent (65%) of its assets in investments described in sections 41-721 and 41-728 , Idaho Code. Any insurer which, on July 1, 2003, has in excess of sixty-five percent (65%) of its assets so invested shall not make any further such investments while the excess exists. The limitations prescribed in this section shall not apply to mortgage-backed securities rated one or two by the securities valuation office (SVO) of the national association of insurance commissioners or to mortgage-backed securities which qualify as provisionally exempt from filing with the SVO.

Legislative History: [41-736, added 2003, ch. 163, sec. 2, p. 460.]

Chapter 8¶

I.C. § 41-801: Authorized deposits of insurers¶

The following deposits of insurers when made through the director shall be accepted and held, and shall be subject to the applicable provisions of this chapter:

(1) Deposits required under this code for authority to transact insurance in this state.

(2) Deposits of domestic insurers when made pursuant to the laws of other states, provinces and countries as requirement for authority to transact insurance in such state, province or country.

(3) Deposits in such additional amounts as are permitted to be made under section 41-808 (excess deposits).

Legislative History: [41-801, added 1961, ch. 330, sec. 170, p. 645.]

I.C. § 41-802: Purpose of deposit¶

Such deposits shall be held for purposes as follows:

(1) Deposits made in this state under sections 41-316 , Idaho Code, (foreign and alien insurance deposit requirements), and 41-316A , Idaho Code, (domestic insurance deposit requirements), shall be held for the purposes stated in the respective sections.

(2) A deposit made in this state by a domestic insurer transacting insurance in another state, province or country, and as required by the laws of such state, province or country, shall be held for the purpose or purposes specified pursuant to such laws.

(3) Deposits of foreign insurers required pursuant to the retaliatory provision, section 41-340 , Idaho Code, shall be held for such purposes as are required by such law, and as specified by the director’s order by which the deposit is required.

Legislative History: [41-802, added 1961, ch. 330, sec. 171, p. 645; am. 1994, ch. 240, sec. 8, p. 756; am. 2004, ch. 90, sec. 4, p. 328.]

I.C. § 41-803: Securities eligible for deposit¶

(1) All such deposits required under sections 41-316 and 41-316A , Idaho Code, for authority to transact insurance in this state shall consist of certificates of deposit issued by solvent banks, or any combination of securities the market value of which is readily ascertainable and, if negotiable by delivery or assignment, of the kinds described in the following sections:

(a) Section 41-707 (public obligations);

(b) Section 41-708 (securities of certain federal agencies);

(c) Section 41-709 (irrigation district obligations);

(d) Section 41-710 (international bank);

(e) Section 41-711 (corporate obligations);

(f) Section 41-717 (equipment trust obligations); and

(g) Section 41-720 (savings and share accounts).

(2) Except that the director shall accept as a security eligible for deposit and recognize as part of the deposit any particular valid and enforceable real estate mortgage already lawfully so on deposit at the effective date of this code, so long as the mortgage continues to qualify for investment of the insurer’s funds therein as under chapter 7 of this code and is not in default in any particular.

(3) All such deposits required of a domestic insurer pursuant to the laws of another state, province or country shall be comprised of securities, if negotiable by delivery or assignment, of the kind or kinds required or permitted by the laws of such state, province or country, except stocks, mortgages of any kind and real estate.

(4) Deposits of foreign insurers made in this state under the retaliatory provision, section 41-340 , Idaho Code, shall consist of such securities or assets as are required by the director pursuant to such provision.

Legislative History: [41-803, added 1961, ch. 330, sec. 172, p. 645; am. 1994, ch. 240, sec. 9, p. 756; am. 2004, ch. 90, sec. 5, p. 328.]

I.C. § 41-804: Custodial arrangements for deposits¶

(1) All deposits of insurers made in this state under this code shall be made through the director.

(2) The deposits shall be made with and held by the trust department of an established bank located in Idaho, approved by the director for the purpose, and under custodial arrangements likewise approved by him. All such custodial arrangements shall comply in substance with the requirements of this code as to the amount, purposes, maintenance, initial amounts, release and withdrawal of such a deposit, and as to the rights of the insurer therein.

(3) The securities qualified for deposit under this chapter may be deposited with a clearing corporation or held in the federal reserve book-entry system. Securities deposited with a clearing corporation or held in the federal reserve book-entry system and used to meet the deposit requirements set forth in this chapter shall be under the control of the director of the department of insurance and shall not be withdrawn by the insurer without the approval of the director. Any insurer holding securities in such manner shall provide evidence satisfactory to the director, issued by its custodian or member bank through which such insurer has deposited such securities in a clearing corporation or through which such securities are held in the federal reserve book-entry system, respectively, in order to establish that the securities are actually recorded in an account in the name of the custodian or other direct participant or member bank, and that the records of the custodian, other participant or member bank reflect that such securities are held subject to the order of the director. Definitions contained in section 41-2870 , Idaho Code, shall apply to this subsection (3).

(4) The cost of any such custodial arrangements shall be borne by the insurer. The state of Idaho shall have no responsibility for the safekeeping of the deposit.

Legislative History: [41-804, added 1961, ch. 330, sec. 173, p. 645; am. 1969, ch. 214, sec. 28, p. 625; am. 1981, ch. 174, sec. 3, p. 308; am. 2004, ch. 90, sec. 6, p. 329.]

I.C. § 41-805: Records — Certificate of deposit¶

(1) The director shall maintain complete record of all securities deposited through him under this chapter, and of all transactions involving any such deposit.

(2) Upon request of the insurer and payment of the fee therefor required under section 41-401 (fee schedule), the director shall furnish to the insurer his certificate under his official seal certifying as to any deposit of the insurer held by him under this code, and as to the amount, composition, and purposes of the deposit.

Legislative History: [41-805, added 1961, ch. 330, sec. 174, p. 645.]

I.C. § 41-806: Assignment of securities¶

(1) The insurer shall duly assign to the director and his successors in office in trust all securities being deposited through him under this code which are not negotiable by delivery; or, in lieu of such assignment, the insurer may give the director an irrevocable power of attorney authorizing him to transfer the securities or any part thereof for any purpose within the scope of this chapter.

(2) Upon release to the insurer, or other person entitled thereto, of any such security the director shall reassign the same to such insurer or person; or, in the case of power of attorney given pursuant to subsection (1) above, he shall deliver the power of attorney, together with the securities covered thereby, to the insurer or person entitled thereto.

Legislative History: [41-806, added 1961, ch. 330, sec. 175, p. 645.]

I.C. § 41-807: Appraisal¶

The director may, in his discretion, prior to acceptance for deposit of any particular asset or security, or at any time thereafter while so deposited, have the same appraised or valued by competent appraisers. The reasonable costs of any such appraisal or valuation shall be borne by the insurer.

Legislative History: [41-807, added 1961, ch. 330, sec. 176, p. 645.]

I.C. § 41-808: Excess deposits¶

(1) If securities or assets deposited by an insurer under this chapter are subject to material fluctuations in market value, the director may, in his discretion, require the insurer to deposit and maintain on deposit additional securities or assets in such amount as may be reasonably necessary to assure that the deposit will at all times have a market value of not less than the amount specified under or pursuant to the law by which the deposit is required.

(2) If not so required by the director, an insurer may at its option so deposit assets or securities in an amount exceeding its deposit required or otherwise permitted under this code by not more than twenty per cent (20%) of such required or permitted deposit, or twenty thousand dollars ($20,000), whichever is the larger amount, for the purpose of absorbing fluctuations in the value of securities and assets deposited, and to facilitate the exchange and substitution of such securities and assets. During the solvency of the insurer any such excess shall be released to the insurer upon its request. During the insolvency of the insurer, such excess deposit shall be released only as provided in section 41-812 (2)(e).

Legislative History: [41-808, added 1961, ch. 330, sec. 177, p. 645.]

I.C. § 41-809: Rights of insurer during solvency¶

So long as the insurer remains solvent and is in compliance with this code it may:

(1) Demand, receive, sue for and recover the income from the securities or assets deposited;

(2) Exchange and substitute for the deposited securities or assets, or any part thereof, other eligible securities and assets of equivalent or greater value; and

(3) At any reasonable time inspect any such deposit.

Legislative History: [41-809, added 1961, ch. 330, sec. 178, p. 645.]

I.C. § 41-810: Levy upon deposit¶

(1) No judgment creditor or other claimant of an insurer shall have the right to levy upon any of the assets or securities of the insurer held on deposit in this state pursuant to section 41-316 or 41-316A , Idaho Code.

(2) As to deposits made in this state pursuant to the retaliatory provision, section 41-340 , Idaho Code, levy thereupon shall be permitted only if expressly so provided in the director’s order under which the deposit is required.

(3) As to the special deposit of a title insurer, if upon expiration of thirty (30) days after the judgment became final the insurer has failed to satisfy in full any final judgment rendered against it by a court of this state and arising out of any contract of insurance or guaranty issued by it, the judgment may be enforced against the insurer’s deposit. For the purposes of this provision a judgment shall be deemed to have become final upon expiration of the period permitted by law for an appeal, or, if an appeal is taken, upon dismissal of the appeal or affirmance of the judgment.

(4) To obtain the enforcement referred to in subsection (3) of this section, the judgment creditor shall petition the court in the same cause in which the judgment was obtained, setting forth the facts referred to in subsection (3) of this section, and the court shall direct issuance of a special execution directed to the sheriff of Ada county of this state requiring the sheriff to sell the assets and securities of the insurer on deposit or so much thereof as may be necessary to satisfy the judgment. The court’s order authorizing the special execution shall direct that a copy of the judgment, petition, and writ of execution shall be served upon the director within five (5) days thereafter. Upon receipt of such service the director shall forthwith notify the insurer of the levy and require the insurer within such period as may be specified in the notice, which period shall be not less than ten (10) nor more than thirty (30) days after the date of the notice, to have its president or other duly authorized representative to attend with the insurer’s key and the director to the opening of the box in which the insurer’s deposit is kept. Upon the box being so opened the director shall extract therefrom and deliver to the sheriff for sale on execution deposited assets or securities of the insurer in amount, up to the full amount so on deposit, not less than as required for the satisfaction of the judgment. All proceedings for the enforcement of the writ of execution against the deposit shall conform as nearly as may be to the practice in ordinary cases except as in this subsection specially provided.

(5) If the insurer, after notice by the director as required under subsection (4) of this section, willfully fails to attend to the opening of the box in which its deposit is kept, or willfully fails to permit the director to extract therefrom assets or securities as in subsection (4) of this section provided, the director shall after hearing held thereon forthwith revoke the insurer’s certificate of authority and institute proceedings for the rehabilitation or liquidation of the insurer under chapter 33 of this code. In any such proceedings the judgment with respect to which execution was issued and leading to the insurer’s failure as herein referred to, shall have a first and prior right and claim as to the assets and securities of the insurer constituting its deposit as levied against, as of the date of service upon the director of the copy of the judgment, petition, and writ of execution as provided for in subsection (4) of this section.

Legislative History: [41-810, added 1961, ch. 330, sec. 179, p. 645; am. 1994, ch. 240, sec. 10, p. 757; am. 2004, ch. 90, sec. 7, p. 330.]

I.C. § 41-811: Deficiency of deposit¶

(1) For the purpose of determining the sufficiency of its deposit in this state the assets and securities of the insurer on deposit shall be valued at current market value.

(2) If for any reason the current market value of such assets and securities falls below the amount of deposit required of the insurer under this code, the insurer shall promptly deposit other or additional assets or securities eligible for deposit and in amount sufficient to cure the deficiency. If the insurer has failed to cure the deficiency within thirty (30) days after receipt of notice thereof by registered or certified mail from the director, the director shall forthwith without further notice revoke the insurer’s certificate of authority.

Legislative History: [41-811, added 1961, ch. 330, sec. 180, p. 645.]

I.C. § 41-812: Duration and release of deposit¶

(1) Every deposit made in this state by an insurer pursuant to this code shall be so held as long as there is outstanding any liability of the insurer as to which the deposit was required; or, if the deposit was required under the retaliatory provision, section 41-340 , Idaho Code, the deposit shall be held for so long as the basis of such retaliation exists.

(2) Except for good cause found by the director after a hearing thereon, any such deposit shall be released and returned:

(a) To the insurer upon extinguishment by reinsurance or otherwise of all liability of the insurer for the security of which the deposit is held. If by reinsurance, the assuming insurer shall be one authorized to transact such insurance in this state.

(b) To the insurer, during solvency, to the extent such deposit is in excess of the amount required.

(c) To a depositing foreign or alien insurer, during its solvency, which has made a similar deposit in another state and has filed with the director the certificate or evidence thereof, under the conditions provided for in section 41-316 (2)(b) or 41-316 (2)(c), Idaho Code.

(d) To the resulting or surviving corporation or to such person as it may designate for the purpose, upon effectuation of a merger or consolidation of the depositing insurer, and upon the resulting or surviving corporation being or becoming authorized to transact insurance in this state.

(e) Upon order of a court of competent jurisdiction, to the receiver, conservator, rehabilitator, or liquidator of the insurer, or to any other properly designated official or officials who succeed to the management and control of the insurer’s assets pursuant to delinquency proceedings brought against the insurer under chapter 33 of this code.

(3) Notwithstanding the provisions of subsections (1) and (2) of this section, the director, in his discretion, may release a deposit made in this state by an insurer pursuant to this code if the insurance regulatory body in the insurer’s state has been appointed the liquidator of the insurer by a court in that state and either of the following applies:

(a) The director has no information or belief that there are any outstanding claims against the insurer by policyholders or creditors of the insurer in Idaho; or

(b) The director believes that any claims by Idaho policyholders or creditors will be adequately protected pursuant to the liquidation proceedings in the insurer’s domestic state.

Legislative History: [41-812, added 1961, ch. 330, sec. 181, p. 645; am. 1995, ch. 289, sec. 4, p. 973.]

I.C. § 41-813: Proofs for release of deposit to insurer — Director’s responsibility¶

(1) Before authorizing or permitting the release of any deposit or excess portion thereof to the insurer, as provided in section 41-812 , Idaho Code, the director shall require the insurer, the applicable insurance regulatory official in the insurer’s domestic state, or other appropriate entity to file with him a written statement in such form and with such verification as he deems advisable setting forth the facts upon which it bases its entitlement to such release.

(2) If release of the deposit is claimed by the insurer upon the ground that all its liabilities, as to which the deposit was held, have been assumed by another insurer authorized to transact insurance in this state, the insurer shall file with the director a copy of the contract or agreement of such reinsurance duly attested under the oath of an officer of each of the insurers parties thereto.

(3) If release of the deposit is claimed by a domestic insurer upon the ground that all its liabilities, as to which the deposit was held, have been terminated other than by reinsurance, the director shall make an examination of the affairs of the insurer for determination of the actuality of such termination.

(4) Upon being satisfied by such statement and reinsurance contract, or examination of the insurer if required under subsection (3) above, and by such other examination if any, of the affairs of the insurer as he deems advisable to make, that the insurer is entitled to the release of its deposit or excess portion thereof as provided in section 41-812 , Idaho Code, the director shall release the deposit or excess portion thereof to the insurer or its authorized representative.

(5) If the director wilfully fails faithfully to keep, deposit, account for or surrender any such assets or securities deposited through him, in the manner as authorized or required under this chapter, he shall be liable therefor upon his official bond, and suit may be brought upon the bond by any person injured by such failure. The director shall not, however, have any liability as to any assets or securities of an insurer released by him in good faith pursuant to the authority vested in him under this chapter.

Legislative History: [41-813, added 1961, ch. 330, sec. 182, p. 645; am. 1995, ch. 289, sec. 5, p. 974.]

Chapter 9¶

I.C. § 41-901: DEFINITIONS¶

For the purposes of this chapter:

(1) "Administrator" or "third party administrator" or "TPA" means any person who directly or indirectly underwrites, collects charges or premiums from or adjusts or settles claims on residents of this state in connection with life, annuity or health insurance coverage offered or provided by an insurer, except any of the following:

(a) An employer, or a wholly owned direct or indirect subsidiary of an employer, on behalf of its employees or the employees of one (1) or more subsidiaries or affiliated corporations of such employer.

(b) A union on behalf of its members.

(c) An insurance company that is either authorized to transact insurance in this state or acting as an insurer with respect to a policy lawfully issued and delivered by such company in and pursuant to the laws of a state in which the insurer was authorized to transact an insurance business, or a hospital, medical, dental or optometric service corporation or a health care service organization, including their sales representatives, possessing a valid certificate of authority in this state when engaged in the performance of their duties.

(d) An insurance producer licensed to sell life, annuities or health coverage in this state whose activities are limited exclusively to the sale, solicitation and negotiation of insurance.

(e) A creditor on behalf of its debtors with respect to insurance covering a debt between the creditor and its debtors.

(f) A trust, its trustees, agents and employees acting pursuant to such trust established in conformity with 29 U.S.C. 186.

(g) A trust exempt from taxation under section 501(a) of the Internal Revenue Code, its trustees and employees acting pursuant to such trust or a custodian and the custodian’s agents or employees acting pursuant to a custodian account that meets the requirements of section 401(f) of the Internal Revenue Code.

(h) A credit union or a financial institution that is subject to supervision or examination by federal or state banking authorities, or a mortgage lender, to the extent they collect and remit premiums to licensed insurance producers or to limited lines producers or authorized insurers in connection with loan payments.

(i) A credit card issuing company that advances for and collects premiums or charges from its credit cardholders who have authorized such collection.

(j) A person who adjusts or settles claims in the normal course of that person’s practice or employment as an attorney at law and who does not collect charges or premiums in connection with life, annuity or health insurance coverage.

(k) A person licensed as a managing general agent in this state whose activities are limited exclusively to the scope of activities conveyed under such license.

(l) A person who is affiliated with an insurer and who acts solely as an administrator for the direct and assumed insurance business of an affiliated insurer. The insurer is responsible for the acts of the administrator and is responsible for providing all of the administrator’s books and records to the insurance director upon a request from the insurance director. For purposes of this paragraph, "insurer" means a licensed insurance company, hospital or professional service corporation or a managed care organization.

(2) "Affiliate" or "affiliated" means an entity or person who directly or indirectly through one (1) or more intermediaries controls or is controlled by, or is under common control with, a specified entity or person.

(3) "Control," including the terms "controlling," "controlled by" and "under common control with," means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing ten percent (10%) or more of the voting securities of any other person. This presumption may be rebutted by a showing made in the manner provided in section 41-3809 (11), Idaho Code, that control does not exist in fact. The director may determine, after furnishing all persons in interest notice and an opportunity to be heard and making specific findings of fact to support the determination that control exists in fact, notwithstanding the absence of a presumption to that effect.

(4) "Director" means the director of the Idaho department of insurance.

(5) "GAAP" means United States "generally accepted accounting principles" consistently applied.

(6) "Home state" means the District of Columbia and any state or territory of the United States in which an administrator is incorporated or maintains its principal place of business. If neither the state in which the administrator is incorporated nor the state in which it maintains its principal place of business has adopted the provisions of this chapter, or a substantially similar law governing administrators, the administrator may declare another state in which it conducts business to be its "home state."

(7) "Insurer" means a person undertaking to provide life, annuity or health coverage or self-funded coverage who is subject to regulation under title 41 , Idaho Code.

(8) "NAIC" means the "national association of insurance commissioners."

(9) "Nonresident administrator" means an administrator with a home state other than Idaho.

(10) "Underwrites" or "underwriting" means, but is not limited to, the acceptance of employer or individual applications for coverage of individuals in accordance with the written rules of the insurer or self-funded plan, or the overall planning and coordinating of a benefits program.

(11) "Uniform application" means the current version of the NAIC uniform application for third party administrators.

Legislative History: [41-901, added 2010, ch. 31, sec. 2, p. 51; am. 2013, ch. 266, sec. 8, p. 681.]

I.C. § 41-902: written agreement necessary¶

(1) No administrator shall act as such without a written agreement between the administrator and the insurer, and the written agreement shall be retained as part of the official records of both the insurer and the administrator for the duration of the agreement and for five (5) years thereafter. The agreement shall be consistent with the provisions of this chapter and shall contain all provisions required in this chapter, except insofar as those requirements do not apply to the functions performed by the administrator.

(2) The written agreement shall include a statement of duties that the administrator is expected to perform on behalf of the insurer and the lines, classes or types of insurance for which the administrator is to be authorized to administer. The agreement shall make provision with respect to underwriting or other standards pertaining to the business underwritten by the insurer.

(3) The insurer or administrator may, with written notice to the other party and the director, terminate the written agreement as provided in the agreement. The insurer may suspend the underwriting authority of the administrator during the pendency of any dispute regarding the termination of the written agreement. The insurer shall fulfill any lawful obligations with respect to policies affected by the written agreement regardless of any dispute between the insurer and the administrator.

Legislative History: [41-902, added 2010, ch. 31, sec. 2, p. 52.]

I.C. § 41-903: payment to administrator¶

If an insurer utilizes the services of an administrator, the payment to the administrator of any premiums or charges for insurance by or on behalf of the insured shall be deemed to have been received by the insurer and the payment of return premiums or claims forwarded by the insurer to the administrator shall not be deemed payment to the insured or claimant until the payments are received by the insured or claimant. Nothing in this chapter limits any right of the insurer against the administrator resulting from the failure of the administrator to make payments to the insurer, insured parties or claimants.

Legislative History: [41-903, added 2010, ch. 31, sec. 2, p. 53.]

I.C. § 41-904: maintenance of information¶

(1) Every administrator shall maintain and make available to the insurer complete books and records of all transactions performed on behalf of the insurer. The books and records shall be maintained in accordance with prudent standards of insurance recordkeeping and shall be maintained for a period of not less than five (5) years from the date of their creation.

(2) The director shall have access to books and records maintained by an administrator for the purposes of examination, audit and inspection.

(3) The insurer shall own the records generated by the administrator pertaining to the insurer; however, the administrator shall retain the right to continuing access to books and records to permit the administrator to fulfill all of its contractual obligations to insured parties, claimants and the insurer, and its obligations to maintain records available to the director.

(4) In the event the insurer and the administrator cancel their agreement, notwithstanding the provisions of subsection (1) of this section, the administrator may, by written agreement with the insurer, transfer all records to a new administrator rather than retain them for five (5) years. In such cases, the new administrator shall acknowledge, in writing, that it is responsible for retaining the records of the prior administrator as required in subsection (1) of this section.

Legislative History: [41-904, added 2010, ch. 31, sec. 2, p. 53.]

I.C. § 41-905: advertising — approval¶

An administrator may use only advertising pertaining to the business underwritten by an insurer that has been approved in writing by the insurer in advance of its use. Prior to approving the use of advertising by an administrator, the insurer shall first file the advertising with the director along with a certification in a form prescribed by the director that the advertising complies with Idaho law. The director may disapprove the use of the advertising on any of the grounds set forth in section 41-1813 , Idaho Code.

Legislative History: [41-905, added 2010, ch. 31, sec. 2, p. 53.]

I.C. § 41-906: premium collection and payment of claims¶

(1) All insurance charges or premiums collected by an administrator on behalf of or for an insurer, and the return of premiums received from that insurer, shall be held by the administrator in a fiduciary capacity. The funds shall be immediately remitted to the person entitled to them or shall be deposited promptly in a fiduciary account established and maintained by the administrator in a federally or state insured financial institution. The written agreement between the administrator and the insurer shall provide for the administrator to periodically render an accounting to the insurer detailing all transactions performed by the administrator pertaining to the business underwritten by the insurer.

(2) All such funds, including charges, fees or premiums, shall be used to establish the premium tax under section 41-402 , Idaho Code.

(3) If charges or premiums deposited in a fiduciary account have been collected on behalf of one (1) or more insurers, the administrator shall keep records clearly recording the deposits in and withdrawals from the account on behalf of each insurer. The administrator shall keep copies of all the records and, upon request of an insurer, shall furnish the insurer with copies of such records pertaining to deposits and withdrawals associated with the insurer.

(4) The administrator shall not pay any claim by withdrawals from a fiduciary account in which premiums or charges are deposited. Withdrawals from the account shall be made as provided in the written agreement between the administrator and the insurer. The written agreement shall address, but not be limited to, the following:

(a) Remittance to an insurer entitled to remittance;

(b) Deposit in an account maintained in the name of the insurer;

(c) Transfer to and deposit in a claims-paying account with claims to be paid as provided for in subsection (5) of this section;

(d) Payment to a group policyholder for remittance to the insurer entitled to such remittance;

(e) Payment to the administrator of its commission, fees or charges; and

(f) Remittance of return premiums to the person or persons entitled to such return premiums.

(5) All claims paid by the administrator from funds collected on behalf of or for an insurer shall be paid only on drafts or checks of and as authorized by the insurer.

Legislative History: [41-906, added 2010, ch. 31, sec. 2, p. 53.]

I.C. § 41-907: delivery of materials to covered individuals¶

Any policies, certificates, booklets, termination notices or other written communications delivered by the insurer to the administrator for delivery to insured parties or covered individuals shall be delivered by the administrator promptly after receipt of instructions from the insurer to deliver them.

Legislative History: [41-907, added 2010, ch. 31, sec. 2, p. 54.]

I.C. § 41-908: compensation to the administrator¶

(1) An administrator shall not enter into an agreement or understanding with an insurer in which the effect is to make the amount of the administrator’s commissions, fees or charges contingent upon savings effected by the adjustment, settlement and payment of losses covered by the insurer’s obligations. This provision shall not prohibit an administrator from receiving performance-based compensation for providing hospital or other auditing services.

(2) The provisions of this section shall not prevent the compensation of an administrator from being based on premiums or charges collected or the number of claims paid or processed.

Legislative History: [41-908, added 2010, ch. 31, sec. 2, p. 54.]

I.C. § 41-909: notice to covered individuals — disclosure of charges and fees¶

(1) Where the services of an administrator are utilized, the administrator shall provide a written notice approved by the insurer to covered individuals advising them of the identity of and relationship among the administrator, the policyholder and the insurer.

(2) Where an administrator collects funds, the reason for collection of each item shall be identified to the insured party and each item shall be shown separately from any premium. Additional charges may not be made for services to the extent the services have been paid for by the insurer.

(3) The administrator shall disclose to the insurer all charges, fees and commissions received from all services in connection with the provision of administrative services for the insurer, including any fees or commissions paid by insurers providing reinsurance.

Legislative History: [41-909, added 2010, ch. 31, sec. 2, p. 54.]

I.C. § 41-910: registration requirement¶

A person who directly or indirectly underwrites, collects charges or premiums from or adjusts or settles claims on residents of this state in connection with life, annuity or health coverage provided by a self-funded plan not regulated under title 41 , Idaho Code, shall register with the director biennially on a form prescribed by the director, verifying its status as herein described.

Legislative History: [41-910, added 2010, ch. 31, sec. 2, p. 55.]

I.C. § 41-911: home state license¶

(1) A person shall apply to be an administrator in its home state and shall receive a license from the regulatory authority of its home state prior to performing any function of an administrator in this state.

(2) A person applying to Idaho as the home state shall submit to the director an application in the form prescribed by the director that shall include or be accompanied by the following information and documents:

(a) All basic organizational documents of the applicant, including any articles of incorporation, articles of association, partnership agreement, trade name certificate, trust agreement, shareholder agreement, certificate of existence from the Idaho secretary of state and other applicable documents and all amendments to such documents;

(b) The bylaws, rules, regulations or similar documents regulating the internal affairs of the applicant;

(c) NAIC biographical affidavits for the individuals who are directly or indirectly responsible for the conduct of affairs of the applicant, including all members of the board of directors, board of trustees, executive committee or other governing board or committee, the principal officers in the case of a corporation or the partners or members in the case of a partnership, association or limited liability company, any shareholders or members holding directly or indirectly ten percent (10%) or more of the voting stock, voting securities or voting interest of the applicant and any other person who directly or indirectly exercises control or influence over the affairs of the applicant;

(d) Audited annual financial statements or reports for the two (2) most recent fiscal years that demonstrate that the applicant has a positive net worth. If the applicant has been in existence for less than two (2) fiscal years, the uniform application shall include financial statements or reports, certified by at least two (2) officers, owners or directors of the applicant and prepared in accordance with GAAP, for any completed fiscal years and for any month during the current fiscal year for which such financial statements or reports have been completed. An audited annual financial report prepared on a consolidated basis shall include a columnar consolidating or combining worksheet that shall be filed with the report and include the following:

(i) Amounts shown on the consolidated audited financial report shall be shown on the worksheet;

(ii) Amounts for each entity shall be stated separately; and

(iii) Explanations of consolidating and eliminating entries shall be included.

The applicant shall also include such other information as the director may require in order to review the current financial condition of the applicant;

(e) In lieu of submitting audited financial statements, and upon written application by an applicant and good cause shown, the director may grant a hardship exemption from filing audited financial statements and allow the submission of unaudited financial statements. Acceptable formats for unaudited financial statements, which shall include notes, are:

(i) Reports compiled or reviewed by a certified public accountant; or

(ii) Internal financial reports prepared in accordance with GAAP, certified by at least two (2) officers, owners or directors of the administrator.

If unaudited financial statements are submitted, the applicant must also secure and maintain a surety bond in a form prescribed by the director for the use and benefit of the director to be held in trust for the benefit and protection of covered persons and any insurer or self-funded plan against loss by reason of acts of fraud or dishonesty, for the greater of ten percent (10%) of funds handled for the benefit of Idaho residents or twenty thousand dollars ($20,000). Administrators of self-funded plans in Idaho are subject to the mandatory surety bond requirement found in subsection (8) of this section, regardless of whether they file audited or unaudited financial reports;

(f) A statement describing the business plan, including information on staffing levels and activities, proposed in this state and nationwide. The plan shall provide details setting forth the applicant’s capability for providing a sufficient number of experienced and qualified personnel in the areas of claims processing, recordkeeping and underwriting;

(g) The license application fee as provided for by rule; and

(h) Such other pertinent information as may be required by the director.

(3) An administrator licensed or applying for licensure under the provisions of this section shall make available for inspection by the director, copies of all contracts with insurers or other persons utilizing the services of the administrator.

(4) An administrator licensed or applying for licensure under the provisions of this section shall produce its accounts, records and files for examination, and make its officers available to give information with respect to its affairs, as often as reasonably required by the director.

(5) The director may refuse to issue a license if the director determines that the applicant or any individual responsible for the conduct of affairs of the applicant is not competent, trustworthy, financially responsible or of good personal and business reputation, or has had an insurance or an administrator certificate of authority or license denied or revoked for cause by any jurisdiction, or if the director determines that any of the grounds set forth in section 41-915 , Idaho Code, exist with respect to the applicant.

(6) A license issued under this section shall remain valid, unless surrendered, suspended or revoked by the director, for so long as the administrator continues in business in this state and remains in compliance with the provisions of this chapter and any applicable rules.

(7) An administrator licensed or applying for licensure under the provisions of this section shall immediately notify the director of any material change in its ownership, control or other fact or circumstance affecting its qualification for a license in this state.

(8) An administrator licensed or applying for a home state license that administers or will administer self-funded health plans subject to regulation under chapter 40 or 41, title 41 , Idaho Code, shall maintain a surety bond in a form prescribed by the director for the use and benefit of the director to be held in trust for the benefit and protection of covered persons and any insurer or self-funded plan against loss by reason of acts of fraud or dishonesty. The bond shall be in the greater of the following amounts:

(a) One hundred thousand dollars ($100,000); or

(b) An amount equal to the greater of ten percent (10%) of the contributions collected by the administrator from self-funded plans subject to regulation under chapters 40 and 41, title 41 , Idaho Code, or ten percent (10%) of the benefits paid by such self-funded plans administered during the preceding calendar year. If the administrator did not administer any self-funded plans subject to regulation under chapter 40 or 41, title 41 , Idaho Code, during the preceding calendar year, the bond shall be in an amount equal to ten percent (10%) of the contributions projected to be received by the administrator from such self-funded plans during the next calendar year.

Legislative History: [41-911, added 2010, ch. 31, sec. 2, p. 55; am. 2012, ch. 156, sec. 1, p. 430.]

I.C. § 41-912: nonresident administrator license¶

(1) Unless an administrator has obtained a home state license in this state, any administrator who performs administrator duties in this state shall obtain a nonresident administrator license in accordance with the provisions of this section by filing with the director the uniform application, accompanied by a letter of certification. In lieu of requiring an administrator to file a letter of certification with the uniform application, the director may verify the nonresident administrator’s home state certificate of authority or license status through an electronic database maintained by the NAIC, its affiliates or subsidiaries.

(2) An administrator shall not be eligible for a nonresident administrator license under the provisions of this section if it does not hold a license in a home state that has adopted under the provisions of this chapter or a substantially similar law governing administrators.

(3) Except as provided in subsections (2) and (8) of this section, the director shall issue to the administrator a nonresident administrator license promptly upon receipt of a complete application.

(4) Each nonresident administrator shall file biennially, as a part of its application for renewal of its license, a statement that its home state administrator license remains in force and has not been revoked or suspended by its home state during the preceding years.

(5) At the time of filing the application for licensing required under the provisions of this section the nonresident administrator shall pay a license application fee as provided for by rule.

(6) An administrator licensed or applying for licensure under the provisions of this section shall produce its accounts, records and files for examination, and make its officers available to give information with respect to its affairs, as often as reasonably required by the director.

(7) A nonresident administrator is not required to hold a nonresident administrator license in this state if the administrator is licensed in its home state and the administrator’s duties in this state are limited to:

(a) The administration of a group policy or plan and no more than a total of twenty percent (20%) of covered persons, for all plans the administrator services, reside in this state; and

(b) The total number of covered persons residing in this state is less than one hundred (100).

(8) The director may refuse to issue a nonresident administrator license, or delay the issuance of a nonresident administrator license, if the director determines that, due to events or information obtained subsequent to the home state’s licensure of the administrator, the nonresident administrator cannot satisfy the requirements of this chapter or that grounds exist for the home state’s revocation or suspension of the administrator’s home state certificate of authority or license.

Legislative History: [41-912, added 2010, ch. 31, sec. 2, p. 56.]

I.C. § 41-913: expiration and renewal of administrator license¶

(1) A license issued pursuant to this chapter shall expire on December 31 of the year following its issuance, but may be renewed for a period of two (2) years commencing January 1 upon filing a renewal form prescribed by the director accompanied by a fee as provided for by rule. The renewal form shall be filed on or before December 31. Any renewal form postmarked or submitted electronically after December 31 shall be accompanied by an additional late filing fee in the amount of double the unpaid renewal fee. Any renewal postmarked after January 31 must be submitted as a new application with supporting documents and accompanied by the full application fee as provided for by rule.

(2) The license shall be renewed by the director unless the director determines that the administrator is not competent, trustworthy or financially responsible, or has had an insurance license denied, revoked or suspended for cause by any state, or otherwise does not meet the qualifications for licensure as set forth in this chapter.

Legislative History: [41-913, added 2010, ch. 31, sec. 2, p. 57.]

I.C. § 41-914: annual report¶

(1) Each administrator licensed under the provisions of this chapter shall file an annual report for the preceding calendar year with the director on or before July 1 of each year, or within such extension of time as the director for good cause may grant. The annual report shall include:

(a) An audited financial statement attested to by an independent certified public accountant. An audited annual financial report prepared on a consolidated basis shall include a columnar consolidating or combining worksheet that shall be filed with the report and include the following:

(i) Amounts shown on the consolidated audited financial report shall be shown on the worksheet;

(ii) Amounts for each entity shall be stated separately; and

(iii) Explanations of consolidating and eliminating entries shall be included.

(b) In lieu of submitting an audited financial statement, and upon written application by an administrator and good cause shown, the director may grant a hardship exemption from filing audited financial statements and allow the submission of unaudited financial statements. Acceptable formats for unaudited financial statements, which shall include notes, are:

(i) Reports compiled or reviewed by a certified public accountant; or

(ii) Internal financial reports prepared in accordance with GAAP, certified by at least two (2) officers, owners or directors of the administrator.

If unaudited financial statements are submitted, the administrator must secure and maintain a surety bond in a form prescribed by the director for the use and benefit of the director to be held in trust for the benefit and protection of covered persons and any insurer or self-funded plan against loss by reason of acts of fraud or dishonesty, for the greater of ten percent (10%) of funds handled for the benefit of Idaho residents or twenty thousand dollars ($20,000).

(2) The annual report shall be in the form and contain such matters as the director prescribes and shall be verified by at least two (2) officers, owners or directors of the administrator.

(3) The annual report shall include the complete names and addresses of all insurers and for self-funded plans, all employers and trusts, with which the administrator had agreements during the preceding fiscal year. The report shall also include the number of Idaho residents covered by each of the plans.

Legislative History: [41-914, added 2010, ch. 31, sec. 2, p. 57; am. 2012, ch. 156, sec. 2, p. 432.]

I.C. § 41-915: grounds for denial, suspension or revocation of license¶

(1) The license of an administrator shall be denied, suspended or revoked if the director finds that the administrator:

(a) Is in an unsound financial condition;

(b) Is using such methods or practices in the conduct of its business so as to render its further transaction of business in this state hazardous or injurious to insured persons or the public; or

(c) Has failed to pay any judgment rendered against it in this state within sixty (60) days after the judgment has become final.

(2) The director may deny, suspend or revoke the license of an administrator if the director finds that the administrator:

(a) Has violated any lawful rule or order of the director or any provision of title 41 , Idaho Code;

(b) Has refused to be examined or to produce its accounts, records and files for examination, or if any individual responsible for the conduct of affairs of the administrator, including members of the board of directors, board of trustees, executive committee or other governing board or committee, the principal officers in the case of a corporation or the partners or members in the case of a partnership, association or limited liability company, any shareholder or member holding directly or indirectly ten percent (10%) or more of the voting stock, voting securities or voting interest of the administrator and any other person who exercises control or influence over the affairs of the administrator, has refused to give information with respect to its affairs or has refused to perform any other legal obligation as to an examination, when required by the director;

(c) Has, without just cause, refused to pay proper claims or perform services arising under its contracts or has, without just cause, caused covered individuals to accept less than the amount due them or caused covered individuals to employ attorneys or bring suit against the administrator to secure full payment or settlement of such claims;

(d) Fails, at any time, to meet any qualification for which issuance of the license could have been refused had the failure then existed and been known to the director;

(e) Or any of the individuals responsible for the conduct of its affairs, including members of the board of directors, board of trustees, executive committee or other governing board or committee, the principal officers in the case of a corporation or the partners or members in the case of a partnership, association or limited liability company, any shareholder or member holding directly or indirectly ten percent (10%) or more of its voting stock, voting securities or voting interest and any other person who exercises control or influence over its affairs, has been convicted of, or has entered a plea of guilty or nolo contendere to any crime that is deemed relevant in accordance with section 67-9411 (1), Idaho Code, or that evidences dishonesty, a lack of integrity and financial responsibility, or an unfitness and inability to provide acceptable service to the consuming public without regard to whether adjudication was withheld; or

(f) Is under suspension or revocation in another state.

(3) The director may, in his discretion and without advance notice or hearing, immediately suspend the license of an administrator if the director finds that one (1) or more of the following circumstances exist:

(a) The administrator is insolvent or impaired;

(b) A proceeding for receivership, conservatorship, rehabilitation or other delinquency proceeding regarding the administrator has been commenced in any state;

(c) The financial condition or business practices of the administrator otherwise pose an imminent threat to the public health, safety or welfare of the residents of this state; or

(d) A final order suspending or revoking the administrator’s license in its home state has been entered.

(4) If the director finds that one (1) or more grounds exist for the suspension or revocation of a license issued under the provisions of this chapter, the director may, in lieu of or in addition to suspension or revocation, impose an administrative penalty upon the administrator pursuant to section 41-117 , Idaho Code.

Legislative History: [41-915, added 2010, ch. 31, sec. 2, p. 58; am. 2020, ch. 175, sec. 7, p. 510.]

I.C. § 41-916: reporting of actions¶

(1) An administrator shall report to the director any administrative action taken against the administrator in another jurisdiction or by another governmental agency within thirty (30) days of the final disposition of the matter. The report shall include a copy of the order, consent order or other relevant legal documents.

(2) Within thirty (30) days of the initial pretrial hearing date, an administrator shall report to the director any criminal prosecution of the administrator or an individual responsible for the conduct of its affairs taken in any jurisdiction. The report shall include a copy of the initial complaint filed, the order resulting from the hearing and any other relevant legal documents.

Legislative History: [41-916, added 2010, ch. 31, sec. 2, p. 59.]

I.C. § 41-917: provisions not limiting¶

The requirements of this chapter are not a waiver or limitation of provisions of this title or other laws of this state but are additional requirements.

Legislative History: [41-917, added 2010, ch. 31, sec. 2, p. 59.]

Chapter 38¶

I.C. § 41-3801: purpose¶

The purpose of this chapter is to prevent acquisition or divestiture of control of an insurer or a holding company system of which an insurer is a part where such acquisition would be adverse to the public interest and the interests of policyholders and shareholders. A further purpose of this chapter is to promote the public interest and the interests of policyholders and shareholders by facilitating, consistent with those interests, better use of management skills and services, diversification through acquisitions, free access to capital markets, sound tax planning and open competition. An additional purpose is to monitor and regulate insurance holding company systems.

Legislative History: [41-3801, added 2013, ch. 266, sec. 2, p. 652.]

I.C. § 41-3802: definitions¶

As used in this chapter, the following terms shall have the following meanings:

(1) "Affiliate" of, or a person "affiliated" with, a specific person, means a person who directly or indirectly through one (1) or more intermediaries controls or is controlled by, or is under common control with, the person specified.

(2) "Control," including "controlling," "controlled by" and "under common control with," means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or a corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote or holds proxies representing ten percent (10%) or more of the voting securities of any other person. This presumption may be rebutted by a showing made in the manner provided in section 41-3809 (11), Idaho Code, that control does not exist in fact. The director may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support the determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.

(3) "Enterprise risk" means any activity, circumstance, event or series of events involving one (1) or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect on the financial condition or liquidity of the insurer or its insurance holding company system as a whole, including but not limited to anything that would cause the insurer’s risk-based capital to fall into company action level as set forth in section 41-5403 , Idaho Code, or would cause the insurer to be in hazardous financial condition as set forth by rule.

(4) "Group capital calculation instructions" means the group capital calculation instructions as adopted and amended by the national association of insurance commissioners (NAIC) effective January 1, 2024, or any subsequent version adopted for use by the director by rule, administrative order, or bulletin, provided that no such instructions shall contradict any section of this chapter.

(5) "Group-wide supervisor" means the regulatory official authorized to engage in conducting and coordinating group-wide supervision activities who is determined or acknowledged by the director under section 41-3815A , Idaho Code, to have sufficient significant contacts with the internationally active insurance group.

(6) "Insurance holding company system" means two (2) or more affiliated persons, one (1) or more of whom is an insurer.

(7) "Insurer" has the same meaning as that set forth in section 41-103 , Idaho Code, except that it shall not include agencies, authorities or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia or a state or political subdivision of a state.

(8) "Internationally active insurance group" means an insurance holding company system that:

(a) Includes an insurer registered under section 41-3809 , Idaho Code; and

(b) Meets the following criteria:

(i) Premiums written in at least three (3) countries;

(ii) The percentage of gross premiums written outside the United States is at least ten percent (10%) of the insurance holding company system’s total gross written premiums; and

(iii) Based on a three (3) year rolling average, the total assets of the insurance holding company system are at least fifty billion dollars ($50,000,000,000) or the total gross written premiums of the insurance holding company system are at least ten billion dollars ($10,000,000,000).

(9) "NAIC liquidity stress test framework" means the NAIC publication as adopted and amended by the NAIC effective December 13, 2022, or any subsequent version adopted for use by the director by rule, administrative order, or bulletin. The term includes a history of the development of regulatory liquidity stress testing, the scope criteria applicable for a specific data year, and the liquidity stress test instructions and reporting templates for a specific data year.

(10) "Person" means an individual, a corporation, a limited liability company, a partnership, an association, a joint stock company, a business trust, an unincorporated organization, or any similar entity or any combination of the foregoing acting in concert, but shall not include any joint venture partnership exclusively engaged in owning, managing, leasing or developing real or tangible personal property.

(11) "Scope criteria" means the designated exposure bases along with minimum magnitudes thereof for the specified data year used to establish a preliminary list of insurers that are considered scoped into the NAIC liquidity stress test framework for that data year.

(12) "Security holder" means a person who owns any security of a specified person, including common stock, preferred stock, debt obligations and any other security convertible into or evidencing the right to acquire any of the foregoing.

(13) "Subsidiary" means a specified person who is an affiliate controlled by such person directly or indirectly through one (1) or more intermediaries.

(14) "Voting security" means any security convertible into or evidencing a right to acquire a voting security.

Legislative History: [41-3802, added 2013, ch. 266, sec. 2, p. 652; am. 2019, ch. 81, sec. 1, p. 188; am. 2025, ch. 62, sec. 1, p. 286.]

I.C. § 41-3803: Subsidiaries of insurers¶

(1) A domestic insurer, either by itself or in cooperation with one (1) or more persons, may organize or acquire one (1) or more subsidiaries. The subsidiaries may conduct any kind of business or businesses and their authority to do so shall not be limited by reason of the fact that they are subsidiaries of a domestic insurer.

(2) In addition to investments in common stock, preferred stock, debt obligations and other securities permitted under title 41 , Idaho Code, a domestic insurer may also:

(a) Invest in common stock, preferred stock, debt obligations and other securities of one (1) or more subsidiaries in amounts that do not exceed the lesser of ten percent (10%) of the insurer’s assets or fifty percent (50%) of the insurer’s surplus regarding policyholders, provided that after making such investments, the insurer’s surplus regarding policyholders will be reasonable in relation to the insurer’s outstanding liabilities and will be adequate to meet its financial needs. In calculating the amount of such investments, investments in domestic or foreign insurance subsidiaries shall be excluded, but the following shall be included:

(i) Total net moneys or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary, including all organizational expenses and contributions to capital and surplus of the subsidiary whether or not represented by the purchase of capital stock or issuance of other securities; and

(ii) All amounts expended in acquiring additional common stock, preferred stock, debt obligations and other securities and all contributions to the capital or surplus of a subsidiary subsequent to its acquisition or formation.

(b) Invest any amount in common stock, preferred stock, debt obligations and other securities of one (1) or more subsidiaries engaged or organized to engage exclusively in the ownership and management of assets authorized as investments for the insurer, provided that each subsidiary agrees to limit its investment in any asset so that the investment will not cause the amount of the total investment of the insurer to exceed any of the investment limitations specified in paragraph (a) of this subsection or in chapter 7, title 41 , Idaho Code, applicable to the insurer. For the purpose of this section, "the total investment of the insurer" shall include:

(i) Any direct investment by the insurer in an asset; and

(ii) The insurer’s proportionate share of any investment in an asset by any subsidiary of the insurer, which shall be calculated by multiplying the amount of the subsidiary’s investment by the percentage of the ownership of the subsidiary.

(c) With the approval of the director, invest any greater amount in common stock, preferred stock, debt obligations or other securities of one (1) or more subsidiaries, provided that after making the investment, the insurer’s surplus regarding policyholders will be reasonable in relation to the insurer’s outstanding liabilities and will be adequate to its financial needs.

(3) Investments in common stock, preferred stock, debt obligations or other securities of subsidiaries made pursuant to subsection (2)(a) of this section shall not be subject to any of the otherwise applicable restrictions or prohibitions contained in title 41 , Idaho Code, applicable to such investments of insurers.

(4) Whether any investment made pursuant to subsection (2) of this section meets the applicable requirements thereof is to be determined before the investment is made by calculating the applicable investment limitations as though the investment had already been made, taking into account the then outstanding principal balance on all previous investments in debt obligations and the value of all previous investments in equity securities as of the day they were made, net of any return of capital invested, not including dividends.

(5) If an insurer ceases to control a subsidiary, it shall dispose of any investment therein made pursuant to this section within three (3) years from the time of the cessation of control or within such further time as the director may prescribe, unless at any time after the investment shall have been made the investment shall have met the requirements for investment under any other section of title 41 , Idaho Code, and the insurer has so notified the director.

Legislative History: [41-3803, added 2013, ch. 266, sec. 2, p. 653.]

I.C. § 41-3804: Acquisition of control of controlling interest with domestic insurer — acquisition of merger or divestiture of controlling interest with domestic insurer¶

(1) The following filing requirements shall apply:

(a) No person other than the issuer shall make a tender offer for or a request or invitation for tenders of, or enter into any agreement to exchange securities for, seek to acquire, or acquire, in the open market or otherwise, any voting security of a domestic insurer if, after the consummation thereof, such person would, directly or indirectly, or by conversion or by exercise of any right to acquire, be in control of the insurer, and no person shall enter into an agreement to merge with or otherwise to acquire control of a domestic insurer or any person controlling a domestic insurer unless, at the time the offer, request or invitation is made or the agreement is entered into, or prior to the acquisition of the securities if no offer or agreement is involved, such person has filed with the director and has sent to the insurer, a statement containing the information required by this section and the offer, request, invitation, agreement or acquisition has been approved by the director in the manner prescribed in this chapter.

(b) For purposes of this section, any controlling person of a domestic insurer seeking to divest his controlling interest of the domestic insurer, in any manner, shall file with the director, with a copy to the insurer, confidential notice of his proposed divestiture at least thirty (30) days prior to the cessation of control. The director shall determine those instances in which the party seeking to divest or to acquire a controlling interest in an insurer will be required to file for and obtain approval of the transaction. The information shall remain confidential until the conclusion of the transaction unless the director, in his discretion, determines that confidential treatment will interfere with or impede enforcement of this section. If the statement referred to in paragraph (a) of this subsection is otherwise filed, this section shall not apply.

(c) With respect to a transaction subject to this section, the acquiring or divesting person must also file a preacquisition notification with the director that contains the information set forth in section 41-3808 (3)(a), Idaho Code, at least thirty (30) days prior to the proposed effective date of the acquisition. A failure to timely file the notification may subject the acquiring or divesting person to penalties as specified in section 41-3808 (5)(e), Idaho Code.

(d) For purposes of this section, a domestic insurer shall include any person controlling a domestic insurer unless the person, as determined by the director, is either directly or through his affiliates primarily engaged in business other than the business of insurance. For the purposes of this section, "person" shall not include any securities broker holding, in the usual and customary broker’s function, less than twenty percent (20%) of the voting securities of an insurance company or of any person who controls an insurance company.

(2) The statement to be filed with the director as referenced in this section shall be made under oath or affirmation and shall contain the following:

(a) The name and address of each person by whom or on whose behalf the merger or other acquisition of control referred to in subsection (1) of this section is to be effected, hereinafter called the "acquiring party"; and

(i) If the person is an individual, his principal occupation and all offices and positions held during the past five (5) years and any conviction of crimes other than minor traffic violations during the past ten (10) years;

(ii) If the person is not an individual, a report of the nature of its business operations during the past five (5) years or for the lesser period as the person and any predecessors shall have been in existence; a detailed description of the business intended to be conducted by the person and the person’s subsidiaries; and a list of all individuals who are or who have been selected to become directors or executive officers of the person, or who perform or will perform functions appropriate to such positions. The list shall include, for each individual, the information required by paragraph (a)(i) of this subsection; and

(iii) For individuals who are directors or executive officers of an entity, the information from time to time that is specified by the director on the biographical affidavit form prescribed by the department of insurance;

(b) The source, nature and amount of the consideration used or to be used in effecting the merger or other acquisition of control, a description of any transaction where funds were or are to be obtained for any such purpose, including any pledge of the insurer’s stock or the stock of any of its subsidiaries or controlling affiliates, and the identity of persons furnishing consideration;

(c) Fully audited financial information as to the earnings and financial condition of each acquiring party for the preceding five (5) fiscal years of each acquiring party, or for such lesser period as the acquiring party and any predecessors shall have been in existence, and similar unaudited information as of a date not earlier than ninety (90) days prior to the filing of the statement;

(d) Any plans or proposals that each acquiring party may have to liquidate the insurer, to sell the insurer’s assets or merge or consolidate the insurer with any person, or to make any other material change in the insurer’s business or corporate structure or management;

(e) The number of shares of any security referred to in subsection (1) of this section that each acquiring party proposes to acquire, and the terms of the offer, request, invitation, agreement or acquisition referred to in subsection (1) of this section, and a statement as to the method by which the fairness of the proposal was determined;

(f) The amount of each class of any security referred to in subsection (1) of this section which is beneficially owned or concerning which there is a right to acquire beneficial ownership by each acquiring party;

(g) A full description of any contracts, arrangements or understandings with respect to any security referred to in subsection (1) of this section in which any acquiring party is involved including, but not limited to, transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. The description shall identify the persons with whom the contracts, arrangements or understandings have been entered into;

(h) A description of the purchase of any security referred to in subsection (1) of this section during the twelve (12) calendar months preceding the filing of the statement required by this section by any acquiring party, including the dates of purchase, names of the purchasers and consideration paid or agreed to be paid;

(i) A description of any recommendations to purchase any security referred to in subsection (1) of this section made during the twelve (12) calendar months preceding the filing of the statement by any acquiring party or by anyone based upon interviews or at the suggestion of the acquiring party;

(j) Copies of all tender offers for, requests or invitations for tenders of, exchange offers for, and agreements to acquire or exchange any securities referred to in subsection (1) of this section, and if distributed, of additional solicitation material relating thereto;

(k) The term of any agreement, contract or understanding made with, or proposed to be made with, any broker-dealer as to solicitation of securities referred to in subsection (1) of this section for tender and the amount of any fees, commissions or other compensation to be paid to broker-dealers with regard thereto;

(l) An agreement by the person required to file the statement referenced in subsection (1) of this section that it will provide the annual report specified in section 41-3809 (12), Idaho Code, for so long as its control exists;

(m) An acknowledgment by the person required to file the statement referenced in subsection (1) of this section that the person and all subsidiaries within its control in the insurance holding company system will provide information to the director upon request as necessary to evaluate enterprise risk to the insurer; and

(n) Such additional information as the director may prescribe by rule as necessary or appropriate for the protection of policyholders and security holders of the insurer or in the director’s determination is in the public interest.

(3) If the person required to file the statement referenced in subsection (1) of this section is a partnership, limited partnership, syndicate or other group, the director may require that the information required by subsection (2)(a) through (n) of this section shall be provided to the director with respect to each partner of the partnership or limited partnership, each member of the syndicate or group, and each person who controls the partner or member. If any partner, member or person is a corporation, or the person required to file the statement referenced in subsection (1) of this section is a corporation, the director may require that the information required by subsection (2)(a) through (n) of this section shall be provided to the director with respect to the corporation, each officer and director of the corporation, and each person who is directly or indirectly the beneficial owner of more than ten percent (10%) of the outstanding voting securities of the corporation.

(4) If any material change occurs in the facts set forth in the statement filed with the director and sent to the insurer pursuant to this section, an amendment setting forth the change, together with copies of all documents and other material relevant to the change, shall be filed with the director and sent to the insurer within two (2) business days after the person learns of the change.

(5) If any offer, request, invitation, agreement or acquisition referenced in subsection (1) of this section is proposed to be made by means of a registration statement under the securities act of 1933, or in circumstances requiring the disclosure of similar information under the securities exchange act of 1934, or under a state law requiring similar registration or disclosure, the person required to file the statement referred to in subsection (1) of this section may use the documents in furnishing the information required by that statement.

Legislative History: [41-3804, added 2013, ch. 266, sec. 2, p. 654.]

I.C. § 41-3805: Tender offer material¶

All requests or invitations for tenders or advertisements making a tender offer or requesting or inviting tenders of such voting securities for control of a domestic insurer made by or on behalf of any person shall contain the information specified in section 41-3804 , Idaho Code, as the director may prescribe and shall be filed with the director at least ten (10) days prior to the time such material is first published or sent or provided to security holders. Copies of any additional material soliciting or requesting such tender offers subsequent to the initial solicitation or request shall contain information as the director may prescribe as necessary or appropriate in the public interest or for the protection of policyholders and stockholders and shall be filed with the director at least ten (10) days prior to the time copies of the material are first published or sent or provided to security holders.

Legislative History: [41-3805, added 2013, ch. 266, sec. 2, p. 657.]

I.C. § 41-3806: Approval by director — Hearings¶

(1) The director shall approve any purchase, exchange, merger or other acquisition of control referred to in section 41-3804 (1), Idaho Code, or in section 41-3824 , Idaho Code, unless, after a public hearing, the director finds that:

(a) After the change of control, the domestic insurer referenced in section 41-3804 (1), Idaho Code, would be unable to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed;

(b) The effect of the purchase, exchange, merger or other acquisition of control would substantially lessen competition in the business of insurance in this state or tend to create a monopoly. In applying the competitive standard in this paragraph:

(i) The informational requirements of section 41-3808 (3)(a), Idaho Code, and the standards of section 41-3808 (4)(b), Idaho Code, shall apply;

(ii) The merger or other acquisition shall not be disapproved if the director finds that any of the situations meeting the criteria provided by section 41-3808 (4)(c), Idaho Code, exist; and

(iii) The director may condition the approval of the merger or other acquisition on the removal of the basis of disapproval within a specified period of time;

(c) The financial condition of any acquiring party may jeopardize the financial stability of the insurer or prejudice the interest of its policyholders or, in the case of an acquisition of control, the interest of any remaining stockholders who are unaffiliated with the acquiring person;

(d) The plans or proposals of the acquiring party to liquidate the insurer, sell its assets or consolidate or merge it with any person, or to make any other material change in its business or corporate structure or management, are unfair and unreasonable to policyholders of the insurer and are not in the public interest;

(e) The competence, experience and integrity of the persons who would control the operation of the insurer are such that it would not be in the interest of policyholders and stockholders of the insurer or of the public to permit the merger or other acquisition of control; or

(f) The acquisition is likely to be hazardous or prejudicial to the insurance-buying public.

(2) The public hearing referenced in subsection (1) of this section shall be held within thirty-five (35) days after the statement required by section 41-3804 (1), Idaho Code, is filed or as otherwise agreed to by the director and the person filing the statement, and at least twenty-one (21) days’ notice of such hearing shall be given by the director to the person filing the statement. Not less than seven (7) days’ notice of the public hearing shall be given by the person filing the statement to the insurer and to such other persons as may be designated by the director. All discovery proceedings to the extent agreed to by the parties or allowed by the director shall be concluded not later than three (3) business days prior to the commencement of the public hearing. The director shall make a determination within fifty-six (56) days after conclusion of such hearing. At the hearing, the person filing the statement, the insurer, any person to whom notice of hearing was sent, and any other person whose interest may be affected shall have the right to present evidence, examine and cross-examine witnesses, and offer oral and written arguments and shall be entitled to conduct discovery proceedings in the same manner as allowed under chapter 2, title 41 , Idaho Code, and applicable rules.

(3) If the proposed acquisition of control will require the approval of more than one (1) commissioner, the public hearing referenced in subsection (2) of this section may be held on a consolidated basis, upon written request to all affected commissioners by the person filing the statement referenced in section 41-3804 (1), Idaho Code. Such person shall file the statement referenced in section 41-3804 (1), Idaho Code, with the national association of insurance commissioners within five (5) days of making the request for a public hearing. A commissioner may opt out of a consolidated hearing and shall provide notice to the applicant of the opt-out within fourteen (14) days of the receipt of the statement referenced in section 41-3804 (1), Idaho Code. A hearing conducted on a consolidated basis shall be public and shall be held within the United States before the commissioners of the states in which the affected insurers are domiciled. Such commissioners shall hear and receive evidence. A commissioner may attend such hearing in person or by telecommunication.

(4) In connection with a change of control of a domestic insurer, any determination by the director that the person acquiring control of the insurer shall be required to maintain or restore the capital of the insurer to the level required by the laws and regulations of this state shall be made not later than sixty (60) days after the date of notification of the change in control submitted pursuant to section 41-3804 (1)(a) of this chapter. Failure of the director to provide a determination within the prescribed time shall not negate the application of capital requirements otherwise required by title 41 , Idaho Code, but may affect the time within which such requirements must be met.

(5) The director may retain at the acquiring person’s expense any attorneys, actuaries, accountants and other experts not otherwise a part of the director’s staff as may be reasonably necessary to assist the director in reviewing the proposed acquisition of control. The director may require the acquiring party to post a bond in an amount not to exceed twenty-five thousand dollars ($25,000) as security for payment of such expenses.

(6) The provisions of this section shall not apply to any offer, request, invitation, agreement or acquisition that the director by order shall exempt as not having been made or entered into for the purpose and not having the effect of changing or influencing the control of a domestic insurer, or as otherwise not anticipated by this section.

(7) The following shall be violations of this section:

(a) The failure to file any statement, amendment or other material required to be filed pursuant to the provisions of section 41-3804 (1) or (2), Idaho Code; or

(b) The effectuation or any attempt to effectuate an acquisition of control of, divestiture of, or merger with a domestic insurer unless the director has given prior approval.

(8) The district courts of the state of Idaho are hereby vested with jurisdiction over every person not resident, domiciled or authorized to do business in this state who files a statement with the director under the provisions of section 41-3804 , Idaho Code, and over all actions involving such person arising out of violations of this section, and each such person shall be deemed to have performed acts equivalent to and constituting an appointment by the person of the director to be his true and lawful attorney upon whom may be served all lawful process in any action, suit or proceeding arising out of violations of this section. Copies of all lawful process shall be served on the director and transmitted by registered or certified mail by the director to the person at his last known address.

Legislative History: [41-3806, added 2013, ch. 266, sec. 2, p. 657.]

I.C. § 41-3807: Mailing — Payment of expenses¶

(1) All notices of public hearings held pursuant to section 41-3806 , Idaho Code, shall be mailed by the insurer to its shareholders within five (5) business days after the insurer has received such notices. The expenses of such mailing shall be borne by the person making the filing. As security for the payment of such expenses, such person shall file with the director a bond or other deposit deemed acceptable and in an amount determined by the director.

(2) The provisions of this section shall not apply to any offers, requests, invitations, agreements or acquisitions by the person referred to in section 41-3804 , Idaho Code, of any voting security referred to in section 41-3804 , Idaho Code, which, immediately prior to the consummation of such offer, request, invitation, agreement or acquisition, was not issued and outstanding.

Legislative History: [41-3807, added 2013, ch. 266, sec. 2, p. 659.]

I.C. § 41-3808: Acquisitions involving insurers not otherwise covered¶

(1) The following definitions shall apply for the purposes of this section only:

(a) "Acquisition" means any agreement, arrangement or activity, the consummation of which results in a person acquiring directly or indirectly the control of another person, and includes, but is not limited to, the acquisition of voting securities, the acquisition of assets, bulk reinsurance and mergers;

(b) "Involved insurer" means an insurer that either acquires or is acquired, is affiliated with an acquirer or acquired, or is the result of a merger.

(2) This section applies to any acquisition in which there is a change in control of an insurer authorized to do business in this state. This section shall not apply to the following:

(a) An acquisition subject to approval or disapproval by the director pursuant to sections 41-3804 and 41-3806 , Idaho Code;

(b) A purchase of securities solely for investment purposes, so long as the securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in any insurance market in this state. If a purchase of securities results in a presumption of control under the provisions of section 41-3802 (2), Idaho Code, it is not solely for investment purposes unless the commissioner of the insurer’s state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist, and the disclaimer action or affirmative finding is communicated by the domiciliary commissioner to the director;

(c) The acquisition of a person by another person when both persons are neither directly nor through affiliates primarily engaged in the business of insurance, if preacquisition notification is filed with the director in accordance with subsection (3)(a) of this section thirty (30) days prior to the proposed effective date of the acquisition. However, such preacquisition notification is not required for exclusion from this section if the acquisition would otherwise be excluded from this section by any other subsection of this section;

(d) The acquisition of already affiliated persons;

(e) An acquisition if, as an immediate result of the acquisition:

(i) In no market would the combined market share of the involved insurers exceeds five percent (5%) of the total market;

(ii) There would be no increase in any market share; or

(iii) In no market would:

1. The combined market share of the involved insurers exceeds twelve percent (12%) of the total market; and

2. The market share increases by more than two percent (2%) of the total market.

For the purpose of paragraph (e) of this subsection, a market means direct written insurance premium in this state for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this state;

(f) An acquisition for which a preacquisition notification would be required pursuant to the provisions of this section due solely to the resulting effect on the ocean marine insurance line of business; or

(g) An acquisition of an insurer whose domiciliary commissioner affirmatively finds that the insurer is in failing condition; there is a lack of feasible alternative to improving such condition; the public benefits of improving the insurer’s condition through the acquisition exceed the public benefits that would arise from not lessening competition; and the findings are communicated by the domiciliary commissioner to the director.

(3) An acquisition covered by subsection (2) of this section may be subject to the issuance of an order pursuant to subsection (5) of this section, unless the acquiring person files a preacquisition notification and the waiting period has expired. The acquired person may file a preacquisition notification with the director. The director shall give confidential treatment to information submitted under the provisions of this subsection in the same manner as provided in section 41-3816 , Idaho Code.

(a) The preacquisition notification shall be in such form and contain such information as prescribed by the director relating to those markets which, under subsection (2)(e) of this section, cause the acquisition not to be exempted from the provisions of this section. The director may require such additional material and information as deemed necessary to determine whether the proposed acquisition, if consummated, would violate the competitive standard of subsection (4) of this section. The required information may include an opinion of an economist as to the competitive impact of the acquisition in this state accompanied by a summary of the education and experience of such person indicating his ability to render an informed opinion.

(b) The waiting period required shall begin on the date of receipt by the director of a preacquisition notification and shall end on the earlier of the thirtieth day after the date of receipt or termination of the waiting period by the director. Prior to the end of the waiting period, the director may require the submission of additional needed information relevant to the proposed acquisition, in which event the waiting period shall end on the earlier of the thirtieth day after receipt of the additional information by the director or termination of the waiting period by the director.

(4) (a) The director may enter an order under subsection (5)(a) of this section with respect to an acquisition if there is substantial evidence that the effect of the acquisition may be substantially to lessen competition in any line of insurance in this state or tend to create a monopoly, or if the insurer fails to file adequate information in compliance with subsection (3) of this section.

(b) In determining whether a proposed acquisition would violate the competitive standard of paragraph (a) of this subsection, the director shall consider the following:

(i) Any acquisition covered under subsection (2) of this section involving two (2) or more insurers competing in the same market is prima facie evidence of violation of the competitive standards.

1. If the market is highly concentrated and the involved insurers possess the following shares of the market:

2. Or, if the market is not highly concentrated and the involved insurers possess the following shares of the market:

A highly concentrated market is one in which the share of the four (4) largest insurers is seventy-five percent (75%) or more of the market. Percentages not shown in the tables are interpolated proportionately to the percentages that are shown. If more than two (2) insurers are involved, exceeding the total of the two (2) columns in the table is prima facie evidence of violation of the competitive standard in paragraph (a) of this subsection. For the purpose of this determination, the insurer with the largest share of the market shall be deemed to be insurer A.

(ii) There is a significant trend toward increased concentration when the aggregate market share of any grouping of the largest insurers in the market, from the two (2) largest to the eight (8) largest, has increased by seven percent (7%) or more of the market over a period of time extending from any base year five (5) to ten (10) years prior to the acquisition up to the time of the acquisition. Any acquisition or merger covered under subsection (2) of this section involving two (2) or more insurers competing in the same market is prima facie evidence of violation of the competitive standard in paragraph (a) of this subsection if:

1. There is a significant trend toward increased concentration in the market;

2. One (1) of the insurers involved is one of the insurers in a grouping of large insurers showing the requisite increase in the market share; and

3. Another involved insurer’s market is two percent (2%) or more.

(iii) For the purposes of paragraph (b) of this subsection:

1. "Insurer" means any company or group of companies under common management, ownership or control;

2. "Market" means the relevant product and geographical markets. In determining the relevant product and geographical markets, the director shall give due consideration to, among other things, the definitions or guidelines, if any, promulgated by the national association of insurance commissioners and to information, if any, submitted by parties to the acquisition. In the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premium for a line of business, which line is that used in the annual statement required to be filed by insurers doing business in this state and the relevant geographical market is assumed to be this state;

3. The burden of showing prima facie evidence of violation of the competitive standard rests upon the director.

(iv) Even if an acquisition is not prima facie violative of the competitive standard under subsection (4)(b)(i) and (ii) of this section, the director may establish the requisite anticompetitive effect based upon other substantial evidence. Even if an acquisition is prima facie violative of the competitive standard under subsection (4)(b)(i) and (ii) of this section, a party may establish the absence of the requisite anticompetitive effect based upon other substantial evidence. Relevant factors in making a determination under this subsection include, but are not limited to, the following: market shares, volatility of ranking of market leaders, number of competitors, concentration, trend of concentration in the industry and ease of entry and exit into the market.

(c) An order may not be entered under subsection (5)(a) of this section if:

(i) The acquisition will yield substantial economies of scale or economies in resource utilization that cannot be feasibly achieved in any other way, and the public benefits that would arise from such economies exceed the public benefits that would arise from not lessening competition; or

(ii) The acquisition will substantially increase the availability of insurance, and the public benefits of the increase exceed the public benefits that would arise from not lessening competition.

(5) (a) If an acquisition violates the provisions of this section, the director may enter an order:

(i) Requiring an involved insurer to cease and desist from doing business in this state with respect to the line or lines of insurance involved in the violation; or

(ii) Denying the application of an acquired or acquiring insurer for a certificate of authority to do business in this state.

(b) Such an order shall not be entered unless:

(i) A hearing has been held in accordance with chapter 2, title 41 , Idaho Code;

(ii) Notice of the hearing was issued prior to the end of the waiting period and not less than fourteen (14) days prior to the hearing; and

(iii) The hearing was concluded and the order issued no later than fifty-six (56) days after the date of the filing of the preacquisition notification with the director.

Every order shall be accompanied by a written decision of the director setting forth findings of fact and conclusions of law.

(c) An order entered under the provisions of this subsection shall not become final earlier than twenty-eight (28) days after it is issued, during which time the involved insurer may submit a plan to remedy the anticompetitive impact of the acquisition within a reasonable time. Based upon such plan or other information, the director shall specify the conditions, if any, under the time period during which the aspects of the acquisition causing a violation of the provisions of this section would be remedied and the order vacated or modified.

(d) An order pursuant to this section shall not apply if the acquisition is not consummated.

(e) Any person who violates a cease and desist order of the director issued pursuant to subsection (5)(a) of this section and while the order is in effect may, after notice and the opportunity for a hearing and upon order of the director, be subject at the discretion of the director to one (1) or more of the following:

(i) A monetary penalty of not more than ten thousand dollars ($10,000) for every day of violation; and/or

(ii) Suspension or revocation of the person’s certificate of authority in this state.

(f) Any insurer or other person who fails to make any filing required by this section, and who also fails to demonstrate a good faith effort to comply with any filing requirement, shall be subject to a fine of not more than fifty thousand dollars ($50,000).

(6) Sections 41-3818 (2) and (3) and 41-3820 , Idaho Code, do not apply to acquisitions covered under subsection (2) of this section.

Legislative History: [41-3808, added 2013, ch. 266, sec. 2, p. 659.]

I.C. § 41-3809: Registration of holding company system insurers¶

(1)(a) Every insurer authorized to do business in this state and that is a member of an insurance holding company system shall register with the director, except a foreign insurer subject to registration requirements and standards adopted by statute or regulation in the jurisdiction of its domicile, which are substantially similar to those contained in this section and in:

(i) Sections 41-3810 (1), 41-3811 and 41-3812 , Idaho Code; and

(ii) The provisions of section 41-3810 (2), Idaho Code, or a provision such as the following: each registered insurer shall keep current the information required to be disclosed in its registration statement by reporting all material changes or additions within fifteen (15) days after the end of the month in which it learns of each change or addition.

(b) Any insurer that is subject to registration under this section shall register within fifteen (15) days after it becomes subject to registration, and annually thereafter for the year ending December 31 immediately preceding, on the due date provided for filing of audited financial reports, or, if the insurer is not subject to filing of audited financial reports, on June 1, unless the director, for good cause shown, extends the time for registration, and then within the extended time. The director may require any insurer authorized to do business in the state that is a member of an insurance holding company system and that is not subject to registration under this section to furnish a copy of the registration statement, the summary specified in subsection (3) of this section or other information filed by the insurance company with the insurance regulatory authority of its domiciliary jurisdiction. Upon request of the insurer or of the insurance regulatory authority of another jurisdiction in which the insurer is authorized to transact insurance, the director at the insurer’s expense shall furnish a copy of the registration statement or other information filed by a domestic insurer with the director pursuant to this chapter.

(2) Every insurer subject to registration under this chapter shall file the registration statement with the director on a form and in a manner prescribed by the director. The registration statement shall contain the following current information:

(a) The capital structure, general financial condition, ownership and management of the insurer and any person controlling the insurer;

(b) The identity and relationship of every member of the insurance holding company system;

(c) The following agreements in force and transactions currently outstanding or that have occurred during the last calendar year between the insurer and its affiliates:

(i) Loans, other investments or purchases, sales or exchanges of securities of the affiliates by the insurer or of the insurer by its affiliates;

(ii) Purchases, sales or exchange of assets;

(iii) Transactions not in the ordinary course of business;

(iv) Guarantees or undertakings for the benefit of an affiliate that result in an actual contingent exposure of the insurer’s assets to liability, other than insurance contracts entered into in the ordinary course of the insurer’s business;

(v) All management agreements, service contracts and all cost-sharing arrangements;

(vi) Reinsurance agreements;

(vii) Dividends and other distributions to shareholders; and

(viii) Consolidated tax allocation agreements.

(d) Any pledge of the insurer’s stock, including stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance holding company system;

(e) If requested by the director, the insurer shall provide to the director financial statements of or within an insurance holding company system, including all affiliates. Financial statements may include, but are not limited to, annual audited financial statements filed with the United States securities and exchange commission (SEC) pursuant to the securities act of 1933, as amended, or the securities exchange act of 1934, as amended. An insurer required to file financial statements pursuant to this section may satisfy the request by providing the director with the most recently filed parent corporation financial statements that have been filed with the SEC;

(f) Other matters concerning transactions between registered insurers and any affiliates as may be included from time to time in any registration forms adopted or approved by the director;

(g) Certification that the insurer’s board of directors is responsible for and oversees corporate governance and internal controls and that the insurer’s officers or senior management have approved, implemented and continue to maintain and monitor corporate governance and internal control procedures; and

(h) Any other information required by the director by statute or rule.

(3) All registration statements shall contain a summary outlining all items constituting changes from the prior registration statement.

(4) No information need be disclosed on the registration statement filed pursuant to subsection (2) of this section if the information is not material for the purposes of this section. Unless the director by rule or order provides otherwise, sales, purchases, exchanges, loans or extensions of credit, investments or guarantees involving one-half of one percent (.5%) or less of an insurer’s admitted assets as of the December 31 of the year immediately preceding shall not be deemed material for purposes of this chapter.

(5) Subject to section 41-3810 , Idaho Code, each registered insurer shall report to the director all dividends and other distributions to shareholders within fifteen (15) business days following the declaration thereof.

(6) Any person within an insurance holding company system subject to registration shall be required to provide complete and accurate information to an insurer, where the information is reasonably necessary to enable the insurer to comply with the provisions of this chapter.

(7) The director shall terminate the registration of any insurer that demonstrates that it no longer is a member of an insurance holding company system.

(8) The director may require or allow two (2) or more affiliated insurers subject to registration to file a consolidated registration statement.

(9) The director may allow any insurer that is authorized to do business in this state and that is part of an insurance holding company system to register on behalf of any affiliated insurer that is required to register under subsection (1) of this section and to comply with all filing requirements under this chapter.

(10) The provisions of this section shall not apply to any insurer, information or transaction if and to the extent that the director by rule or order shall exempt the same from the provisions of this section. In considering whether to issue an exemption, the director may consider the following:

(a) The size of the insurer and all affiliates;

(b) The structure of ownership within the insurance holding company system;

(c) The nature and amounts of transactions within the insurance holding company system;

(d) The nature and complexity of the business of the insurer and affiliates; and

(e) Any other factors the director deems appropriate.

Prior to issuing an exemption, the director shall notify all other insurance regulators where the insurer or its affiliates hold a certificate of authority.

(11) Any person may file with the director a disclaimer of affiliation with any authorized insurer, or such a disclaimer may be filed by the insurer or any member of an insurance holding company system. The disclaimer shall fully disclose all material relationships and bases for affiliation between the person and the insurer as well as the basis for disclaiming the affiliation. A disclaimer of affiliation shall be deemed to have been granted unless the director, within thirty (30) days following receipt of a complete disclaimer, notifies the filing party that the disclaimer is disallowed. In the event of disallowance, the disclaiming party may request an administrative hearing pursuant to chapter 2, title 41 , Idaho Code, which shall be granted. The disclaiming party shall be relieved of its duty to register under this section if approval of the disclaimer has been granted by the director, or if the disclaimer is deemed to have been approved.

(12) The ultimate controlling person of every insurer subject to registration shall also file an annual enterprise risk report. The report shall, to the best of the ultimate controlling person’s knowledge and belief, identify the material risks within the insurance holding company system that could pose enterprise risk to the insurer. The report shall be filed with the lead state director of the insurance holding company system as determined by the procedures within the financial analysis handbook adopted by the national association of insurance commissioners (NAIC).

(13)(a) Except as provided in this subsection, the ultimate controlling person of every insurer subject to registration shall concurrently file with the registration an annual group capital calculation in accordance with the NAIC group capital calculation instructions. The lead state director may allow a controlling person that is not the ultimate controlling person to file the group capital calculation. The following insurance holding company systems shall be exempt from filing the group capital calculation:

(i) An insurance holding company system that has only one (1) insurer within its holding company structure, that only writes business in its domestic state, and that assumes no business from any other insurer;

(ii) An insurance holding company system that is required to perform a group capital calculation specified by the United States federal reserve board. If the calculation from the federal reserve board under the terms of information sharing agreements cannot be shared with the lead state director, the insurance holding company system is not exempt from the group capital calculation filing;

(iii) An insurance holding company system whose non-United States group-wide supervisor is located within a reciprocal jurisdiction as described in section 41-515 (2)(f)(i)1., Idaho Code, that recognizes the United States state regulatory approach to group supervision and group capital; and

(iv) An insurance holding company system:

1. That provides information to the lead state that meets the requirements for accreditation under the NAIC financial standards and accreditation program, either directly or indirectly through the group-wide supervisor, who has determined such information is satisfactory to allow the lead state to comply with the provisions of section 41-3815A , Idaho Code; and

2. Whose non-United States group-wide supervisor that is not in a reciprocal jurisdiction recognizes and accepts, as specified by the director in regulation, the group capital calculation as the worldwide group capital assessment for United States insurance groups who operate in that jurisdiction.

(b) The exemptions described in paragraphs (a)(iii) and (iv) of this subsection shall not prevent the lead state director from requiring the group capital calculation for United States operations of any non-United States-based insurance holding company system when it is deemed appropriate for prudential oversight and solvency monitoring purposes or for ensuring the competitiveness of the insurance marketplace.

(c) The lead state director may exempt the ultimate controlling person from filing the annual group capital calculation or accept a limited group capital filing as specified by the lead state director.

(d) If an insurance holding company system no longer meets the requirements for an exemption, the insurance holding company system shall file the group capital calculation at the next annual filing date unless the lead state director grants an extension.

(14) The ultimate controlling person of every insurer subject to registration who is also scoped into the NAIC liquidity stress test framework shall file the results of a specific year’s liquidity stress test. The filing shall be made to the lead state director of the insurance holding company system.

(a) The NAIC liquidity stress test framework shall include scope criteria applicable to a specific data year. Insurers meeting at least one (1) threshold of the scope criteria shall be considered scoped into the NAIC liquidity stress test framework for the specified data year unless the lead state director determines the insurer should not be scoped into the framework for that data year.

(b) The performance of, and filing of the results from, a specific year’s liquidity stress test shall comply with the instructions and templates of the NAIC liquidity stress test framework.

(15) The failure to file a registration statement or any summary of the registration statement or enterprise risk filing required in this section within the time specified for filing shall be a violation of the provisions of this section.

Legislative History: [41-3809, added 2013, ch. 266, sec. 2, p. 663; am. 2025, ch. 62, sec. 2, p. 288.]

I.C. § 41-3810: Standards and management of an insurer within an insurance holding company system¶

(1) Transactions within an insurance holding company system to which an insurer subject to registration is a party shall be subject to the following standards:

(a) The terms shall be fair and reasonable;

(b) Agreements for cost-sharing services and management shall include such provisions as required by this chapter or rule promulgated by the director;

(c) Charges or fees for services performed shall be reasonable;

(d) Expenses incurred and payment received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied;

(e) The books, accounts and records of each party to all such transactions shall be so maintained as to clearly and accurately disclose the precise nature and details of the transactions, including such accounting information as is necessary to support the reasonableness of the charges or fees to the respective parties;

(f) The insurer’s surplus regarding policyholders following any dividends or distributions to shareholder affiliates shall be reasonable in relation to the insurer’s outstanding liabilities and adequate to meet its financial needs;

(g) All records and data of the insurer held by an affiliate shall be and shall remain the property of the insurer, shall be subject to control of the insurer, shall be identifiable, and shall be segregated or readily capable of segregation, at no additional cost to the insurer, from all other persons’ records and data. This includes all records and data that are otherwise the property of the insurer, in whatever form maintained, including but not limited to claims and claim files, policyholder lists, application files, litigation files, premium records, rate books, underwriting manuals, personnel records, financial records, or similar records within the possession, custody, or control of the affiliate. At the request of the insurer, the affiliate shall provide access to such records and data such that the director can: obtain a complete set of all records of any type that pertain to the insurer’s business; obtain access to the operating systems on which the data is maintained; obtain the software that runs those systems either through assumption of licensing agreements or otherwise; and restrict the use of the data by the affiliate if it is not operating the insurer’s business. The affiliate shall provide a waiver of any landlord lien or other encumbrance to give the insurer access to all records and data in the event of the affiliate’s default under a lease or other agreement; and

(h) Premiums or other funds belonging to the insurer that are collected by or held by an affiliate shall be the exclusive property of the insurer and shall be subject to the control of the insurer. Any right of offset in the event an insurer is placed into receivership shall be subject to the provisions of chapter 33, title 41 , Idaho Code.

(2) The following transactions involving a domestic insurer and any person in its insurance holding company system, including amendments or modifications of affiliate agreements previously filed pursuant to this section, that are subject to any materiality standards contained in paragraphs (a) through (g) of this subsection, may not be entered into unless the insurer has notified the director in writing of its intention to enter into the transaction at least thirty (30) days prior thereto, or such shorter period as the director may permit, and the director has not disapproved it within that period. The notice for amendments or modifications shall include the reasons for the change and the financial impact on the domestic insurer. Informal notice shall be reported to the director within thirty (30) days after the termination of a previously filed agreement, for determination of the type of filing required, if any.

(a) Sales, purchases, exchanges, loans, extensions of credit, guarantees or investments, provided the transactions are equal to or exceed:

(i) With respect to non-life insurers, the lesser of three percent (3%) of the insurer’s admitted assets or twenty-five percent (25%) of surplus regarding policyholders as of December 31 of the year immediately preceding;

(ii) With respect to life insurers, three percent (3%) of the insurer’s admitted assets as of December 31 of the year immediately preceding;

(b) Loans or extensions of credit to any person who is not an affiliate, where the insurer makes loans or extensions of credit with the agreement or understanding that the proceeds of the transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase assets of, or to make investments in, any affiliate of the insurer making the loans or extensions of credit, provided the transactions are equal to or exceed:

(i) With respect to non-life insurers, the lesser of three percent (3%) of the insurer’s admitted assets or twenty-five percent (25%) of surplus regarding policyholders as of December 31 of the year immediately preceding;

(ii) With respect to life insurers, three percent (3%) of the insurer’s admitted assets as of December 31 of the year immediately preceding;

(c) Reinsurance agreements or modifications thereto, including:

(i) All reinsurance pooling agreements;

(ii) Agreements in which the reinsurance premium or a change in the insurer’s liabilities, or the projected reinsurance premium or a change in the insurer’s liabilities, in any of the next three (3) years, equals or exceeds five percent (5%) of the insurer’s surplus regarding policyholders, as of December 31 of the year immediately preceding, including those agreements that may require as consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement or understanding exists between the insurer and the nonaffiliate that any portion of the assets will be transferred to one (1) or more affiliates of the insurer;

(d) All management agreements, service contracts, tax allocation agreements, guarantees and cost-sharing arrangements;

(e) Guarantees when made by a domestic insurer, provided however, that a guarantee that is quantifiable as to amount is not subject to the notice requirement of this section, unless it exceeds the lesser of one-half of one percent (.5%) of the insurer’s admitted assets or ten percent (10%) of surplus regarding policyholders as of December 31 of the year immediately preceding. Further, all guarantees that are not quantifiable as to amount are subject to the notice requirements of this section;

(f) Direct or indirect acquisitions or investments in a person that controls the insurer or in an affiliate of the insurer in an amount that, together with the insurer’s present holdings in such investments, exceeds two and one-half percent (2.5%) of the insurer’s surplus to policyholders. Direct or indirect acquisitions or investments in subsidiaries acquired pursuant to section 41-3803 , Idaho Code, or authorized under any other section of this chapter, or in nonsubsidiary insurance affiliates that are subject to the provisions of this chapter, are exempt from this requirement; and

(g) Any material transactions, specified by statute or rule, that the director determines may adversely affect the interests of the insurer’s policyholders.

(3) Nothing in this section shall be deemed to authorize or permit any transactions that, in the case of an insurer not a member of the same insurance holding company system, would be otherwise contrary to law.

(4) A domestic insurer may not enter into transactions that are part of a plan or series of like transactions with persons within the insurance holding company system if the purpose of those separate transactions is to avoid the statutory threshold amount and thus avoid the review that would occur otherwise. If the director determines that separate transactions were entered into over any twelve (12) month period for that purpose, the director may exercise his authority pursuant to section 41-3819 , Idaho Code.

(5) The director, in reviewing transactions pursuant to subsection (2) of this section, shall consider whether the transactions comply with the standards set forth in subsection (1) of this section and whether they may adversely affect the interests of policyholders.

(6) The director shall be notified within thirty (30) days of any investment of the domestic insurer in any one (1) corporation, if the total investment in the corporation by the insurance holding company system exceeds ten percent (10%) of the corporation’s voting securities.

(7)(a) Any affiliate to an agreement or contract with a domestic insurer that is subject to the provisions of subsection (2)(d) of this section shall be subject to the jurisdiction of any supervision, seizure, conservatorship, or receivership proceedings against the insurer and to the authority of any supervisor, conservator, rehabilitator, or liquidator for the insurer appointed pursuant to chapter 33, title 41 , Idaho Code, for the purpose of interpreting, enforcing, and overseeing the affiliate’s obligations under the agreement or contract to perform services for the insurer that:

(i) Are an integral part of the insurer’s operations, including but not limited to management, administration, accounting, data processing, marketing, underwriting, claims handling, investment, or any other similar functions; or

(ii) Are essential to the insurer’s ability to fulfill its obligations under insurance policies.

(b) The director may require that an agreement or contract pursuant to subsection (2)(d) of this section for the provision of services described in paragraph (a) of this subsection specify that the affiliate consents to the jurisdiction as set forth in this section.

Legislative History: [41-3810, added 2013, ch. 266, sec. 2, p. 666; am. 2025, ch. 62, sec. 4, p. 294.]

I.C. § 41-3811: Adequacy of surplus¶

For purposes of this chapter, in determining whether an insurer’s surplus regarding policyholders is reasonable in relation to the insurer’s outstanding liabilities and adequate to meet its financial needs, the following factors, among others, shall be considered:

(1) The size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria;

(2) The extent to which the insurer’s business is diversified among several lines of insurance;

(3) The number and size of risks insured in each line of business;

(4) The extent of the geographical dispersion of the insurer’s insured risks;

(5) The nature and extent of the insurer’s reinsurance program;

(6) The quality, diversification and liquidity of the insurer’s investment portfolio;

(7) The recent past and projected future trend in the size of the insurer’s investment portfolio;

(8) The surplus regarding policyholders maintained by other comparable insurers;

(9) The adequacy of the insurer’s reserves;

(10) The quality and liquidity of investments in affiliates; the director may treat any investment in an affiliate as a disallowed asset for purposes of determining the adequacy of surplus regarding policyholders whenever in the judgment of the director the investment so warrants; and

(11) The quality of the insurer’s earnings and the extent to which the reported earnings include extraordinary items.

Legislative History: [41-3811, added 2013, ch. 266, sec. 2, p. 668.]

I.C. § 41-3812: Dividends and other distributions¶

(1) No domestic insurer shall pay any extraordinary dividend or make any other extraordinary distribution to its shareholders until thirty (30) days after the director has received notice of the declaration thereof and has not within that period disapproved the payment, or until the director has approved the payment within the thirty (30) day period. For purposes of this section, an extraordinary dividend or distribution includes any dividend or distribution of cash or other property, whose fair market value together with that of other dividends or distributions made within the preceding twelve (12) months exceeds the greater of:

(a) Ten percent (10%) of the insurer’s surplus regarding policyholders as of December 31 of the year immediately preceding; or

(b) The net gain from operations of the insurer, if the insurer is a life insurer, or the net income, if the insurer is not a life insurer, not including net realized capital gains or losses, for the twelve (12) month period ending December 31 of the year immediately preceding, but shall not include pro rata distributions of any class of the insurer’s own securities.

Notwithstanding any other provision of law, an insurer may declare an extraordinary dividend or distribution that is conditional upon the director’s approval, and the declaration shall confer no rights upon shareholders until the director has approved the payment of the dividend or distribution or until the director has not disapproved payment within the thirty (30) day period referred to in this subsection.

(2) Except as provided in this subsection, a domestic insurer shall not make any dividends except from earned surplus. A domestic insurer may declare and distribute a dividend from other than earned surplus if:

(a) The director has given approval for the dividend prior to payment; and

(b) Following payment of the dividend, the insurer’s surplus regarding policyholders is:

(i) Reasonable in relation to its outstanding liabilities; and

(ii) Adequate to meet its financial needs.

(3) For purposes of subsection (2) of this section, "earned surplus" means unassigned funds as required to be reported on the insurer’s annual statement.

(4) A domestic insurer that is a member of a holding company system shall notify the director in writing of any nonextraordinary dividends to be paid or other distributions to be made to shareholders within five (5) business days following the declaration of the dividend or distribution, and shall notify the director in writing at least ten (10) days, commencing from the date of receipt by the director, prior to the payment of any dividends or the making of any other distribution.

Legislative History: [41-3812, added 2013, ch. 266, sec. 2, p. 668; am. 2017, ch. 95, sec. 1, p. 244; am. 2018, ch. 89, sec. 1, p. 194.]

I.C. § 41-3813: Management of domestic insurers subject to registration¶

(1) Notwithstanding the control of a domestic insurer by any person, the officers and directors of the insurer shall not thereby be relieved of any obligation or liability to which they would otherwise be subject by law, and the insurer shall be managed so as to assure its separate operating identity consistent with this chapter.

(2) Nothing in this section shall preclude a domestic insurer from having or sharing a common management or cooperative or joint use of personnel, property or services with one (1) or more other persons under arrangements meeting the standards of section 41-3810 (1), Idaho Code.

(3) Not less than one-third (1/3) of the directors of a domestic insurer, and not less than one-third (1/3) of the members of each committee of the board of directors of any domestic insurer, shall be persons who are not officers or employees of the insurer or of any entity controlling, controlled by or under common control with the insurer and who are not beneficial owners of a controlling interest in the voting stock of the insurer or entity. At least one (1) person must be included in any quorum for the transaction of business at any meeting of the board of directors or any committee thereof.

(4) The board of directors of a domestic insurer shall establish one (1) or more committees comprised solely of directors who are not officers or employees of the insurer or of any entity controlling, controlled by or under common control with the insurer and who are not beneficial owners of a controlling interest in the voting stock of the insurer or any such entity. The committee or committees shall have responsibility for nominating candidates for director for election by shareholders or policyholders, evaluating the performance of officers deemed to be principal officers of the insurer and recommending to the board of directors the selection and compensation of the principal officers.

(5) The provisions of subsections (3) and (4) of this section shall not apply to a domestic insurer if the person controlling the insurer, such as an insurer, a mutual insurance holding company or a publicly held corporation, has a board of directors and committees thereof that meet the requirements of subsections (3) and (4) of this section with respect to such controlling entity.

(6) An insurer may make application to the director for a waiver from the requirements of this section, if the insurer’s annual direct written and assumed premium, excluding premiums reinsured with the federal crop insurance corporation and national flood insurance program, is less than three hundred million dollars ($300,000,000). An insurer may also make application to the director for a waiver from the requirements of this section based upon unique circumstances. The director may consider various factors including, but not limited to, the type of business entity, volume of business written, availability of qualified board members or the ownership or organizational structure of the entity.

Legislative History: [41-3813, added 2013, ch. 266, sec. 2, p. 669; am. 2014, ch. 97, sec. 27, p. 288.]

I.C. § 41-3814: Examination¶

(1) Power of director. Subject to the limitation contained in this section and in addition to the authority the director has under chapter 2, title 41 , Idaho Code, relating to the examination of insurers, the director shall have the power to examine any insurer registered under section 41-3809 , Idaho Code, and its affiliates to ascertain the financial condition of the insurer, including the enterprise risk to the insurer by the ultimate controlling party, or by any entity or combination of entities within the insurance holding company system, or by the insurance holding company system on a consolidated basis.

(2) The director may order any insurer registered under section 41-3809 , Idaho Code, to produce such records, books or other information in the possession or control of the insurer or its affiliates as are reasonably necessary to determine compliance with this chapter. For such purpose, the director may order any insurer registered under section 41-3809 , Idaho Code, to produce information not in the possession of the insurer if the insurer can obtain access to such information pursuant to contractual relationships, statutory obligations or other method. In the event the insurer cannot obtain the information requested by the director, the insurer shall provide the director with a detailed explanation of the reason that the insurer cannot obtain the information and the identity of the holder of information. Whenever it appears to the director that the detailed explanation is without merit, the director may require, after notice and the opportunity for a hearing, that the insurer pay a penalty in the amount and in the manner provided in section 41-3819 (1), Idaho Code, and may suspend or revoke the insurer’s license.

(3) The director may retain at the registered insurer’s expense such attorneys, actuaries, accountants and other experts not otherwise a part of the director’s staff as shall be reasonably necessary to assist in the conduct of the examination referenced in subsection (1) of this section. Persons so retained shall be under the direction and control of the director for the purposes stated herein and shall act in a purely advisory capacity.

(4) Each registered insurer producing for examination records, books and papers pursuant to subsection (1) of this section shall be liable for and shall pay the expense of examination in accordance with the provisions of section 41-228 , Idaho Code, and applicable rules promulgated by the director.

(5) In the event the insurer fails to comply with an order issued by the director, the director shall have the power to examine the insurer’s affiliates to obtain the information. The director shall also have the power to issue subpoenas, to administer oaths and to examine under oath any person for purposes of determining compliance with the provisions of this section. Upon the failure or refusal of any person to obey a subpoena issued by the director, the director may petition a court of competent jurisdiction and, upon proper showing, the court may enter an order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order shall be punishable as contempt of court. Every person shall be obligated to attend as a witness at the place specified in the subpoena, when subpoenaed, anywhere within the state. He shall be entitled to the same fees and mileage, if claimed, as a witness in the district court, which fees, mileage and actual expense, if any, necessarily incurred in securing the attendance of witnesses, and their testimony, shall be itemized and charged against and be paid by the company being examined.

Legislative History: [41-3814, added 2013, ch. 266, sec. 2, p. 670.]

I.C. § 41-3815: group-wide supervision of internationally active insurance groups¶

41-3815A. group-wide supervision of internationally active insurance groups. (1) The director is authorized to act as the group-wide supervisor for any internationally active insurance group in accordance with the provisions of this section. However, the director may otherwise acknowledge another regulatory official as the group-wide supervisor where the internationally active insurance group:

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

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

(c) Has substantial insurance operations in the United States and in this state, but the director has determined pursuant to the factors set forth in subsections (2) and (6) of this section that the other regulatory official is the appropriate group-wide supervisor.

An insurance holding company system that does not otherwise qualify as an internationally active insurance group may request that the director make a determination or acknowledgment as to a group-wide supervisor pursuant to this section.

(2) In cooperation with other state, federal, and international regulatory agencies, the director will identify a single group-wide supervisor for an internationally active insurance group. The director may determine that the director is the appropriate group-wide supervisor for an internationally active insurance group that conducts substantial insurance operations concentrated in this state. However, the director may acknowledge that a regulatory official from another jurisdiction is the appropriate group-wide supervisor for the internationally active insurance group. The director shall consider the following factors when making a determination or acknowledgment under this subsection:

(a) The place of domicile of the insurers within the internationally active insurance group who hold the largest share of the group’s written premiums, assets, or liabilities;

(b) The place of domicile of the top-tiered insurer(s) in the insurance holding company system of the internationally active insurance group;

(c) The location of the executive offices or largest operational offices of the internationally active insurance group;

(d) Whether another regulatory official is acting or is seeking to act as the group-wide supervisor under a regulatory system that the director determines to be:

(i) Substantially similar to the system of regulation provided under the laws of this state; or

(ii) Otherwise sufficient in terms of providing for group-wide supervision, enterprise risk analysis, and cooperation with other regulatory officials; and

(e) Whether another regulatory official acting or seeking to act as the group-wide supervisor provides the director with reasonably reciprocal recognition and cooperation. However, a director or regulatory official from another jurisdiction identified under this section as the group-wide supervisor may determine that it is appropriate to acknowledge another supervisor to serve as the group-wide supervisor. The acknowledgment of the group-wide supervisor shall be made after consideration of the factors listed in this subsection, shall be made in cooperation with and subject to the acknowledgment of other regulatory officials involved with supervision of members of the internationally active insurance group, and shall be made in consultation with the internationally active insurance group.

(3) Notwithstanding any other provision of law, when another regulatory official is acting as the group-wide supervisor of an internationally active insurance group, the director shall acknowledge that regulatory official as the group-wide supervisor. However, in the event of a material change in the internationally active insurance group that results in:

(a) The internationally active insurance group’s insurers domiciled in this state holding the largest share of the group’s premiums, assets, or liabilities; or

(b) This state being the place of domicile of the top-tiered insurer(s) in the insurance holding company system of the internationally active insurance group, the director shall make a determination or acknowledgment as to the appropriate group-wide supervisor for such an internationally active insurance group pursuant to subsection (2) of this section.

(4) Pursuant to section 41-3814 , Idaho Code, the director is authorized to collect from any insurer registered pursuant to section 41-3809 , Idaho Code, all information necessary to determine whether the director may act as the group-wide supervisor of an internationally active insurance group or if the director may acknowledge another regulatory official to act as the group-wide supervisor. Prior to issuing a determination that an internationally active insurance group is subject to group-wide supervision by the director, the director shall notify the insurer registered pursuant to section 41-3809 , Idaho Code, and the ultimate controlling person within the internationally active insurance group. The internationally active insurance group shall have no fewer than thirty (30) days to provide the director with additional information pertinent to the pending determination. The director shall publish on the department of insurance website the identity of internationally active insurance groups that the director has determined are subject to group-wide supervision by the director.

(5) If the director is the group-wide supervisor for an internationally active insurance group, the director is authorized to engage in any of the following group-wide supervision activities:

(a) Assess the enterprise risks within the internationally active insurance group to ensure that:

(i) The material financial condition and liquidity risks to the members of the internationally active insurance group engaged in the business of insurance are identified by management; and

(ii) Reasonable and effective mitigation measures are in place;

(b) Request, from any member of an internationally active insurance group subject to the director’s supervision, information necessary and appropriate to assess enterprise risk, including, but not limited to, information about the members of the internationally active insurance group regarding:

(i) Governance, risk assessment, and management;

(ii) Capital adequacy; and

(iii) Material intercompany transactions;

(c) Coordinate and, through the authority of the regulatory officials of the jurisdictions where members of the internationally active insurance group are domiciled, compel development and implementation of reasonable measures designed to ensure that the internationally active insurance group is able to timely recognize and mitigate enterprise risks to members of such internationally active insurance group engaged in the business of insurance;

(d) Communicate with other state, federal, and international regulatory agencies for members within the internationally active insurance group and share relevant information subject to the confidentiality provisions of section 41-3816 , Idaho Code, through supervisory colleges as set forth in section 41-3815 , Idaho Code, or otherwise;

(e) Enter into agreements with or obtain documentation from any insurer registered under section 41-3809 , Idaho Code, any member of the internationally active insurance group and any other state, federal, and international regulatory agencies for members of the internationally active insurance group, providing the basis for or otherwise clarifying the director’s role as group-wide supervisor, including provisions for resolving disputes with other regulatory officials. Such agreements or documentation shall not serve as evidence in any proceeding that any insurer or person within an insurance holding company system not domiciled or incorporated in this state is doing business in this state or is otherwise subject to jurisdiction in this state; and

(f) Other group-wide supervision activities, consistent with the authorities and purposes enumerated in this subsection, as considered necessary by the director.

(6) If the director acknowledges that another regulatory official from a jurisdiction that is not accredited by the national association of insurance commissioners is the group-wide supervisor, the director is authorized to reasonably cooperate, through supervisory colleges or otherwise, with group-wide supervision undertaken by the group-wide supervisor, provided that:

(a) The director’s cooperation is in compliance with the laws of this state; and

(b) The regulatory official acknowledged as the group-wide supervisor also recognizes and cooperates with the director’s activities as a group-wide supervisor for other internationally active insurance groups where applicable. Where such recognition and cooperation is not reasonably reciprocal, the director is authorized to refuse recognition and cooperation.

(7) The director is authorized to enter into agreements with or obtain documentation from any insurer registered under section 41-3809 , Idaho Code, any affiliate of the insurer, and other state, federal, and international regulatory agencies for members of the internationally active insurance group, that provide the basis for or otherwise clarify a regulatory official’s role as group-wide supervisor.

(8) The director may promulgate rules necessary for the administration of this section.

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

Legislative History: [41-3815A, added 2019, ch. 81, sec. 2, p. 189.]

I.C. § 41-3816: Confidential treatment¶

(1) Documents, materials or other information in the possession or control of the department that are obtained by or disclosed to the director or any other person in the course of an examination or investigation made pursuant to section 41-3814 , Idaho Code, and all information reported or provided to the department pursuant to sections 41-3804 (2), 41-3809 , 41-3810 , and 41-3815A , Idaho Code, shall be confidential by law and privileged, shall be exempt from public disclosure, shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action. However, the director is authorized to use such documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the director’s official duties. The director shall not otherwise make the documents, materials or other information public without the prior written consent of the insurer to which it pertains, unless the director, after giving the insurer and its affiliates who would be affected notice and opportunity to be heard, determines that the interest of policyholders, shareholders or the public will be served by the publication, in which event the director may publish all or any part in such manner as may be deemed appropriate.

(a) For purposes of the information reported and provided to the department pursuant to section 41-3809 (13), Idaho Code, the director shall maintain the confidentiality of the group capital calculation and group capital ratio produced within the calculation and any group capital information received from an insurance holding company supervised by the federal reserve board or any United States group-wide supervisor.

(b) For purposes of the information reported and provided to the department pursuant to section 41-3809 (14), Idaho Code, the director shall maintain the confidentiality of the liquidity stress test results and supporting disclosures and any liquidity stress test information received from an insurance holding company supervised by the federal reserve board or non-United States group-wide supervisors.

(2) Neither the director nor any person who receives documents, materials or other information while acting under the authority of the director or with whom such documents, materials or other information is shared pursuant to this chapter shall be permitted or required to testify in any private civil action concerning any confidential documents, materials or information subject to subsection (1) of this section.

(3) In order to assist in the performance of the director’s duties under title 41 , Idaho Code, the director:

(a) May share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subsection (1) of this section, with other state, federal and international regulatory agencies, with the national association of insurance commissioners (NAIC) and its affiliates and subsidiaries, and with state, federal and international law enforcement authorities, including members of any supervisory college described in section 41-3815 , Idaho Code, provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the document, material or other information and has verified in writing the legal authority to maintain confidentiality;

(b) Notwithstanding the provisions of paragraph (a) of this subsection, may only share confidential and privileged documents, materials or information reported pursuant to section 41-3809 (12), Idaho Code, with commissioners of states having statutes or regulations substantially similar to subsection (1) of this section and who have agreed in writing not to disclose such information;

(c) May receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from the NAIC and its affiliates and subsidiaries and from regulatory and law enforcement officials of other foreign or domestic jurisdictions and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and

(d) Shall enter into written agreements with the NAIC governing sharing and use of information provided pursuant to the provisions of this chapter consistent with this subsection, which agreements shall:

(i) Specify procedures and protocols regarding the confidentiality and security of information shared with the NAIC or third-party consultants designated by the director pursuant to this chapter, including procedures and protocols for sharing by the NAIC with other state, federal or international regulators. Such agreement shall provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the documents, materials, or other information and has verified in writing the legal authority to maintain such confidentiality;

(ii) Specify that ownership of information shared with the NAIC or a third-party consultant designated by the director pursuant to this chapter remains with the director, and the NAIC’s or third-party consultant’s use of the information is subject to the direction of the director;

(iii) Excluding documents, materials, or information reported pursuant to section 41-3809 (14), Idaho Code, prohibit the NAIC or third-party consultant designated by the director from storing the information shared pursuant to this chapter;

(iv) Require prompt notice to be given to an insurer whose confidential information is in the possession of the NAIC or a third-party consultant designated by the director pursuant to this chapter that disclosure of such confidential information has been requested or subpoenaed or otherwise sought;

(v) Require the NAIC or a third-party consultant designated by the director to consent to intervention by an insurer in any judicial, administrative, or similar action in which the NAIC or a third-party consultant designated by the director may be required to disclose confidential information about the insurer shared with the NAIC or a third-party consultant designated by the director pursuant to this chapter; and

(vi) For documents, materials, or information reported pursuant to section 41-3809 (14), Idaho Code, in the case of an agreement involving a third-party consultant, provide for notification of the identity of the consultant to the applicable insurers.

(4) The sharing of information by the director pursuant to this chapter shall not constitute a delegation of regulatory authority or rulemaking, and the director is solely responsible for the administration, execution and enforcement of the provisions of this chapter.

(5) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the director under the provisions of this section or as a result of sharing as authorized in subsection (3) of this section.

(6) Documents, materials, or other information in the possession or control of the NAIC or a third-party consultant designated by the director pursuant to this chapter shall be confidential and privileged, shall not be a public record, shall not be subject to public disclosure, shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action.

(7) The group capital calculation and resulting group capital ratio required pursuant to section 41-3809 (13), Idaho Code, and the liquidity stress test along with its results and supporting disclosures required pursuant to section 41-3809 (14), Idaho Code, shall be considered regulatory tools and are not intended as a means to rank insurers or insurance holding company systems generally. Except as otherwise may be required under the provisions of this chapter, the making, publishing, disseminating, circulating, or placing before the public, directly or indirectly, by any written or electronic means of communication available to the public, or in any other way, with regard to the group capital calculation, group capital ratio, the liquidity stress test results, or supporting disclosures for the liquidity stress test of any insurer or any insurer group, or of any component derived in the calculation by any person engaged in any manner in the insurance business is hereby prohibited.

(8) If any materially false statement or an inappropriate comparison of any amount regarding an insurer’s or insurance group’s filings made pursuant to section 41-3809 (13) or (14), Idaho Code, is published in any written publication and the insurer is able to demonstrate to the director with substantial proof the falsity or inappropriateness of such statement, then the insurer may publish announcements in a written publication solely to rebut the materially false statement or inappropriate comparison.

Legislative History: [41-3816, added 2013, ch. 266, sec. 2, p. 671; am. 2019, ch. 81, sec. 3, p. 192; am. 2025, ch. 62, sec. 5, p. 297.]

I.C. § 41-3817: Rules¶

The director may promulgate rules and issue orders as shall be necessary to carry out the provisions of this chapter.

Legislative History: [41-3817, added 2013, ch. 266, sec. 2, p. 673.]

I.C. § 41-3818: Injunctions, prohibitions against voting securities, sequestration of voting securities¶

(1) Whenever it appears to the director that any insurer or any director, officer, employee or agent thereof has committed or is about to commit a violation of the provisions of this chapter or of any rule or order issued by the director hereunder, the director may apply to the district court, fourth judicial district for Ada county, for an order enjoining the insurer or director, officer, employee or agent thereof from violating or continuing to violate the provisions of this chapter or any rule or order thereunder, and for such other equitable relief as the nature of the case and the interests of the insurer’s policyholders, creditors and shareholders or the public may require.

(2) No security that is the subject of any agreement or arrangement regarding acquisition, or that is acquired or to be acquired, in contravention of the provisions of this chapter or of any rule or order issued by the director hereunder, may be voted at any shareholders’ meeting, or may be counted for quorum purposes, and any action of shareholders requiring the affirmative vote of a percentage of shares may be taken as though the securities were not issued and outstanding; however, no action taken at any such meeting shall be invalidated by the voting of such securities, unless the action would materially affect control of the insurer or unless the courts of this state so order. If an insurer or the director has reason to believe that any security of the insurer has been or is about to be acquired in contravention of the provisions of this chapter or of any rule or order issued by the director hereunder, the insurer or the director may apply to the fourth judicial district court for Ada county to enjoin any offer, request, invitation, agreement or acquisition made in contravention of section 41-3804 , Idaho Code, or any rule or order issued by the director to enjoin the voting of any security so acquired, to void any vote of the security already cast at any meeting of shareholders, and for such other equitable relief as the nature of the case and the interest of the insurer’s policyholders, creditors and shareholders or the public may require.

(3) In any case where a person has acquired or is proposing to acquire any voting securities in violation of the provisions of this chapter or any rule or order issued by the director hereunder, the fourth judicial district court for Ada county, on such notice as the court deems appropriate, upon the application of the insurer or the director, shall seize or sequester any voting securities of the insurer owned directly or indirectly by the person, and issue such order as may be appropriate to effectuate the provisions of this chapter.

(4) Notwithstanding any other provisions of law, for the purposes of this chapter, the situs of the ownership of the securities of domestic insurers shall be deemed to be in this state.

Legislative History: [41-3818, added 2013, ch. 266, sec. 2, p. 673.]

I.C. § 41-3819: Sanctions¶

(1) Any insurer failing, without just cause, to file any registration statement as required in this chapter shall be required, after notice and the opportunity for a hearing, to pay a penalty of two hundred dollars ($200) for each day of delay, to be recovered by the director, and the penalty so received shall be distributed to the general fund of the state of Idaho. The maximum penalty under this section is ten thousand dollars ($10,000). The director may reduce the penalty if the insurer demonstrates to the director that the imposition of the penalty would constitute a financial hardship to the insurer.

(2) Every director or officer of an insurance holding company system who knowingly violates, participates in or assents to, or who knowingly permits any of the officers or agents of the insurer to engage in transactions or make investments that have not been properly reported or submitted pursuant to section 41-3809 (1), 41-3810 (2) or 41-3812 , Idaho Code, or who violates the provisions of this chapter shall pay, in their individual capacity, an administrative penalty of not more than five thousand dollars ($5,000) per violation, after notice and the opportunity for a hearing before the director. In determining the amount of the administrative penalty, the director shall take into account the appropriateness of the penalty with respect to the gravity of the violation, the history of any previous violations and such other matters as the interests of justice may require.

(3) Whenever it appears to the director that any insurer subject to this chapter or any director, officer, employee or agent thereof has engaged in any transaction or entered into a contract that is subject to section 41-3810 or 41-3812 , Idaho Code, and that would not have been approved had approval been requested, the director may order the insurer to cease and desist immediately from any further activity under that transaction or contract. After notice and the opportunity for a hearing, the director may also order the insurer to void any contracts and restore the status quo if such action is in the best interest of the policyholders, creditors or the public.

(4) Whenever it appears to the director that any insurer or any director, officer, employee or agent thereof has committed a willful violation of this chapter, the director may seek criminal proceedings to be instituted by referring the matter to the attorney general or the county prosecutor in the county in which the principal office of the insurer is located, or if the insurer has no office in this state, then in Ada county, Idaho, against the insurer or the responsible director, officer, employee or agent thereof. Any insurer who willfully violates the provisions of this chapter may be fined not more than five thousand dollars ($5,000). Any individual who willfully violates the provisions of this chapter shall be guilty of a felony and may be imprisoned for not more than two (2) years or fined in his individual capacity not more than five thousand dollars ($5,000), or both.

(5) Any officer, director or employee of an insurance holding company system who willfully and knowingly subscribes to or makes or causes to be made any false statements or false reports or false filings with the intent to deceive the director in the performance of his duties under the provisions of this chapter, upon conviction shall be imprisoned for not more than three (3) years or fined five thousand dollars ($5,000), or both. Any fines imposed shall be paid by the officer, director or employee in his individual capacity.

(6) Whenever it appears to the director that any person has committed a violation of the provisions of section 41-3804 , Idaho Code, and which prevents the director from fully understanding the enterprise risk to the insurer by affiliates or by the insurance holding company system, such violation may serve as an independent basis for the director’s disapproval of dividends or distributions and for placing the insurer under an order of supervision in accordance with chapter 33, title 41 , Idaho Code.

Legislative History: [41-3819, added 2013, ch. 266, sec. 2, p. 673.]

I.C. § 41-3820: Receivership¶

Whenever it appears to the director that any person has committed a violation of the provisions of this chapter that so impairs the financial condition of a domestic insurer as to threaten insolvency or make its further transaction of business hazardous to its policyholders, creditors, shareholders or the public, the director may proceed as provided in chapter 33, title 41 , Idaho Code, to take possession of the property of the domestic insurer and to conduct its business in the capacity of a receiver.

Legislative History: [41-3820, added 2013, ch. 266, sec. 2, p. 674.]

I.C. § 41-3821: Recovery¶

(1) If an order for liquidation or rehabilitation of a domestic insurer has been entered, the receiver appointed under the order shall be authorized to recover on behalf of the insurer:

(a) From any parent corporation or holding company or person or affiliate who otherwise controlled the insurer, the amount of distributions, other than distributions of shares of the same class of stock, paid by the insurer on its capital stock; or

(b) Any payment in the form of a bonus, termination settlement or extraordinary lump sum salary adjustment made by the insurer or its subsidiary to a director, officer or employee, where the distribution or payment pursuant to this subsection is made at any time during the one (1) year period preceding the petition for liquidation, conservation or rehabilitation, as the case may be, subject to the limitations of subsections (2), (3) and (4) of this section.

(2) No distribution shall be recoverable if the parent or affiliate of such domestic insurer shows that when paid the distribution was lawful and reasonable, and that the insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the insurer to fulfill its contractual obligations.

(3) Any person who was a parent corporation or holding company or a person who otherwise controlled the insurer or affiliate at the time the distributions were paid shall be liable up to the amount of distributions or payments under subsection (1) of this section, that the person received. Any person who otherwise controlled the insurer at the time the distributions were declared shall be liable up to the amount of distributions that would have been received if they had been paid immediately. If two (2) or more persons are liable with respect to the same distributions, they shall be jointly and severally liable.

(4) The maximum amount recoverable pursuant to this section shall be the amount needed in excess of all other available assets of the impaired or insolvent insurer to pay the contractual obligations of the impaired or insolvent insurer and to reimburse any guaranty funds.

(5) To the extent that any person liable under subsection (3) of this section is insolvent or otherwise fails to pay claims due pursuant to subsection (3) of this section, its parent corporation or holding company or person who otherwise controlled it at the time the distribution was paid shall be jointly and severally liable for any resulting deficiency in the amount recovered from the parent corporation or holding company or person who otherwise controlled it.

Legislative History: [41-3821, added 2013, ch. 266, sec. 2, p. 675.]

I.C. § 41-3822: Revocation, suspension or nonrenewal of insurer’s license¶

Whenever it appears to the director that any person has committed a violation of the provisions of this chapter that makes the continued operation of an insurer contrary to the interests of policyholders or the public, the director may, after giving notice and the opportunity for a hearing, suspend, revoke or refuse to renew the insurer’s license or certificate of authority to do business in this state for such period as the director finds is required for the protection of policyholders or the public. Any such determination shall be accompanied by specific findings of fact and conclusions of law.

Legislative History: [41-3822, added 2013, ch. 266, sec. 2, p. 675.]

I.C. § 41-3823: Judicial review — mandamus¶

(1) Any person aggrieved by any act, determination, rule or order or any other action of the director pursuant to this chapter may appeal to the fourth judicial district court for Ada county, Idaho. The court shall conduct its review in accordance with the provisions of chapter 52, title 67 , Idaho Code, or other applicable provisions of law.

(2) The filing of an appeal pursuant to this section shall stay the application of any rule, order or other action of the director to the party pursuing such appeal, unless the court, after providing the party with notice and the opportunity for a hearing, determines that a stay would be detrimental to the interest of policyholders, shareholders, creditors or the public.

(3) Any person aggrieved by any failure of the director to act or make a determination required by this chapter may petition the fourth judicial district court for Ada county for a writ in the nature of a mandamus or a peremptory mandamus directing the director to act or make a determination.

Legislative History: [41-3823, added 2013, ch. 266, sec. 2, p. 675.]

I.C. § 41-3824: Mutual insurance holding companies¶

(1) (a) A domestic mutual insurer, upon approval of the director, may reorganize by forming an insurance holding company system, which shall be designated as "a mutual insurance holding company," based upon a mutual insurance company plan and continuing the corporate existence of the reorganizing insurer as a stock insurer. The director, after a public hearing as provided in section 41-3806 , Idaho Code, if satisfied that the interests of the policyholders are properly protected and that the plan of reorganization is fair and equitable to the policyholders, may approve the proposed plan of reorganization and may require as a condition of approval such modifications of the proposed plan of reorganization as the director finds necessary for the protection of the policyholders’ interests. The director may retain consultants for this purpose as provided in section 41-3806 (5), Idaho Code. A reorganization pursuant to this section is subject to the requirements of sections 41-3804 and 41-3805 , Idaho Code. The director shall retain jurisdiction over a mutual insurance holding company organized pursuant to this section to assure that policyholder interests are protected.

(b) All of the initial shares of the capital stock of the reorganized insurer shall be issued to the mutual insurance holding company. The membership interests of the policyholders of the reorganized insurer shall become membership interests in the mutual insurance holding company. Policyholders of the reorganized insurer shall be members of the mutual insurance holding company in accordance with the articles of incorporation and bylaws of the mutual insurance holding company. The mutual insurance holding company shall at all times own a majority of the voting shares of the capital stock of the reorganized insurer.

(2) (a) A domestic mutual insurer, upon the approval of the director, may reorganize by merging its policyholders’ membership interests into a mutual insurance holding company formed pursuant to subsection (1) of this section and continuing the corporate existence of the reorganizing insurer as a stock insurer subsidiary of the mutual insurance holding company. The director, after a public hearing as provided in section 41-3806 , Idaho Code, if satisfied that the interests of the policyholders are properly protected and that the merger is fair and equitable to the policyholders, may approve the proposed merger and may require as a condition of approval such modifications of the proposed merger as the director finds necessary for the protection of the policyholders’ interests. For this purpose, the director may retain consultants as provided in section 41-3806 (5), Idaho Code. A merger pursuant to this subsection is subject to sections 41-3804 and 41-3805 , Idaho Code. The director shall retain jurisdiction over the mutual insurance holding company organized pursuant to this section to assure that policyholder interests are protected.

(b) All of the initial shares of the capital stock of the reorganized insurer shall be issued to the mutual insurance holding company. The membership interests of the policyholders of the reorganized insurance company shall become membership interests in the mutual insurance holding company. Policyholders of the reorganized insurer shall be members of the mutual insurance holding company in accordance with the articles of incorporation and bylaws of the mutual insurance holding company. The mutual insurance holding company shall at all times own a majority of the voting shares of the capital stock of the reorganized insurer. A merger of policyholders’ membership interests in a mutual insurer into a mutual insurance holding company shall be deemed to be a merger of insurance companies pursuant to section 41-2857 , Idaho Code, and is subject to the requirements of section 41-2857 , Idaho Code.

(c) A foreign mutual insurer that is a domestic insurer organized under chapter 3, title 41 , Idaho Code, may reorganize upon the approval of the director and in compliance with the requirements of any law or rule applicable to the foreign mutual insurer by merging its policyholders’ membership interests into a mutual insurance holding company formed pursuant to subsection (1) of this section and continuing the corporate existence of the reorganizing foreign mutual insurer as a foreign stock insurer subsidiary of the mutual insurance holding company. The director, after a public hearing as provided in section 41-3806 , Idaho Code, may approve the proposed merger. The director may retain consultants as provided in section 41-3806 (5), Idaho Code. A merger pursuant to this paragraph is subject to the requirements of sections 41-3804 and 41-3805 , Idaho Code. The reorganizing foreign mutual insurer may remain a foreign company or foreign corporation after the merger and may be admitted to do business in this state, upon approval by the director. A foreign mutual insurer that is a party to the merger may at the same time redomesticate in this state by complying with the applicable requirements of this state and its state of domicile. The provisions of paragraph (b) of this subsection shall apply to a merger authorized under this paragraph.

(3) A mutual insurance holding company resulting from the reorganization of a domestic mutual insurer organized under chapter 21, title 30 , Idaho Code, shall be incorporated pursuant to chapter 21, title 30 , Idaho Code. This requirement shall supersede any conflicting provisions of chapter 21, title 30 , Idaho Code. The articles of incorporation and any amendments to such articles of the mutual insurance holding company shall be subject to approval of the director in the same manner as those of an insurance company.

(4) A mutual insurance holding company is deemed to be an insurer subject to chapter 33, title 41 , Idaho Code, and shall automatically be a party to any proceeding under chapter 33, title 41 , Idaho Code, involving an insurer that, as a result of a reorganization pursuant to subsection (1) or (2) of this section, is a subsidiary of the mutual insurance holding company. In any proceeding under chapter 33, title 41 , Idaho Code, involving the reorganized insurer, the assets of the mutual insurance holding company are deemed to be assets of the estate of the reorganized insurer for purposes of satisfying the claims of the reorganized insurer’s policyholders. A mutual insurance holding company shall not be dissolved or liquidated without the prior approval of the director or as ordered by the district court pursuant to chapter 33, title 41 , Idaho Code.

(5) (a) Section 41-2855 , Idaho Code, is not applicable to a reorganization or merger pursuant to this section.

(b) Section 41-2855 , Idaho Code, is applicable to demutualization of a mutual insurance holding company that resulted from the reorganization of a domestic mutual insurer organized pursuant to chapter 3, title 41 , Idaho Code, as if the domestic mutual insurer were a mutual life insurer.

(6) A membership interest in a domestic mutual insurance holding company shall not constitute a security as defined in section 30-14-102 (28), Idaho Code.

(7) The majority of the voting shares of the capital stock of the reorganized insurer, which is required by this section to be at all times owned by a mutual insurance holding company, shall not be conveyed, transferred, assigned, pledged, subject to a security interest or lien, encumbered or otherwise hypothecated or alienated by the mutual insurance holding company or intermediate holding company. Any conveyance, transfer, assignment, pledge, security interest, lien, encumbrance, hypothecation or alienation of, in or on the majority of the voting shares of the reorganized insurer that is required by this section to be at all times owned by a mutual insurance holding company, is in violation of the provisions of this section and shall be void in inverse chronological order of the date of such conveyance, transfer, assignment, pledge, security interest, lien, encumbrance or hypothecation or alienation, as to the shares necessary to constitute a majority of such voting shares. The majority of the voting shares of the capital stock of the reorganized insurer that is required by this section to be at all times owned by a mutual insurance holding company shall not be subject to execution and levy as provided in title 11 , Idaho Code. The shares of the capital stock of the surviving or new company resulting from a merger or consolidation of two (2) or more reorganized insurers or two (2) or more intermediate holding companies that were subsidiaries of the same mutual insurance holding company are subject to the same requirements, restrictions and limitations as provided in this section to which the shares of the merging or consolidating reorganized insurers or intermediate holding companies were subject as provided in this section prior to the merger or consolidation.

(a) As used in this section, "majority of the voting shares of the capital stock of the reorganized insurer" means shares of the capital stock of the reorganized insurer that carry the right to cast a majority of the votes entitled to be cast by all of the outstanding shares of the capital stock of the reorganized insurer for the election of directors and on all other matters submitted to a vote of the shareholders of the reorganized insurer. The ownership of a majority of the voting shares of the capital stock of the reorganized insurer that is required pursuant to this section to be at all times owned by a parent mutual insurance holding company includes indirect ownership through one (1) or more intermediate holding companies in a corporate structure approved by the director. However, indirect ownership through one (1) or more intermediate holding companies shall not result in the mutual insurance holding company owning less than the equivalent of a majority of the voting shares of the capital stock of the reorganized insurer. The director shall have jurisdiction over an intermediate holding company as if it were a mutual insurance holding company.

(b) As used in this section, "intermediate holding company" means a holding company that is a subsidiary of a mutual insurance holding company and that either directly or through a subsidiary intermediate holding company has one (1) or more subsidiary-reorganized insurers of which a majority of the voting shares of the capital stock would otherwise have been required pursuant to this section to be at all times owned by the mutual insurance holding company.

(8) It is the intent of the legislature that the formation of a mutual insurance holding company shall not increase the Idaho tax burden of the mutual insurance holding company system and that a stock insurance subsidiary shall continue to be subject to Idaho insurance premium taxation in lieu of all other taxes except real property taxes as provided in section 41-405 , Idaho Code. Subject to approval by the director as required under Idaho law, a stock insurance subsidiary may issue dividends or distributions to the mutual insurance holding company or any intermediate holding company and such dividends or distributions shall be excluded from the Idaho taxable income of the recipients; provided however, that such exclusion shall not apply if, in the year preceding the year in which the dividends or distributions were made, the subsidiary insurer’s liability for Idaho premium tax was less than the amount of Idaho income tax, computed after allowance for income tax credits, for which the insurer would have been liable in such year had the insurer been subject to Idaho income taxation rather than premium taxation.

Legislative History: [41-3824, added 2013, ch. 266, sec. 2, p. 676; am. 2017, ch. 58, sec. 26, p. 119.]

I.C. § 41-3825: Severability¶

The provisions of this chapter are hereby declared to be severable and if any provision of this chapter or the application of such provision to any person or circumstance is declared invalid for any reason, such declaration shall not affect the validity of the remaining portions of this chapter.

Legislative History: [41-3825, added 2013, ch. 266, sec. 2, p. 679.]

Chapter 48¶

I.C. § 41-4801: Short title¶

This chapter may be cited as the "Idaho Liability Risk Retention Act."

Legislative History: [41-4801, added 1987, ch. 140, sec. 1, p. 274.]

I.C. § 41-4802: Purpose¶

The purpose of this chapter is to regulate the formation and operation of risk retention groups in Idaho formed pursuant to the provisions of the federal liability risk retention act of 1986.

Legislative History: [41-4802, added 1987, ch. 140, sec. 1, p. 275.]

I.C. § 41-4803: Definitions¶

As used in this chapter:

(1) "Director" means the director of the department of insurance of this state or the director, commissioner, or superintendent of the department of insurance of any other state.

(2) "Completed operations liability" means liability arising out of the installation, maintenance or repair of any product at a site which is not owned or controlled by:

(a) Any person who performs that work; or

(b) Any person who hires an independent contractor to perform that work, but shall include liability for activities which are completed or abandoned before the date of the occurrence giving rise to the liability.

(3) "Domicile" for purposes of determining the state in which a purchasing group is domiciled means:

(a) For a corporation, the state in which the purchasing groups is incorporated; or

(b) For an unincorporated entity, the state of its principal place of business.

(4) "Hazardous financial condition" means that, based on its present or reasonably anticipated financial condition, a risk retention group, although not yet financially impaired or insolvent, is unlikely to be able:

(a) To meet obligations to policyholders with respect to known claims and reasonably anticipated claims; or

(b) To pay other obligations in the normal course of business.

(5) "Insurance" means primary insurance, excess insurance, reinsurance, surplus lines insurance, or any other arrangement for shifting and distributing risk which is determined to be insurance under this code.

(6) "Liability" means legal liability for damages, including costs of defense, legal costs and fees, and other claims expenses because of injuries to other persons, damage to their property, or other damage or loss to such other persons resulting from or arising out of any business whether profit or nonprofit, trade, product, services including professional services, premises, or operations, or arising out of any activity of any state or local government, or any agency or political subdivision thereof, but does not include personal risk liability or with the exception of an employer’s legal liability with respect to its employees under the federal employers’ liability act (45 U.S.C. 51 et seq.), an employer’s liability.

(7) "Personal risk liability" means liability for damages because of injury to any person, damage to property, or other loss or damage resulting from any person, familial, or household responsibilities or activities apart from responsibilities or activities referred to in subsection (6) of this section.

(8) "Plan of operation or feasibility study" means an analysis which presents the expected activities and results of a risk retention group, including, at a minimum:

(a) The coverages, deductibles, coverage limits and rates and rating classifications systems for each line of insurance the group would offer;

(b) Historical and expected loss experience of the proposed members and national experience of similar exposures to the extent that this experience is reasonably available;

(c) Pro forma financial statements and projections;

(d) Appropriate opinions by a qualified, independent casualty actuary, including a determination of minimum premium or participation levels required to commence operations and to prevent hazardous financial conditions;

(e) Identification of management, underwriting procedures and guidelines, managerial oversight methods, and investment policies; and

(f) Such other items as may be required by the director for liability insurance companies authorized by the insurance laws of the state in which the risk retention group is chartered.

(9) "Product liability" means liability for damages because of any personal injury, death, emotional harm, consequential economic damage or property damage (including damages resulting from the loss of use of property) arising out of the manufacture, design, importation, distribution, packaging, labeling, lease, or sale of a product, but does not include the liability of any person for those damages if the product involved was in the possession of such a person when the incident giving rise to the claim occurred.

(10) "Purchasing group" means any group which:

(a) Has as one of its purposes the purchase of liability insurance on a group basis;

(b) Purchases such insurance only for its group members and only to cover their similar or related liability exposure, as described in paragraph (c) of this subsection;

(c) Is composed of members whose businesses or activities are similar or related with respect to the liability to which members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations; and

(d) Is domiciled in any state.

(11) "Risk retention group" means any corporation or other limited liability association:

(a) Whose primary activity consists of assuming and spreading all, or any portion of the liability exposure of its group members;

(b) Which is organized for the primary purpose of conducting the activity described under paragraph (a) of this subsection which:

(i) Is chartered and licensed as a liability insurance company and authorized to engage in the business of insurance under the laws of any state; or

(ii) Before January 1, 1985, was chartered or licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, before such date, had certified to the insurance director of at least one (1) state that it satisfied the capitalization requirements of such state, except that any such group shall be considered to be a risk retention group only if it has been engaged in such business continuously since such date and only for the purpose of continuing to provide insurance to cover product liability or completed operations liability, as such terms were defined in the federal product liability risk retention act of 1981 before the date of the enactment of the federal liability risk retention act of 1986;

(c) Which does not exclude any person from membership in the group solely to provide for members of such a group a competitive advantage over such a person which:

(i) Has as its members only persons who have an ownership interest in the group and which has as its owners only persons who are members who are provided insurance by the risk retention group; or

(ii) Has as its sole member and sole owner an organization which is owned by persons who are provided insurance by the risk retention group;

(d) Whose members are engaged in businesses or activities similar or related with respect to the liability of which such members are exposed by virtue of any related, similar or common business trade, product, services, premises or operations; or

(e) Whose activities do not include the provision of insurance other than:

(i) Liability insurance for assuming and spreading all or any portion of the liability of its group members; and

(ii) Reinsurance with respect to the liability of any other risk retention group or any members of such other group, which is engaged in businesses or activities so that such group or member meets the requirement described in paragraph (d) of this subsection from membership in the risk retention group which provides such reinsurance;

(f) The name of which includes the phrase "risk retention group".

(12) "State" means any state of the United States or the District of Columbia.

Legislative History: [41-4803, added 1987, ch. 140, sec. 1, p. 275.]

I.C. § 41-4804: Risk retention groups chartered in this state¶

(1) A risk retention group seeking to be chartered in this state must be chartered and licensed as a liability insurance company authorized by the insurance laws of this state and, except as provided elsewhere in this chapter, must comply with:

(a) All of the laws, rules, regulations and requirements applicable to such insurers chartered and licensed in this state;

(b) Section 41-4805 , Idaho Code, to the extent such requirements are not a limitation on laws, rules, regulations or requirements of this state.

(2) Before it may offer insurance in any state, each risk retention group shall also submit for approval to the director of this state a plan of operation or feasibility study and revisions of such plan or study if the group intends to offer any additional lines of liability insurance. Immediately upon receipt of an application for charter, this state shall provide:

(a) Summary information concerning the filing to the national association of insurance commissioners, including the name of the risk retention group, the identity of the initial members of the group, the identity of those individuals who organized the group or who will provide administrative services or otherwise influence or control the activities of the group;

(b) The amount and nature of initial capitalization;

(c) The coverages to be afforded; and

(d) The states in which the group intends to operate.

Providing notification to the national association of insurance commissioners is in addition to and shall not be sufficient to satisfy the requirements of section 41-4805 , Idaho Code, or any other sections of this chapter.

Legislative History: [41-4804, added 1987, ch. 140, sec. 1, p. 277.]

I.C. § 41-4805: Risk retention groups not chartered in this state¶

Risk retention groups chartered in states other than this state and seeking to do business as a risk retention group in this state must observe and abide by the laws of this state as follows:

(1) Before transacting any insurance business or offering any insurance policies in this state, a risk retention group shall submit to the director of this state:

(a) A statement identifying the state or states in which the risk retention group is chartered and licensed as a liability insurance company, the date of chartering, the risk retention group’s principal place of business, and such other information including information concerning its membership as the director of this state may require to verify that the risk retention group is qualified as defined in subsection (11) of section 41-4803 , Idaho Code;

(b) A copy of its plan of operations or feasibility study and revisions of such plan or study submitted to its state of domicile; provided, however, that the provision relating to the submission of a plan of operation or feasibility study shall not apply with respect to any line or classification of liability insurance which was defined in the product liability risk retention act of 1981 before October 27, 1986, and was offered before such date by any risk retention group which had been chartered and operating for not less than three (3) years before such date;

(c) A statement of registration which designates the director as its agent for the purpose of receiving service of legal documents or process against the risk retention group.

(2) Any risk retention group doing business in this state shall submit the following financial information to the director:

(a) A copy of the group’s financial statement submitted to its state of domicile, which shall be certified by an independent public accountant and contain a statement of opinion on loss and loss adjustment expense reserves made by a member of the American academy of actuaries or a qualified loss reserve specialist operating under criteria established by the national association of insurance commissioners;

(b) A copy of each examination of the risk retention group as certified by the director or public official conducting the examination;

(c) Upon request by the director, a copy of any audit performed with respect to the risk retention group; and

(d) Such information as may be required to verify the group’s continuing qualification as a risk retention group as defined in subsection (11) of section 41-4803 , Idaho Code.

(3) All risk retention groups operating in this state, and all premiums paid for any coverage within this state to any risk retention group, shall be subject to the same premium tax provisions, including any interest, fines, and penalties for nonpayment, as are applicable to foreign admitted insurers. To the extent any agents or brokers are utilized, they shall report and pay the taxes for the premiums for risks which they have placed with or on behalf of any risk retention group not chartered in this state. To the extent any agents or brokers are not utilized, or agents or brokers that are utilized fail to pay said premium tax, each risk retention group shall pay the tax for risks insured within the state. Further, each risk retention group shall report to the director all premiums paid to it for risks insured within this state.

(4) Any risk retention groups and its agents and representatives are subject to and shall comply with the provisions of section 41-1329 , Idaho Code (unfair claim settlement practices).

(5) Any risk retention group formed in this state shall comply with and be subject to chapter 13, title 41 , Idaho Code (trade practices and frauds). The director may issue orders enjoining prohibited practices in accordance with section 41-213 , Idaho Code, or section 41-1321 , Idaho Code, or may apply directly to the district court for Ada county, state of Idaho, for such injunctive relief as he deems appropriate.

(6) Any risk retention group must submit to an examination by the director of this state to allow him to determine the group’s financial condition if the director of the jurisdiction in which the group is chartered has not initiated an examination or does not initiate an examination within sixty (60) days after a request by the director of this state. Any such examination shall be coordinated to avoid unjustified repetition or duplication and shall be conducted in an expeditious manner.

(7) Any policy issued by a risk retention group shall contain in 10 point or larger type on the front page and the declaration page, the following notice:

This policy has been issued by your risk retention group. Your risk retention group may not be subject to all of the insurance laws and regulations of your state. State insurance insolvency guaranty funds are not available for your risk retention group.

(8) In addition to other restrictions that may be applicable, the following acts by a risk retention group are hereby prohibited:

(a) The solicitation or sale of insurance by a risk retention group to any person who is not eligible for membership in such group; and

(b) The solicitation or sale of insurance by, or operation of, a risk retention group that is in a hazardous financial condition or is financially impaired.

(9) No risk retention group shall be allowed to do business in this state if an insurance company is directly or indirectly a member or owner of such risk retention group, other than in the case of a risk retention group whose members are all insurance companies.

(10) No risk retention group may offer any insurance policy or insurance coverage that has been declared unlawful by the Idaho supreme court or is in conflict with chapter 5 or chapter 25, title 41 , Idaho Code.

(11) A risk retention group not chartered in this state and doing business in this state must comply with a lawful order issued in a voluntary dissolution proceeding or in a delinquency proceeding commenced by another state’s insurance director if there has been a finding of financial impairment after an examination pursuant to subsection (6) of this section.

Legislative History: [41-4805, added 1987, ch. 140, sec. 1, p. 278; am. 2005, ch. 78, sec. 5, p. 273.]

I.C. § 41-4806: Compulsory associations¶

No risk retention group shall be permitted to join or contribute financially to any insurance insolvency guaranty fund or similar mechanism in this state, nor shall any risk retention group, or its insureds, receive any benefit from any such fund for claims arising out of the operations of such risk retention group.

Legislative History: [41-4806, added 1987, ch. 140, sec. 1, p. 280.]

I.C. § 41-4807: Counter signatures not required¶

A policy of insurance issued to a risk retention group or any member of that group shall not be required to be countersigned as otherwise provided in sections 41-337 and 41-338 , Idaho Code.

Legislative History: [41-4807, added 1987, ch. 140, sec. 1, p. 280; am. 2005, ch. 75, sec. 3, p. 255.]

I.C. § 41-4808: Purchasing groups — Exemption from certain laws relating to the group purchase of insurance¶

Any purchasing group meeting the criteria established under the provisions of the federal liability risk retention act of 1986 shall be exempt from any law of this state relating to the creation of groups for the purchase of insurance, prohibition of group purchasing, or any law that would discriminate against a purchasing group or its members. In addition, an insurer shall be exempt from any law of this state which prohibits providing, or offering to provide to a purchasing group or its members advantages based on their loss and expense experience not afforded to other persons with respect to rates, policy forms, coverages or other matters. A purchasing group shall be subject to all other applicable laws of this state.

Legislative History: [41-4808, added 1987, ch. 140, sec. 1, p. 280.]

I.C. § 41-4809: Notice and registration requirements of purchasing groups¶

(1) A purchasing group which intends to do business in this state shall furnish notice to the director which shall:

(a) Identify the state in which the group is domiciled;

(b) Specify the lines and classifications of liability insurance which the purchasing group intends to purchase;

(c) Identify the insurance company from which the group intends to purchase its insurance and the domicile of such company;

(d) Identify the principal place of business of the group; and

(e) Provide such other information as may be required by the director to verify that the purchasing group is qualified as defined in subsection (10) of section 41-4803 , Idaho Code.

(2) The purchasing group shall register with and designate the director as its agent for the purpose of receiving service of legal documents or process, except that such requirements shall not apply in the case of a purchasing group:

(a) Which was domiciled before April 1, 1986, and is domiciled on and after October 27, 1986, in any state of the United States;

(b) Which before October 27, 1986, purchased insurance from an insurance carrier licensed in any state and since October 27, 1986, purchased its insurance from an insurance carrier licensed in any state;

(c) Which was a purchasing group under the requirements of the product liability risk retention act of 1981 before October 27, 1986; and

(d) Which does not purchase insurance that was not authorized for purposes of an exemption under that act, as in effect before October 27, 1986.

Legislative History: [41-4809, added 1987, ch. 140, sec. 1, p. 280.]

I.C. § 41-4810: Restrictions on insurance purchased by purchasing groups¶

A purchasing group may not purchase insurance from a risk retention group that is not chartered in a state, nor from an insurer not admitted in the state in which the purchasing group is located, unless the purchase is effected through a licensed agent or broker acting pursuant to the surplus lines laws and regulations of such state.

Legislative History: [41-4810, added 1987, ch. 140, sec. 1, p. 281.]

I.C. § 41-4811: Administrative and procedural authority regarding risk retention groups and purchasing groups¶

The director is authorized to make use of any of the powers established under this code to enforce the laws of this state so long as those powers are not specifically preempted by the product liability risk retention act of 1981, as amended by the risk retention amendments of 1986. This includes, but is not limited to, the director’s administrative authority to investigate, issue subpoenas, conduct depositions and hearings, issue orders and impose penalties. With regard to any investigation, administrative proceedings, or litigation, the director may rely on the procedural law and regulations of the state. The injunctive authority of the director in regard to risk retention groups is restricted by the requirement that any injunction be issued by a court of competent jurisdiction.

Legislative History: [41-4811, added 1987, ch. 140, sec. 1, p. 281.]

I.C. § 41-4812: Penalties¶

A risk retention group which violates any provision of this chapter will be subject to fines and penalties applicable to licensed insurers generally, including revocation of its license and/or the right to do business in this state.

Legislative History: [41-4812, added 1987, ch. 140, sec. 1, p. 281.]

I.C. § 41-4813: Duty of agents or brokers to obtain license¶

Any person acting, or offering to act, as an agent or broker for a risk retention group or purchasing group, which solicits members, sells insurance coverage, purchases coverage for its members located within the state or otherwise does business in this state shall, before commencing any such activity, obtain a license from the director.

Legislative History: [41-4813, added 1987, ch. 140, sec. 1, p. 281.]

I.C. § 41-4814: Binding effect of orders issued in U.S. district courts¶

An order issued by any district court of the United States enjoining a risk retention group from soliciting or selling insurance, or operating in any state, or in all states or in any territory or possession of the United States, upon a finding that such a group is in a hazardous financial condition shall be enforceable in the courts of the state.

Legislative History: [41-4814, added 1987, ch. 140, sec. 1, p. 282.]

I.C. § 41-4815: Rules and regulations¶

The director may establish and from time to time amend such rules relating to risk retention groups as may be necessary or desirable to carry out the provisions of this chapter.

Legislative History: [41-4815, added 1987, ch. 140, sec. 1, p. 282.]

I.C. § 41-4816: Purchasing group taxation¶

Premium taxes and taxes on premiums paid for coverage of risks resident or located in this state by a purchasing group or any members of the purchasing group shall be:

(1) Imposed at the same rate and subject to the same interest, fines and penalties as that applicable to premium taxes and taxes on premiums paid for similar coverage from a similar insurance source by other insureds; and

(2) Paid first by such insurance source, and if not by such source by the agent or broker for the purchasing group, and if not by such agent or broker then by the purchasing group, and if not by such purchasing group then by each of its members.

Legislative History: [41-4816, added 1990, ch. 348, sec. 1, p. 937.]

Chapter 51¶

I.C. § 41-5101: Short title¶

This chapter may be cited as the "Reinsurance Intermediary Act."

Legislative History: [41-5101, added 1992, ch. 82, sec. 1, p. 249.]

I.C. § 41-5102: Definitions¶

As used in this chapter:

(1) "Actuary" means a person who is a member in good standing of the American academy of actuaries.

(2) "Controlling person" means any person, firm, association or corporation who directly or indirectly has the power to direct or cause to be directed, the management, control or activities of the reinsurance intermediary.

(3) "Insurer" means any person, firm, association or corporation duly licensed in this state pursuant to the applicable provisions of the insurance law as an insurer.

(4) "Licensed producer" means an agent, broker or reinsurance intermediary licensed pursuant to the applicable provision of the insurance law.

(5) "Qualified United States financial institution" means for purposes of this chapter, a qualified United States financial institution that:

(a) Is organized or, in the case of a United States office of a foreign banking organization, licensed, under the laws of the United States or any state thereof;

(b) Is regulated, supervised and examined by United States federal or state authorities having regulatory authority over banks and trust companies; and

(c) Has been determined by either the director, or the securities valuation office of the national association of insurance commissioners, to meet such standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the director.

(6) "Reinsurance intermediary" means a reinsurance intermediary-broker, or a reinsurance intermediary-manager as these terms are defined in subsections (7) and (8) of this section.

(7) "Reinsurance intermediary-broker (RB)" means any person, other than an officer or employee of the ceding insurer, firm, association or corporation who solicits, negotiates or places reinsurance cessions or retrocessions on behalf of a ceding insurer without the authority or power to bind reinsurance on behalf of such insurer.

(8) "Reinsurance intermediary-manager (RM)" means any person, firm, association or corporation who has authority to bind or manage all or part of the assumed reinsurance business of a reinsurer (including the management of a separate division, department or underwriting office) and acts as an agent for such reinsurer whether known as a RM, manager or other similar term. Notwithstanding the above, the following persons shall not be considered a RM, with respect to such reinsurer, for the purposes of this chapter:

(a) An employee of the reinsurer;

(b) A United States manager of the United States branch of an alien reinsurer;

(c) An underwriting manager which, pursuant to contract, manages all the reinsurance operations of the reinsurer, is under common control with the reinsurer, subject to chapter 38, title 41 , Idaho Code, and whose compensation is not based on the volume of premiums written; or

(d) The manager of a group, association, pool or organization of insurers which engage in joint underwriting or joint reinsurance and which are subject to examination by the insurance director of the state in which the manager’s principal business office is located.

(9) "Reinsurer" means any person, firm, association or corporation duly licensed or authorized to do business in this state pursuant to the applicable provisions of the insurance law as an insurer with the authority to assume reinsurance.

(10) "To be in violation" means that the reinsurance intermediary, insurer or reinsurer for whom the reinsurance intermediary was acting failed to substantially comply with the provision of this chapter.

Legislative History: [41-5102, added 1992, ch. 82, sec. 1, p. 249.]

I.C. § 41-5103: Licensure¶

(1) No person, firm, association or corporation shall act as a RB in this state if the RB maintains an office either directly or as a member or employee of a firm or association, or an officer, director or employee of a corporation:

(a) In this state, unless such RB is a licensed producer in this state; or

(b) In another state, unless such RB is a licensed producer in this state or another state having a law substantially similar to this law or such RB is licensed in this state as a nonresident reinsurance intermediary.

(2) No person, firm, association or corporation shall act as a RM:

(a) For a reinsurer domiciled in this state, unless such RM is a licensed producer in this state;

(b) In this state, if the RM maintains an office either directly or as a member or employee of a firm or association, or an officer, director or employee of a corporation in this state, unless such RM is a licensed producer in this state;

(c) In another state for a nondomestic insurer, unless such RM is a licensed producer in this state or another state having a law substantially similar to this law or such person is licensed in this state as a nonresident reinsurance intermediary.

(3) The director may require a RM subject to subsection (2) of this section to:

(a) File a bond in an amount from an insurer acceptable to the director for the protection of the reinsurer; and

(b) Maintain an errors and omissions policy in an amount acceptable to the director.

(4) (a) The director may issue a reinsurance intermediary license to any person, firm, association or corporation who has complied with the requirements of this chapter. Any such license issued to a firm or association will authorize all the members of such firm or association and any designated employees to act as reinsurance intermediaries under the license, and all such persons shall be named in the application and any supplements thereto. Any such license issued to a corporation shall authorize all of the officers, and any designated employees and directors thereof to act as reinsurance intermediaries on behalf of such corporation, and all such persons shall be named in the application and any supplements thereto.

(b) If the applicant for a reinsurance intermediary license is a nonresident, such applicant, as a condition precedent to receiving or holding a license, shall designate the director as agent for service of process in the manner, and with the same legal effect, provided for in this title for designation of service of process upon unauthorized insurers, and shall also furnish the director with the name and address of a resident of this state upon whom notices or orders of the director or process affecting such nonresident reinsurance intermediary may be served. Such licensee shall promptly notify the director in writing of every change in its designated agent for service of process, and such change shall not become effective until acknowledged by the director.

(5) The director may refuse to issue a reinsurance intermediary license if, in his judgment, the applicant, anyone named on the application, or any member, principal, officer or director of the applicant, is not trustworthy, or that any controlling person of such applicant is not trustworthy to act as a reinsurance intermediary, or that any of the foregoing has given cause for revocation or suspension of such license, or has failed to comply with any prerequisite for the issuance of such license. Upon written request therefor, the director will furnish a summary of the basis for refusal to issue a license, which document shall be privileged and exempt from disclosure pursuant to exemptions provided in chapter 1, title 74 , Idaho Code.

(6) Licensed attorneys at law of this state when acting in their professional capacity as such shall be exempt from the provisions of this section.

Legislative History: [41-5103, added 1992, ch. 82, sec. 1, p. 250; am. 1999, ch. 30, sec. 12, p. 55; am. 2015, ch. 141, sec. 115, p. 464.]

I.C. § 41-5104: Required contract provisions — Reinsurance intermediary — Brokers¶

Transactions between a RB and the insurer it represents in such capacity shall only be entered into pursuant to a written authorization, specifying the responsibilities of each party. The authorization shall, at a minimum, provide that:

(1) The insurer may terminate the RB’s authority at any time.

(2) The RB will render accounts to the insurer accurately detailing all material transactions, including information necessary to support all commissions, charges and other fees received by, or owing, to the RB, and remit all funds due to the insurer within thirty (30) days of receipt.

(3) All funds collected for the insurer’s account will be held by the RB in a fiduciary capacity in a bank which is a qualified United States financial institution as defined herein.

(4) The RB will comply with the provisions of section 41-5105 , Idaho Code.

(5) The RB will comply with the written standards established by the insurer for the cession or retrocession of all risks.

(6) The RB will disclose to the insurer any relationship with any reinsurer to which business will be ceded or retroceded.

Legislative History: [41-5104, added 1992, ch. 82, sec. 1, p. 251.]

I.C. § 41-5105: Books and records — Reinsurance intermediary brokers¶

(1) For at least ten (10) years after expiration of each contract of reinsurance transacted by the RB, the RB will keep a complete record for each transaction showing:

(a) The type of contract, limits, underwriting restrictions, classes or risks and territory;

(b) Period of coverage, including effective and expiration dates, cancellation provisions and notice required of cancellation;

(c) Reporting and settlement requirements of balances;

(d) Rate used to compute the reinsurance premium;

(e) Names and addresses of assuming reinsurers;

(f) Rates of all reinsurance commissions, including the commissions on any retrocessions handled by the RB;

(g) Related correspondence and memoranda;

(h) Proof of placement;

(i) Details regarding retrocessions handled by the RB including the identity of retrocessionaires and percentage of each contract assumed or ceded;

(j) Financial records including, but not limited to, premium and loss accounts; and

(k) When the RB procures a reinsurance contract on behalf of a licensed ceding insurer:

(i) Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or

(ii) If placed through a representative of the assuming reinsurer, other than an employee, written evidence that such reinsurer has delegated binding authority to the representative.

(2) The insurer will have access and the right to copy and audit all accounts and records maintained by the RB related to its business in a form usable by the insurer.

Legislative History: [41-5105, added 1992, ch. 82, sec. 1, p. 252.]

I.C. § 41-5106: Duties of insurers utilizing the services of a reinsurance intermediary — Broker¶

(1) An insurer shall not engage the services of any person, firm, association or corporation to act as a RB on its behalf unless such person is licensed as required in section 41-5103 (1), Idaho Code.

(2) An insurer may not employ an individual who is employed by a RB with which it transacts business, unless such RB is under common control with the insurer and subject to the provisions of chapter 38, title 41 , Idaho Code.

(3) The insurer shall annually obtain a copy of the statement of the financial condition of each RB with which it transacts business.

Legislative History: [41-5106, added 1992, ch. 82, sec. 1, p. 252.]

I.C. § 41-5107: Required contract provisions — Reinsurance intermediary — Managers¶

Transactions between a RM and the reinsurer it represents in such capacity shall only be entered into pursuant to a written contract, specifying the responsibilities of each party, which shall be approved by the reinsurer’s board of directors. At least thirty (30) days before such reinsurer assumes or cedes business through such producer, a true copy of the approved contract shall be filed with the director for approval. The contract shall, at a minimum, contain provisions that:

(1) The reinsurer may terminate the contract for cause upon written notice to the RM. The reinsurer may immediately suspend the authority of the RM to assume or cede business during the pendency of any dispute regarding the cause for termination.

(2) The RM will render accounts to the reinsurer accurately detailing all material transactions, including information necessary to support all commissions, charges and other fees received by, or owing to the RM, and remit all funds due under the contract to the reinsurer on not less than a monthly basis.

(3) All funds collected for the reinsurer’s account will be held by the RM in a fiduciary capacity in a bank which is a qualified United States financial institution as defined herein. The RM may retain no more than three (3) months estimated claims payments and allocated loss adjustment expenses. The RM shall maintain a separate bank account for each reinsurer that it represents.

(4) For at least ten (10) years after expiration of each contract of reinsurance transacted by the RM, the RM will keep a complete record for each transaction showing:

(a) The type of contract, limits, underwriting restrictions, classes or risks and territory;

(b) Period of coverage, including effective and expiration dates, cancellation provisions and notice required of cancellation, and disposition of outstanding reserves on covered risks;

(c) Reporting and settlement requirements of balances;

(d) Rate used to compute the reinsurance premium;

(e) Names and addresses of reinsurers;

(f) Rates of all reinsurance commissions, including the commissions on any retrocessions handled by the RM;

(g) Related correspondence and memoranda;

(h) Proof of placement;

(i) Details regarding retrocessions handled by the RM, as permitted under the provisions of section 41-5109 (4), Idaho Code, including the identity of retrocessionaires and percentage of each contract assumed or ceded;

(j) Financial records including, but not limited to, premium and loss accounts; and

(k) When the RM places a reinsurance contract on behalf of a ceding insurer:

(i) Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or

(ii) If placed through a representative of the assuming reinsurer, other than an employee, written evidence that such reinsurer has delegated binding authority to the representative.

(5) The reinsurer will have access and the right to copy all accounts and records maintained by the RM related to its business in a form usable by the reinsurer.

(6) The contract cannot be assigned in whole or in part by the RM.

(7) The RM will comply with the written underwriting and rating standards established by the insurer for the acceptance, rejection or cession of all risks.

(8) Set forth the rates, terms and purposes of commissions, charges and other fees which the RM may levy against the reinsurer.

(9) If the contract permits the RM to settle claims on behalf of the reinsurer:

(a) All claims will be reported to the reinsurer in a timely manner;

(b) A copy of the claim file will be sent to the reinsurer at its request or as soon as it becomes known that the claim:

(i) Has the potential to exceed the lesser of an amount determined by the director or the limit set by the reinsurer;

(ii) Involves a coverage dispute;

(iii) May exceed the RM’s claims settlement authority;

(iv) Is open for more than six (6) months; or

(v) Is closed by payment of the lesser of an amount set by the director or an amount set by the reinsurer;

(c) All claim files will be the joint property of the reinsurer and the RM. However, upon an order of liquidation of the reinsurer such files shall become the sole property of the reinsurer or its estate. The RM shall have reasonable access to and the right to copy the files on a timely basis; and

(d) Any settlement authority granted to the RM may be terminated for cause upon the reinsurer’s written notice to the RM or upon the termination of the contract. The reinsurer may suspend the settlement authority during the pendency of the dispute regarding the cause of termination.

(10) If the contract provides for a sharing of interim profits by the RM, such interim profits will not be paid until one (1) year after the end of each underwriting period for property business and five (5) years after the end of each underwriting period for casualty business (or a later period set by the director for specified lines of insurance) and not until the adequacy of reserves on remaining claims has been verified pursuant to section 41-5109 (3), Idaho Code.

(11) The RM will annually provide the reinsurer with a statement of its financial condition prepared by an independent certified accountant.

(12) The reinsurer shall periodically (at least semiannually) conduct an onsite review of the underwriting and claims processing operations of the RM.

(13) The RM will disclose to the reinsurer any relationship it has with any insurer prior to ceding or assuming any business with such insurer pursuant to this contract.

(14) Within the scope of its actual or apparent authority the acts of the RM shall be deemed to be the acts of the reinsurer on whose behalf it is acting.

Legislative History: [41-5107, added 1992, ch. 82, sec. 1, p. 252.]

I.C. § 41-5108: Prohibited acts¶

The RM shall not:

(1) Cede retrocessions on behalf of the reinsurer, except that the RM may cede facultative retrocessions pursuant to obligatory facultative agreements if the contract with the reinsurer contains reinsurance underwriting guidelines for such retrocessions. Such guidelines shall include a list of reinsurers with which such automatic agreements are in effect, and for each such reinsurer, the coverages and amounts or percentages that may be reinsured, and commission schedules.

(2) Commit the reinsurer to participate in reinsurance syndicates.

(3) Appoint any producer without assuring that the producer is lawfully licensed to transact the type of reinsurance for which he is appointed.

(4) Without prior approval of the reinsurer, pay or commit the reinsurer to pay a claim, net of retrocessions, that exceeds the lesser of an amount specified by the reinsurer or one per cent (1%) of the reinsurer’s policyholder surplus as of December 31 of the last complete calendar year.

(5) Collect any payment from a retrocessionaire or commit the reinsurer to any claim settlement with a retrocessionaire, without prior approval of the reinsurer. If prior approval is given, a report must be promptly forwarded to the reinsurer.

(6) Jointly employ an individual who is employed by the reinsurer unless such RM is under common control with the reinsurer subject to chapter 38, title 41 , Idaho Code.

(7) Appoint a sub-RM.

Legislative History: [41-5108, added 1992, ch. 82, sec. 1, p. 254.]

I.C. § 41-5109: Duties of reinsurers utilizing the services of a reinsurance intermediary — Manager¶

(1) A reinsurer shall not engage the services of any person, firm, association or corporation to act as a RM on its behalf unless such person is licensed as required in section 41-5103 (2), Idaho Code.

(2) The reinsurer shall annually obtain a copy of the statement(s) of the financial condition of each RM which such reinsurer has engaged, prepared by an independent certified accountant in a form acceptable to the director.

(3) If a RM establishes loss reserves, the reinsurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the RM. This opinion shall be in addition to any other required loss reserve certification.

(4) Binding authority for all retrocessional contracts or participation in reinsurance syndicates shall rest with an officer of the reinsurer who shall not be affiliated with the RM.

(5) Within thirty (30) days of termination of a contract with a RM, the reinsurer shall provide written notification of such termination to the director.

(6) A reinsurer shall not appoint to its board of directors, any officer, director, employee, controlling shareholder or subproducer of its RM. The provisions of this subsection shall not apply to relationships governed by chapter 38, title 41 , Idaho Code, or if applicable, chapter 17, title 41 , Idaho Code.

Legislative History: [41-5109, added 1992, ch. 82, sec. 1, p. 255; am. 1993, ch. 194, sec. 35, p. 530.]

I.C. § 41-5110: Examination authority¶

(1) A reinsurance intermediary shall be subject to examination by the director. The director shall have access to all books, bank accounts and records of the reinsurance intermediary in a form usable to the director.

(2) A RM may be examined as if it were the reinsurer.

Legislative History: [41-5110, added 1992, ch. 82, sec. 1, p. 255.]

I.C. § 41-5111: Penalties and liabilities¶

(1) A reinsurance intermediary, insurer or reinsurer found by the director, after a hearing conducted in accordance with chapter 52, title 67 , Idaho Code, to be in violation of any provision(s) of this chapter shall:

(a) For each separate violation, pay a penalty in an amount not exceeding five thousand dollars ($5,000);

(b) Be subject to revocation or suspension of its license; and

(c) If a violation was committed by the reinsurance intermediary, such reinsurance intermediary shall make restitution to the insurer, reinsurer, rehabilitator or liquidator of the insurer or reinsurer for the net losses incurred by the insurer or reinsurer attributable to such violation.

(2) The decision, determination or order of the director pursuant to subsection (1) of this section shall be subject to judicial review pursuant to chapter 52, title 67 , Idaho Code.

(3) Nothing contained in this section shall affect the right of the director to impose any other penalties provided in the insurance law.

(4) Nothing contained in this chapter is intended to or shall in any manner limit or restrict the rights of policyholders, claimants, creditors or other third parties or confer any rights to such persons.

Legislative History: [41-5111, added 1992, ch. 82, sec. 1, p. 256.]

Chapter 62¶

I.C. § 41-6201: SHORT TITLE¶

The provisions of this chapter shall be known and may be cited as the "Idaho Motor Vehicle Service Contract Act."

Legislative History: [41-6201, added 2018, ch. 116, sec. 2, p. 241.]

I.C. § 41-6202: LEGISLATIVE INTENT¶

(1) The legislature finds and declares that a considerable number of Idaho citizens use contracts to provide necessary services for the repair and servicing of motor vehicles purchased and used within the state.

(2) It is the intent of the legislature that this act provides for state of Idaho regulation of motor vehicle service contracts offered for sale in the state by any person other than the motor vehicle manufacturer or its affiliates and subsidiaries.

(3) It is also the intent of the legislature that this act shall not apply to:

(a) The customary and usual performance guarantees or warranties offered at no additional charge by motor vehicle manufacturers, or their affiliates and subsidiaries, regarding the sale of motor vehicles;

(b) Maintenance agreements; or

(c) Theft protection programs or theft protection program warranties.

Such products identified in this subsection shall not be subject to the provisions of title 41 , Idaho Code, unless expressly made applicable.

Legislative History: [41-6202, added 2018, ch. 116, sec. 2, p. 241.]

I.C. § 41-6203: definitions¶

As used in this chapter:

(1) "Administrator" means the person responsible for the administration of the motor vehicle service contract;

(2) "Director" means the director of the Idaho department of insurance;

(3) "Incidental costs" means expenses specified in a theft protection program warranty that are incurred by the warranty holder due to the failure of a theft protection program to perform as provided in the contract. Incidental costs may include, without limitation, insurance policy deductibles, rental vehicle charges, the difference between the actual value of the stolen vehicle at the time of theft and the cost of a replacement vehicle, sales taxes, registration fees, transaction fees and mechanical inspection fees. Incidental costs may be reimbursed in either a fixed amount specified in the theft protection program warranty or by use of a formula itemizing specific incidental costs incurred by the warranty holder;

(4) "Liability insurance policy" means a policy of insurance providing coverage for all contractual obligations incurred by a motor vehicle service contract provider under the terms of a motor vehicle service contract issued or sold by the motor vehicle service contract provider;

(5) "Maintenance agreement" means a contract of limited duration that provides scheduled maintenance only;

(6) "Mechanical breakdown insurance" means a policy, contract or agreement that undertakes to perform or provide repair or replacement service, or indemnification for such service, for the operational or structural failure of a motor vehicle due to defect in materials or workmanship or normal wear and tear and that is issued by an insurance company authorized to do business in this state;

(7) "Motor vehicle service contract" means a contract or agreement given for separately stated consideration that undertakes to perform or provide repair or replacement service, or indemnification for such service, for the operational or structural failure of a motor vehicle due to defect in materials or workmanship or normal wear and tear but shall not include mechanical breakdown insurance. A motor vehicle service contract may provide full or partial reimbursement for other expenses incurred by the motor vehicle service contract holder as a direct and proximate result of an operational or structural failure or reduced operating efficiency if included in the contract coverage, including but not limited to towing, rental car, lodging, motor club, maintenance benefits, roadside assistance and meal expenses. An agreement whereby an employer or a third party contracted by the employer provides mileage reimbursement and incidental maintenance and repairs to its employees for personal vehicles used for business purposes, which agreement shall not be considered a motor vehicle service contract or a contract of insurance. "Motor vehicle service contract" also means a contract or agreement that provides one (1) or more of the following:

(a) The repair or replacement of tires, wheels or tires and wheels on a motor vehicle damaged as a result of coming into contact with road hazards;

(b) The removal of dents, dings or creases on a motor vehicle that can be repaired using the process of paintless dent removal without affecting the existing paint finish and without replacing vehicle body panels, sanding, bonding or painting;

(c) The repair of chips or cracks in or the replacement of motor vehicle windshields as a result of damage caused by road hazards; or

(d) The replacement of a motor vehicle key or key fob in the event that the key or key fob becomes inoperable or is lost or stolen;

(8) "Motor vehicle service contract holder" means a person who purchases a motor vehicle service contract or is a permitted transferee;

(9) "Motor vehicle service contract provider" means a person who is contractually obligated to a motor vehicle service contract holder under the terms of a motor vehicle service contract;

(10) "Person" means an individual, company, association, organization, partnership, business trust, corporation or any other form of legal entity;

(11) "Road hazard" means a hazard encountered while driving a motor vehicle and may include, but not be limited to, potholes, rocks, wood debris, metal parts, glass, plastic, curbs or composite scraps;

(12) "Theft protection program" means a device or system that:

(a) Is installed on or applied to a motor vehicle;

(b) Is designed to prevent loss or damage to a motor vehicle from theft; and

(c) Includes a theft protection program warranty.

The term shall include, but not be limited to, alarm systems, body part marking products, steering locks, window etch products, pedal and ignition locks, fuel and ignition kill switches, and electronic, radio and satellite tracking devices. The term does not include fuel additives, oil additives or other chemical products applied to the engine, transmission or fuel system, or to interior or exterior surfaces of a motor vehicle;

(13) "Theft protection program warranty" means a written agreement by a warrantor that provides, if a theft protection program fails to prevent loss or damage to a motor vehicle from theft, the warrantor will pay to or on behalf of the warranty holder specified incidental costs as a result of the failure of the theft protection program to perform pursuant to the terms of the theft protection program warranty.

Legislative History: [41-6203, added 2018, ch. 116, sec. 2, p. 242.]

I.C. § 41-6204: Service contract reimbursement policy requirements¶

(1) The following are mandatory insurance provisions:

(a) No motor vehicle service contract shall be issued, sold or offered for sale in this state unless the motor vehicle service contract provider is insured under a service contract liability policy issued by an insurer admitted to do business in this state or as otherwise provided in subsection (2) of this section. The policy shall provide that the insurer will pay to or on behalf of the motor vehicle service contract provider all sums the motor vehicle service contract provider is legally obligated to pay according to the motor vehicle service contract provider’s contractual obligations under the motor vehicle service contracts issued or sold by the motor vehicle service contract provider; and

(b) All service contract liability policies insuring motor vehicle service contracts issued, sold or offered for sale in this state must conspicuously state that, upon failure of the motor vehicle service contract provider to perform under the contract, the issuer of the policy shall pay on behalf of the provider any sums that the provider is legally obligated to perform according to the provider’s contractual obligations under the motor vehicle service contracts issued or sold by the provider.

(2) The service contract liability policy shall be obtained from an insurer authorized, registered or otherwise permitted to transact insurance in this state or a surplus lines insurer meeting the requirements of chapter 12, title 41 , Idaho Code, and which insurer or surplus lines insurer meets one (1) of the following requirements:

(a)(i) Maintain surplus as to policyholders and paid-in capital of at least fifteen million dollars ($15,000,000); and

(ii) Annually file copies of the insurer’s audited financial statements, its national association of insurance commissioners (NAIC) annual statement and the actuarial certification required by and filed in the insurer’s state of domicile; or

(b)(i) Maintain surplus as to policyholders and paid-in capital of less than fifteen million dollars ($15,000,000) but at least equal to ten million dollars ($10,000,000);

(ii) Maintain a ratio of net written premiums, wherever written, to surplus as to policyholders and paid-in capital of not greater than three (3) to one (1); and

(iii) Annually file copies of the insurer’s audited financial statements, its NAIC annual statement and the actuarial certification required by and filed in the insurer’s state of domicile.

(3) Premiums are defined as those funds paid by or on behalf of the motor vehicle service contract provider to the liability insurance policy issuer for such risks covered under such liability insurance policy. Such premiums or the method of developing such premiums shall be filed with the director of the department of insurance for approval.

(4) The issuer of a service contract liability policy may not cancel the policy until a thirty (30) days’ advance notice of cancellation has been mailed or delivered to each motor vehicle service contract provider. The cancellation of a service contract liability policy shall not reduce the insurer’s responsibility for motor vehicle service contracts issued by motor vehicle service contract providers prior to the date of the cancellation.

Legislative History: [41-6204, added 2018, ch. 116, sec. 2, p. 243.]

I.C. § 41-6205: Motor vehicle service contract provisions¶

The following provisions shall apply to the sale of motor vehicle service contracts in the state:

(1) A motor vehicle service contract may not be issued, sold or offered for sale in this state unless the contract contains a statement in substantially the following form: "Obligations of the motor vehicle service contract provider under this motor vehicle service contract are guaranteed under a service contract liability policy. Should the motor vehicle service contract provider fail to pay or provide service on any claim within sixty (60) days after proof of loss has been filed, the motor vehicle service contract holder is entitled to make a claim directly against the insurance company." The motor vehicle service contract shall also conspicuously state the name and address and a toll-free claim service number of the insurer.

(2) The motor vehicle service contract must identify the motor vehicle service contract provider, the seller and the motor vehicle service contract holder.

(3) The motor vehicle service contract must conspicuously state the total purchase price of the motor vehicle service contract.

(4) If prior approval of repair work is required, the motor vehicle service contract must conspicuously state the procedure for obtaining prior approval and for making a claim, including a toll-free telephone number for claim service and a procedure for obtaining reimbursement for emergency repairs performed outside of normal business hours.

(5) The motor vehicle service contract must conspicuously state the existence of any deductible amount.

(6) The motor vehicle service contract must specify the merchandise and services to be provided and any limitations, exceptions or exclusions. Any preexisting conditions clause must specifically state which preexisting conditions are excluded from coverage.

(7) The motor vehicle service contract must state any terms, restrictions or conditions governing the transferability of the service contract.

(8) The motor vehicle service contract must state the terms, restrictions or conditions governing cancellation of the service contract by either the motor vehicle service contract holder or motor vehicle service contract provider.

(9) A motor vehicle service contract may not be issued, sold or offered for sale in this state unless the contract contains a statement in substantially the following form: "Coverage afforded under this motor vehicle service contract is not guaranteed by the Idaho insurance guaranty association."

(10) No motor vehicle service contract may be issued, sold or offered in this state unless the service contract conspicuously states that the motor vehicle service contract holder is allowed to cancel the service contract:

(a) Within thirty (30) days of its purchase if no claim has been made and shall receive a full refund of the service contract retail price, less any cancellation fee stated in the service contract not exceeding fifty dollars ($50.00); or

(b) At any other time and shall receive a pro rata refund of the service contract retail price for the unexpired term of the service contract, based on the number of the lapsed months, miles or such other measure that is clearly disclosed in the service contract, less any cancellation fees stated in the service contract not exceeding fifty dollars ($50.00).

Legislative History: [41-6205, added 2018, ch. 116, sec. 2, p. 244.]

I.C. § 41-6206: Motor vehicle service contract requirements¶

Before the sale of any motor vehicle service contract, the motor vehicle service contract provider shall give written notice to the customer clearly disclosing that the purchase of the contract is not required either to purchase or to obtain financing for a motor vehicle. No motor vehicle service contract may be used in this state by any motor vehicle service contract provider if the contract:

(1) In any respect violates, or does not comply with, the laws of this state;

(2) Contains or incorporates by reference any inconsistent, ambiguous or misleading clauses or any exceptions and conditions that affect the risk assumed or to be assumed in the general coverage of the contract;

(3) Has any title, heading or other indication of its provisions that is misleading; or

(4) Is printed or otherwise reproduced in any manner that renders any material provision of the contract substantially illegible.

Legislative History: [41-6206, added 2018, ch. 116, sec. 2, p. 245.]

I.C. § 41-6207: Prohibited acts¶

(1) A motor vehicle service contract provider may not use in its name, contracts or literature:

(a) Any of the words "insurance," "casualty," "surety," "mutual" or any other words descriptive of the insurance, casualty or surety business; or

(b) A name deceptively similar to the name or description of any insurance or surety corporation, or any other motor vehicle service contract provider.

(2) A motor vehicle service contract provider, its representative or any other person may not make, permit or allow to be made any false, deceptive or misleading statement, or may not deliberately omit any material statement that would be considered misleading if omitted, in connection with the sale, offer to sell or advertisement of a motor vehicle service contract.

(3) It shall be unlawful for any company to directly or indirectly represent in any manner, whether by written solicitation, advertisement or telemarketing, a false, deceptive or misleading statement with regard to:

(a) Such company’s affiliation with a motor vehicle manufacturer, recreational vehicle manufacturer or dealer;

(b) Such company’s possession of information regarding a motor vehicle owner’s current motor vehicle manufacturer’s or recreational vehicle manufacturer’s original equipment warranty;

(c) All indications that such company’s records show that a motor vehicle or recreational vehicle owner’s current motor vehicle manufacturer’s or recreational vehicle manufacturer’s original equipment warranty is nearing or past expiration;

(d) A requirement that such motor vehicle or recreational vehicle owner register for a new motor vehicle service contract with such company to maintain coverage under the motor vehicle or recreational vehicle owner’s current service contract or manufacturer’s original equipment warranty.

Legislative History: [41-6207, added 2018, ch. 116, sec. 2, p. 245.]

I.C. § 41-6208: Recordkeeping requirements¶

(1) All motor vehicle service contract providers shall keep accurate accounts, books and records concerning transactions regulated under the provisions of this act. A motor vehicle service contract provider’s accounts, books and records shall include:

(a) Copies of all motor vehicle service contracts issued;

(b) The name and address of each motor vehicle service contract holder; and

(c) Claim files.

(2) All motor vehicle service contract providers shall retain all records pertaining to each motor vehicle service contract holder for at least three (3) years after the specified period of coverage has expired. It shall be the responsibility of the insurer issuing the liability policy to make an examination at least every two (2) years of each motor vehicle service contract provider that they insure to assure that each provider is in compliance with the recordkeeping requirements.

Legislative History: [41-6208, added 2018, ch. 116, sec. 2, p. 246.]

I.C. § 41-6209: licensing¶

Motor vehicle service contract providers, and persons marketing, administering, selling or offering to sell motor vehicle service contracts for motor vehicle service contract providers, are not required to obtain a license under title 41 , Idaho Code. A motor vehicle service contract provider shall not be subject to regulation under any provision of title 41 , Idaho Code, not made expressly applicable to it.

Legislative History: [41-6209, added 2018, ch. 116, sec. 2, p. 246.]

I.C. § 41-6210: guaranty¶

The provisions of the Idaho insurance guaranty association act, chapter 36, title 41 , Idaho Code, shall not apply to any motor vehicle service contract, mechanical breakdown insurance or motor vehicle service contract liability insurance policy, as defined in this chapter, and no claim under any motor vehicle service contract, mechanical breakdown insurance or motor vehicle service contract liability insurance policy shall be deemed to be a "covered claim" within the scope of section 41-3605 (7), Idaho Code, as to which the Idaho insurance guaranty association has any obligation under section 41-3608 , Idaho Code, or other provisions of chapter 36, title 41 , Idaho Code.

Legislative History: [41-6210, added 2018, ch. 116, sec. 2, p. 246.]

I.C. § 41-6211: Enforcement and Penalties¶

(1) The director may conduct examinations of motor vehicle service contract providers, administrators, insurers or other persons to enforce the provisions of this chapter and to protect motor vehicle service contract holders in this state. Upon request of the director, the provider shall make available to the director all accounts, books and records concerning motor vehicle service contracts sold or issued by the provider that are necessary to enable the director to reasonably determine compliance or noncompliance with this chapter.

(2) The following provisions of chapter 2, title 41 , Idaho Code, generally addressing the director’s inquiry powers, orders and conduct of administrative proceedings apply to persons subject to this chapter:

(a) Sections 41-210 through 41-215 , Idaho Code;

(b) Sections 41-220 through 41-223 , 41-225 , and 41-227 , Idaho Code; and

(c) Sections 41-229 through 41-240 , and section 41-247 , Idaho Code.

(3) Any company that violates any provisions of this act may, in the director’s discretion, be subject to a civil penalty of one thousand dollars ($1,000) per violation, limited to a total of twenty-five thousand dollars ($25,000) in the aggregate for all like violations.

(4) This act does not create a separate civil cause of action, but does not preclude a cause of action under the Idaho consumer protection act, chapter 6, title 48 , Idaho Code, or any applicable common law or statutory causes of action.

Legislative History: [41-6211, added 2018, ch. 116, sec. 2, p. 246.]

Idaho Administrative Rules (IDAPA)¶

IDAPA 18.07.01¶

IDAPA 18.07.01.000 - Legal Authority¶

Title 41, Chapters 2 and 38, Sections 41-211 and 41-3817, Idaho Code. (4-6-23)

IDAPA 18.07.01.001 - Scope¶

These rules administer the Idaho Acquisitions of Control and Insurance Holding Company Systems Regulatory Act including its MHC provisions. (4-6-23)

IDAPA 18.07.01.010 - Definitions¶

These definitions supplement those in Chapter 38, Title 41, Idaho Code: (4-6-23)

1. Affiliated Person. (4-6-23)

   a. Any person directly or indirectly owning, controlling, or holding with power to vote, five percent (5%) or more of another person's outstanding voting securities; or (4-6-23)

   b. Any person, five percent (5%) or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by another person; or (4-6-23)

   c. Any person directly or indirectly controlling, controlled by, or under common control with, another person; or (4-6-23)

   d. Any officer, director, partner, copartner, or employee of another person. (4-6-23)

2. Domestic Mutual Insurance Company. A mutual insurer as defined in Section 41-302, Idaho Code, that is incorporated under Idaho law. (4-6-23)

3. Executive Officer. Chief executive officer, chief operating of ficer, chief financial officer, treasurer, secretary, controller, and any other individual performing functions corresponding to those performed by those officers under whatever title. (4-6-23)

4. Interested Person. Interested person means: (4-6-23)

   a. An affiliated person of another person or company; or (4-6-23)

   b. A member of the immediate family of any natural person who is an affiliated person of another company; or (4-6-23)

   c. Any person, partner or employee of any person who, at any time in a company's last two completed fiscal years, has acted as the company's lawyer; or (4-6-23)

   d. Any natural person whom the Director, by order, find s to be an interested person because the person had, at any time during a company's last two completed fiscal years, a material business or professional relationship with that company or its principal executive officer. (4-6-23)

5. Intermediate Holding Company. A subsidiary of a MHC or part of a MHC-controlled holding company system. (4-6-23)

6. Limited Application. A domestic mutual insurance company's application to reorganize as a MHC that will hold, at all times, all of the stock of its insurance subsidiaries. (4-6-23)

7. Member of the Immediate Family. Any parent, or child, and their spouses, siblings, including step and adoptive relationships. (4-6-23)

8. MHC. A mutual insurance holding company under Section 41-3824, Idaho Code. (4-6-23)

9. Plan of Reorganization. A plan to reorganize a domestic mutual insurance company by forming a MHC. (4-6-23)

10. Standard Application. A domestic mutual insurance company's application to reorganize as a MHC that may sell interests in its subsidiaries to third parties. (4-6-23)

11. Stock. Any security showing an equity interest in the issuing entity. (4-6-23)

12. Stock Offering. Any proposed sale, exchange, transfer or change of ownership of stock or of securities convertible into, or exchangeable or exercisable for, stock. "Stock offering" does not mean: (4-6-23)

    a. An offering of preferred stock without ordinary voting rights that is not convertible or exchangeable into common stock; or (4-6-23)

    b. A stock transfer between entities in a MHC system, including the MHC, intermediate holding company, and any insurance company subsidiaries. (4-6-23)

13. Ultimate Controlling Person. A person not controlled by another person. (4-6-23)

IDAPA 18.07.01.011 - Forms -- General Requirements¶

1. Forms As Guides. Forms A, B, C, D, E, and F included on the Department's website are guides for persons filing statements prescribed by Title 41, Chapter 38, Idaho Code, and not intended as fillable blank forms. Statements need to contain the numbers and captions for all items. (4-6-23)

2. Filings. Each statement, including all exhibits, papers, and documents are to be electronically filed with the Director, and a hard copy personally delivered or mailed. Sign at least one (1) copy as stated on the form. If a signature is affixed pursuant to a power of attorney or similar authority, file a copy of the power of attorney or other authority with the statement. (4-6-23)

3. Format. Prepare statements in English, using United States currency, and be easily readable and suitable for review and reproduction. Debits in credit categories and credits in debit categories should be clearly distinguishable on photocopies. (4-6-23)

4. Hearing. If an applicant requests a consolidated hearing under Section 41-3806(3), Idaho Code, then besides filing Form A with the Director, the applicant will electronically file a copy of Form A with the National Association of Insurance Commissioners. (4-6-23)

IDAPA 18.07.01.012 - Forms -- Incorporation By Referen Ce, Summaries And Omissions¶

1. Incorporation by Reference. Information prescribed by any item on a Form may be incorporated by reference in answer or partial answer to any other item. Information contained in any financial statement, annual report, proxy statement, statement filed with a governmental authority, or other document may be incorporated by reference in answer or partial answer to any item if the document or paper is filed as an exhibit to the statement. Excerpts of documents may be filed as exhibits. Documents need not be attached as exhibits if filed with the Director within the previous three (3) years. References to informat ion in exhibits or documents already on file need to clearly identify that information and indicate it is incorporated by reference. Information cannot be incorporated by reference if doing so would make the statement incomplete, unclear or confusing. (4-6-23)

2. Summaries or Outlines. When any Form requires a summary or outline, briefly explain the document's pertinent provisions. The summary or outline may incorporate by reference parts of any exhibit or document filed with the Director within the three (3) prior years. If documents filed as exhibits are substantially identical except as to parties, dates of execution, or other details, one (1) document should be filed with a schedule identifying the omitted documents and any material details in which the omitted documents differ from the filed documents. (4-6-23)

IDAPA 18.07.01.013 - Forms -- Information Unknown Or Unavailable And Extension Of Time To¶

FURNISH. For items that cannot be furnished at the time prescribed, the filer will: identify the information, document or report in question; state why its impractical to file it when prescribed; and request an extension to file it on a specified date. The extension request is deemed granted unless the Director issues an order denying the request within twenty-eight (28) days of receipt. (4-6-23)

IDAPA 18.07.01.014 - Forms -- Additional Information And Exhibits¶

In addition to expressly prescribed information, the Director may reques t additional information necessary for clarification. The filer may file exhibits besides those expressly necessary by the statement, clearly indicating the subject matters to which they refer. At the top of the cover page for changes to content in necessary Forms state "Change No. [insert number] to" and date of the change. (4-6-23)

IDAPA 18.07.01.015 - Subsidiaries Of Domestic Insurers¶

The authority to invest in subsidiaries under Section 41-3803, Idaho Code, is in addition to authority to invest in subsidiaries from any other provision of Title 41, Idaho Code. (4-6-23)

IDAPA 18.07.01.016 - Acquisition Of Control -- Statement Filing¶

A person filing under Section 41-3804, Idaho Code, will furnish the prescribed information on Forms A and E. (4-6-23)

IDAPA 18.07.01.017 - Amending Form A¶

The applicant will promptly advise the Director of changes in Form A information arising after it was filed but before the Director's disposition of the application. (4-6-23)

IDAPA 18.07.01.018 - Acquiring Section¶

1. Domestic Insurer's Name. If a "domestic insurer" under Section 41-3804(1)(d), Idaho Code, is being acquired, then include in the application's cover page the domestic insurer's name in this format: "ABC Insurance Company, a subsidiary of XYZ Holding Company." (4-6-23)

2. References to Insurer. Where a Section 41-3804(1)(d) insurer is acquired, Form A's references to "the insurer" mean both the domestic subsidiary insurer and the acquired person. (4-6-23)

IDAPA 18.07.01.019 - Pre-Acquisition Notification¶

1. Pre-Acquisition Notification. If a domestic insurer, including any controlling person, proposes a merger or acquisition per Section 41-3808(1)(a), Idaho Code, they will file Form E. If a licensed non-domiciliary insurer proposes a merger or acquisition per Section 41-3808, Idaho Code, they will file Form E unless exempted by

2. Experts. The director may request an expert opinion regarding the competitive impact of the proposed acquisition. (4-6-23)

IDAPA 18.07.01.020 - Annual Registration Of Insurers -- Statement Filing¶

An insurer filing under Section 41-3809, Idaho Code, will complete Form B. (4-6-23)

IDAPA 18.07.01.021 - Summary Of Registration -- Statement Filing¶

An insurer filing an annual registration under section 41-3809, Idaho Code, will also complete Form C. (4-6-23)

IDAPA 18.07.01.022 - Amending Form B¶

1. Amending Form B. An insurer will file any amendments to Form B within fifteen (15) days after the end of any month in which there is a material change to the information in the annual registration. (4-6-23)

2. Form B Format. Amendments are filed on Form B including only the amended items.The top of the cover page for each amendment will state "Amendment No. [insert number] to Form B for [insert year]" and the date of the change, not the date of the original filings. (4-6-23)

IDAPA 18.07.01.023 - Alternative And Consolidated Registrations¶

1. Filing on Behalf of Affiliated Insurers. An authorized insurer may f ile a registration statement for an affiliated insurer or insurers. The registration statement may include information about any insurer in the holding system, even if the insurer is not authorized to do business in Idaho. In lieu of Form B, an authorized insurer may file a copy of the registration statement or similar report on file with its state of domicile if: (4-6-23)

   a. The filing contains substantially similar information prescribed on Form B; and (4-6-23)

   b. The filer is the principal insurance company in the insurance holding company system. (4-6-23)

2. Statement That Filing Insurer Is the Principal Insurer. An insurer filing in lieu of Form B for an affiliated insurer will state facts substantiating the filing insurer's claim that it is the principal insurer in the insurance holding system. (4-6-23)

3. Unauthorized Insurer. With the Director's prior approval, an unauthorized insurer may follow any procedures under Subsection 023.01. (4-6-23)

4. Consolidated Registration Statements. An insurer may follow Section 41-3809(8), or 41- 3809(9), Idaho Code, without the Director's prior approval. The Director may request individual filings if necessary for clarity, ease of administration, or the public good. (4-6-23)

IDAPA 18.07.01.024 - Disclaimers And Termination Of Registration¶

1. Information Requisite. A disclaimer of affiliation or a request for termination of registration, on the basis that a person does not, or will not, upon the taking of some proposed action, control another person (the "subject"), will state: (4-6-23)

   a. The number of the subject's authorized, issued and outstanding voting securities; (4-6-23)

   b. For the person whose control is denied and all the person's affiliates, the number and percentage of shares of the subject's voting securities that are held of record or known to be beneficially owned, and the number of shares for which there is a direct or indirect right to acquire; (4-6-23)

   c. All material relationships and bases for affiliation between the subject and the person whose control is denied and all their affiliates: (4-6-23)

   d. Why such person should not be considered to control the subject. (4-6-23)

2. Request Deemed Granted. A request to terminate registration is deemed granted unless the Director notifies the filer otherwise within thirty (30) days after the request is received. (4-6-23)

IDAPA 18.07.01.025 - Transactions Subject To Prior Notice - Notice Filing¶

1. Form D. When an insurer notifies the Department of a proposed transaction under Section 41- 3810, Idaho Code, the insurer will verify the information in Subsection 025.02 on Form D. (4-6-23)

2. Agreements. Terms for cost sharing services and management services will at a minimum: (4-6-23)

   a. Identify the person providing services and the nature of such services; (4-6-23)

   b. Set forth the methods to allocate costs; (4-6-23)

   c. Prescribe timely settlement, at least on a quarterly basis, and compliance with the requirements in the Accounting Practices and Procedures Manual; (4-6-23)

   d. Bar advancement of funds by the insurer to the affiliate except to pay for services specified in the agreement; (4-6-23)

   e. State that the insurer will maintain oversight for functions provided to the insurer by the affiliate and that the insurer will monitor services annually for quality assurance; (4-6-23)

   f. Define books and records of the insurer to include all books and records developed or maintained under or related to the agreement; (4-6-23)

   g. Specify that all books and records of the insurer are and remain the property of the insurer and are subject to control of the insurer; (4-6-23)

   h. State that all funds and invested assets of the insurer are the exclusive property of the insurer, held for the benefit of the insurer and are subject to the control of the insurer; (4-6-23)

   i. Include standards for termination of the agreement with and without cause; (4-6-23)
   

   j. Include provisions for indemnification of the insurer in the event of gross negligence or willful misconduct on the part of the affiliate providing the services; (4-6-23)

   k. Specify that, if the insurer is placed in receivership or seized by the Director under Title 41, Chapter 33, Idaho Code: (4-6-23)

   i. All of the rights of the insurer under the agreement extend to the Director; and (4-6-23)
   
   ii. All books and records will immediately be made available to the Director, and will be turned over to the Director immediately upon the Director's request; (4-6-23)
   

   l. Specify that the affiliate has no automatic right to terminate the agreement if the insurer is placed in receivership pursuant to Title 41, Chapter 33, Idaho Code; and (4-6-23)

   m. Specify that the affiliate will continue to maintain any systems, programs, or other infrastructure notwithstanding a seizure by the Director under Title 41, Chapter 33, Idaho Code, and will make them available to the Director, for so long as the affiliate continues to receive timely payment for services rendered. (4-6-23)

IDAPA 18.07.01.026 - Enterprise Risk Report¶

The ultimate controlling person of an insurer will file an enterprise risk report per Section 41-3809(12), Idaho Code, on Form F. (4-6-23)

IDAPA 18.07.01.027 - Extraordinary Dividends And Other Distributions¶

1. Request for Approval. Requests to approve extraordinary dividends or other extraordinary distribution to shareholders will include the following: (4-6-23)

   a. The amount of the proposed dividend; (4-6-23)

   b. The date established for payment; (4-6-23)

   c. Whether the dividend is in cash or other property. If property, a description thereof, its cost, its fair market value, and an explanation of the valuation basis; (4-6-23)

   d. Calculations showing the proposed dividend is extraordinary, which includes: (4-6-23)

   i. The amounts, dates, and form of payment of all distributions (including regular dividends but excluding distributions of the insurer's own securities) paid within twelve (12) consecutive months ending on the date fixed for payment of the proposed dividend for which approval is sought; (4-6-23)
   
   ii. Surplus as regards policyholders (total capital and surplus) as of the preceding December 31st; (4-6-23)
   
   iii. If the insurer is a life insurer, the net gain from operations for the twelve (12) months ending the preceding December 31st; and (4-6-23)
   
   iv. If the insurer is not a life insurer, the net income less net realized capital gains for the twelve (12) months ending the preceding December 31st. (4-6-23)
   

   e. A balance sheet and income statement for the period since the last annual statement filed with the Director and the end of the month before the month in which the request for dividend approval is submitted; and (4-6-23)

   f. The proposed distribution's effect on the insurer's surplus and the reasonableness of surplus in relation to the insurer's outstanding liabilities and the adequacy of surplus relative to the insurer's financial needs. (4-6-23)

2. Other Distributions. Subject to Section 41-3812, Idaho Code, registered insurers report to the Director all dividends and other shareholder distributions within fifteen (15) business days after the declaration thereof, including the information from Paragraph 027.01.d. (4-6-23)

IDAPA 18.07.01.028 - Adequacy Of Surplus¶

Besides the factors in Section 41-3811, Idaho Code, the Director may consider other factors bearing on the insurer's financial condition. No one (1) factor is controlling. Comparing other insurers' surplus, the Director will consider the extent to which each factor varies among companies. When determining the quality and liquidity of an insurer's investments in subsidiaries the Director will include a consideration of the individual subsidiary and may discount or disallow its valuation as individual investments warrant. (4-6-23)

IDAPA 18.07.01.051 - Mhc Application - Content - Process¶

1. Designating Application as Limited or Standard. Applications are designated as limited or standard. Filing a limited application does not preclude later filing a standard application. (4-6-23)

2. Application Information. Applications are filed in duplicate and will include: (4-6-23)

   a. Designation as limited or standard; (4-6-23)

   b. A Plan of Reorganization; (4-6-23)

   c. A plan for policyholder approval in accordance with the applicant's articles of incorporation and bylaws, with at least twenty (20) day notice to the policyholders; (4-6-23)

   d. A copy of the MHC's proposed articles of incorporation and bylaws specifying all membership rights; (4-6-23)

   e. The names, addresses and occupations of all corporate officers and members of the MHC's board of directors; (4-6-23)

   f. Information sufficient to demonstrate that reorganization will not diminish the applicant's financial condition; (4-6-23)

   g. A copy of the proposed articles of incorporation and bylaws fo r any insurance company subsidiary or intermediate holding company subsidiary; (4-6-23)

   h. Form A; (4-6-23)

   i. An application index; and (4-6-23)
   

   j. Any other information requested by the Director. (4-6-23)

IDAPA 18.07.01.052 - Hearing Notice¶

1. Scheduling. A hearing will be held after the Director has received and reviewed the application. (4-6-23)

2. Evidence Presented at Hearing. The applicant will provide evidence that the application is complete, complies with Idaho law, and the requirements for reorganization have been fulfilled. (4-6-23)

3. Notice of Hearing. The Department will notify known interested parties about the hearing at least twenty (20) days before it occurs. (4-6-23)

IDAPA 18.07.01.053 - Plan Of Reorganization¶

1. Plan of Reorganization. The plan of reorganization or "Plan" needs to preserve the applicant's property, be fair and equitable to policyholders and protect their interests, and not diminish the applicant's financial condition. (4-6-23)

2. Limited Application. A limited application Plan will include: (4-6-23)

   a. Establishing a MHC with at least one (1) stock insurance company subsidiary or one (1) intermediary stock holding company with a stock insurance company subsidiary, the share of which is held exclusively by the mutual insurance holding company; (4-6-23)

   b. Protection of existing policyholders' interests; (4-6-23)

   c. Providing existing and future policyholder membership in the MHC; (4-6-23)

   d. The number of policyholder members of the board of directors of the MHC; (4-6-23)

   e. Demonstrating that, if there are proceedings under Title 41, Chapter 33, Idaho Code, involving a stock insurance company subsidiary of the MHC, the assets of the MHC will be available to satisfy the policyholder obligations of the stock insurance company; (4-6-23)

   f. How any accumulation or prospective accumulation of earnings by the MHC in excess of that determined by the board of directors to be necessary will inure to the exclusive benefit of the MHC's member policyholders; (4-6-23)

   g. The nature and content of the annual report and financial statement sent to each member; and (4-6-23)

   h. Other matters the applicant deems appropriate. (4-6-23)

3. Standard Application. A standard application Plan includes: (4-6-23)

   a. Establishing a MHC with at least one (1) stock insurance company subsidiary or one (1) wholly- owned intermediate stock holding company with a stock insurance company subsidiary, the shares of which are held exclusively by the wholly- owned intermediate holding company; (4-6-23)

   b. Protecting existing policyholders' interests; (4-6-23)

   c. Providing existing and future policyholder membership in the MHC; (4-6-23)

   d. The number of policyholder members on the MHC's board of directors; (4-6-23)

   e. Demonstrating that, if there are proceedings under Title 41, Chapter 33, Idaho Code, involving a stock insurance company subsidiary of the MHC, the assets of the MHC will be available to satisfy the policyholder obligations of the stock insurance company; (4-6-23)

   f. How any accumulation or prospective accumulation of earnings by the MHC excess of that determined by the MHC's board of directors to be necessary will inure to the exclusive benefit of the MHC's member policyholders; (4-6-23)

   g. The nature and content of the annual report and financial statement sent to each member; and (4-6-23)

   h. The plan for a stock offering per this rule; and (4-6-23)

   i. Other matters the applicant deems appropriate. (4-6-23)
   

IDAPA 18.07.01.054 - Duties Of The Director¶

1. Jurisdiction. The Director retains jurisdiction over the MHC and any intermediate holding company subsidiaries with stock insurance company subsidiaries. (4-6-23)

2. Approval or Denial of Application. The Director will, by order, approve, conditionally approve, or deny an application. (4-6-23)

   a. Modifications. The Director may prescribe modifications to the proposed Plan. Prescribed modifications are accepted by filing amendments to the proposed Plan with the Director within thirty (30) days after the Director's order is issued. The Application will be denied if the prescribed amendments are not filed. (4-6-23)

   b. Expiration. An approval or conditional approval of a Plan expires if the reorganization is not completed within one hundred eighty (180) days unless extended by the Director for good cause. (4-6-23)

   c. Revoking approval. The Director may revoke a Plan's approval or conditional approval if the Director finds the applicant has not complied with the Plan. The Director may compel the applicant to complete a Plan unless the applicant has wholly abandoned the Plan consistent with the applicant's governance provisions. The Director retains jurisdiction over the applicant until the Plan is completed. (4-6-23)

   d. Completion notice. Upon completing the Plan, the applicant files a notice of completion with the Director. (4-6-23)

IDAPA 18.07.01.055 - Regulation - Compliance¶

1. Wavier of Compliance. No regulatory standards are waived during the pendency of a Plan application. (4-6-23)

2. Merger or Acquisition. MHC mergers and acquisitions are subject to Director approval. If a MHC is to acquire more than fifty percent (50%) of a stock insurance company, then the applicant files a plan describing the insurer's policyholders' membership interests in the MHC. (4-6-23)

3. Annual Financial Statement. A MHC will annually file a financial statement by June 1 including: (4-6-23)

   a. An income statement; (4-6-23)

   b. A balance sheet; (4-6-23)

   c. A cash flow statement; (4-6-23)

   d. The status of any closed block formed because of the Plan; (4-6-23)

   e. An asset investment plan; and (4-6-23)

   f. A statement disclosing any intention to pledge, borrow against, alienate, hypothecate, or otherwise encumber MHC assets. (4-6-23)

4. Subsidiary Investment Obligations. At least fifty percent (50%) of the MHC's generally accepted accounting practices (GAAP) basis net worth will be invested in insurance company subsidiaries. (4-6-23)

5. Distributions to Policyholders. Policy credits, dividends or other distributions to a MHC's policyholder members will be fair and equitable and are subject to Director approval and the public hearing process in Chapter 38, Title 41, Idaho Code. (4-6-23)

IDAPA 18.07.01.056 - Reorganization Of Mutual Insurer With Mutual Insurance Holding¶

COMPANY. Domestic mutual insurance companies may merge their policyholders' interests into a MHC by filing a compliant joint application with the MHC. This also applies to foreign mutual insurance companies or a foreign health service corporation, which, if a domestic corporation, would be organized under Title 41, Chapter 28, Idaho Code. (4-6-23)

IDAPA 18.07.01.057 - Mergers Of Mutual Insurance Holding Companies¶

Two (2) or more MHCs may merge by filing a compliant merger plan. (4-6-23)

IDAPA 18.07.01.058 - Stock Offerings¶

1. Prior Approval. A stock offering by a MHC, or by any of its direct or indirect insurance company or intermediate holding company subsidiaries, is subject to the Director's prior approval through this section's application and hearing process. (4-6-23)

2. Application for Stock Offering Contents. (4-6-23)

   a. A description of the stock the applicant would offer, and of all shareholder rights; (4-6-23)

   b. The total number of shares authorized to be issued, the estimated number requested to offer, and the intended date or range of dates for the offer; (4-6-23)

   c. A justification for a uniform planned offering price, or of the method by which the offering price will be determined; (4-6-23)

   d. The name or names of any underwriter, syndicate member or placement agent involved and the known names of each entity, person, or group of persons to whom the stock offering is to be made who will control at least five percent (5%) of the total outstanding class of shares, and the manner in which the offer is to be tendered. If the entity or person is a corporation or business organization, the name of each member of its board of directors or equivalent management will be provided with the name. Copies of Securities and Exchange Commission filings disclosing intended stock acquisitions will be included; (4-6-23)

   e. A description of stock subscription rights afforded to MHC members in conjunction with the stock offering; (4-6-23)

   f. A detailed description of all expenses to be incurred in the stock offering; (4-6-23)

   g. How funds raised by the stock offering will be used; and (4-6-23)

   h. Any other information the Director requests. (4-6-23)

3. Prescribed Provisions. The stock offering plan will state: (4-6-23)

   a. Officers, directors, and insiders of the MHC and its direct or indirect subsidiaries and affiliates are restricted from purchasing or owning shares of the stock offering, or issuance of stock options to or for the benefit of such officers, directors and insiders, for at least six (6) months following the first public offering date and regularly trading of the stock. Officers, directors and insiders are not barred from exercising subscription rights accorded to members of the MHC, except that, pursuant to those rights, the officers, directors, and insiders of the MHC and its direct or indirect subsidiaries and affiliates cannot purchase or own, in the aggr egate, more than five percent (5%) of the stock offering for at least six (6) months following the first date of the public offering and regular trading of the stock; (4-6-23)

   b. A majority of the members of the MHC's board of directors cannot be an interested person of the MHC or of an affiliated person of the MHC. The Director may waive this requirement for good cause; (4-6-23)

   c. The MHC will adopt articles of incorporation barring any waiver of dividends from stock subsidiaries except under conditions specified in the articles and after approval of the waiver by the MHC's board of directors and the Director; (4-6-23)

   d. After the initial stock offering by a direct or indirect insurance company or intermediate insurance company subsidiary of a MHC, the boards of directors of each such insurance company or intermediate holding company will include at least three (3) directors who are not interested persons of the MHC; and (4-6-23)

   e. The board of directors of the corporation offering stock need to establish, a pricing committee consisting exclusively of directors who are interested persons. The committee's responsibility is to evaluate and approve the price of any stock offering. (4-6-23)

4. More Than One Class of Stock. An insurance company or intermediate insurance holding company subsidiary of a MHC may issue more than one (1) class of stock. At all times a majority of the voting stock will be held by the MHC or its subsidiary and, no class of common stock may have greater dividend or other rights than the class held by the MHC or its subsidiary. (4-6-23)

5. Experts. The Director may hire experts to help review the application, at the applicant's expense. (4-6-23)

6. Public Hearing. A public hearing may be held on any stock offering application. A stock offering including an initial offering of stock is expressly subject to a public hearing. The applicant will provide a Director- approved hearing notice to MHC members at least twenty (20) days before the hearing. (4-6-23)

7. Approval. The Director may approve the stock offering plan if: (4-6-23)

   a. The method for establishing the stock offering price is consistent with generally accepted market or industry practices for establishing stock offering prices; and (4-6-23)

   b. The offering will not unfairly impact the interests of MHC members. (4-6-23)

8. Concurrent Filing with SEC. Filing a registration statement with the Securities and Exchange Commission before, or concurrently with, notice to the MHC members is permitted. (4-6-23)

9. Subsequent Offerings of Publicly Traded Stock. (4-6-23)

   a. Notwithstanding Section 013, stock offerings, besides an initial stock offering, through which stock offered is regularly traded on the New York Stock Exchange, the American Stock Exchange, or another Director- approved exchange, or designated on the national association of securities dealers automated quotations - national market system (NASDAQ), is subject to this procedure: If a MHC or direct or indirect insurance company or intermediate insurance company subsidiary thereof intends to make a stock offering governed by this section, the entity will notify the Director, at least thirty (30) days before the offering, regarding: (4-6-23)

   i. The total number of shares intended to be offered; (4-6-23)
   
   ii. The intended date of sale; (4-6-23)
   
   iii. Evidence the stock is regularly traded on one of the public exchanges noted above; and (4-6-23)
   
   iv. A record of the stock's trading pace and volume during the prior fifty-two (52) weeks. (4-6-23)
   

   b. The Director may object to the offering within thirty (30) days after receiving the notice. Upon an objection, the procedures in Subsection 059.02 will be followed to determine approval. (4-6-23)

10. Approval Expiration. A stock-offering approval under Subsections 059.06, 059.07, or 059.08 expires ninety (90) days after the approval date, except as provided by the Director's order. (4-6-23)

11. Representation of Director's Approval. A prospectus, information, sales material or sales presentation by the applicant, or a representative, agent or affiliate of the applicant, will not represent that the Director's approval constitutes an endorsement of the price, price range, or any other information relating to the stock. (4-6-23)

IDAPA 18.07.01.059 - Banned Mhc - Practices¶

1. Borrowing Funds. Borrowing funds from the MHC, or its subsidiaries and affiliates, to finance the purchase of any part of a stock offering. (4-6-23)

2. Paying Commissions. Paying commissions, "special fees" or other special payments or extraordinary compensation to officers, directors, or interested persons and affiliates, for arranging, promoting, aiding or assisting in reorganization or for arranging promoting, aiding assisting or participating in the structuring and placement of a stock offering. (4-6-23)

3. Avoiding This Chapter. Transferring legal or beneficial ownership of stock to another person in avoidance of this chapter. (4-6-23)

IDAPA 18.07.01.060 - Regulating Holding Company System¶

All material transactions between subsidiaries and affiliates of the MHC need to be approved by a majority of the directors of the MHC as fair and reasonable, on terms and conditions not less favorable than those available from unaffiliated third parties. (4-6-23)

IDAPA 18.07.01.061 - Reporting Stock Ownership And Transactions¶

1. Acquiring Ownership Interest. Any director or officer of an MHC or its direct or indirect subsidiaries or affiliates, who directly or indirectly acquires the beneficial ownership of any security issued by any member of the MHC system will, within fifteen (15) days following the transaction, file a statement of the transaction in a format prescribed by the Director. (4-6-23)

2. Filing SEC Forms. A MHC and its direct or indirect subsidiaries and affiliates, will file with the Director copies of Form 3, Form 4 and Schedule 13D, or any equivalent filings, made under the Securities and Exchange Act of 1934, as amended, within fifteen (15) days of receipt thereof. (4-6-23)

IDAPA 18.07.02¶

IDAPA 18.07.02.000 - Legal Authority¶

Title 41, Chapters 2 and 6, Sections 41-211 and 41-612, Idaho Code. (4-6-23)

IDAPA 18.07.02.001 - Scope¶

To determine minimum standard valuation for annuity and pure endowment contracts. (4-6-23)

IDAPA 18.07.02.010 - Definitions¶

1. 1983 Table 'a'. The mortality table developed by the Society of Actuaries (SOA) Committee for Individual Annuity Valuation in 1981 and in June 1982 by the National Association of Insurance Commissioners (NAIC). (4-6-23)

2. 1983 GAM Table. The mortality table developed by the SOA Committee on Annuities and adopted as a recognized mortality table for annuities in December 1983 by the NAIC. (4-6-23)

3. 1994 GAR Table. The mortality table developed by the (SOA) Group Annuity Valuation Table Task Force and shown on pages 866-867 of Volume 47 of the Transactions of Society of Actuaries 1995. (4-6-23)

4. 2012 Individual Annuity Mortality Period Life (2012 IAM Period) Table. The Period Table loaded mortality rates for calendar year 2012. This table contains rates, qx2012, developed by the (SOA) Committee on Life Insurance Research. (4-6-23)

5. 2012 Individual Annuity Reserving (2012 IAR) Table. The generational mortality table developed by the (SOA) Committee on Life Insurance Research and containing rates, qx2012+n derived from a combination of the 2012 IAM Period Table and Scale G2, using the method Section 014. (4-6-23)

6. Annuity 2000 Mortality Table. The mortality table developed by the (SOA) Committee on Life Insurance Research. (4-6-23)

7. Generational Mortality Table. A mortality table with mortality rates that decrease for a given age from one year to the next based on a combination of a Period Table and a projection scale containing mortality- improvement rates. (4-6-23)

8. Period Table. A table of mortality rates applying to a given calendar year (the Period). (4-6-23)

9. Projection Scale G2 (Scale G2). A table of annual rates, G2x, of mortality improvement by age for projecting future mortality rates beyond calendar year 2012. This table was developed by the (SOA) Committee on Life Insurance Research. (4-6-23)

IDAPA 18.07.02.011 - Individual Annuity Or Pure Endowment Contracts¶

1. Individual Annuity Mortality Table. Except as stated in Subsections 011.02, the 1983 Table 'a' is approved as an individual annuity mortality table for valuation, and, a company may use it to determine the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after July 1, 1982. (4-6-23)

2. Minimum Standard of Valuation. Except as stated in Subsection 011.03, either the 1983 Table 'a' or the Annuity 2000 Mortality Table is used to determine the minimum standard of valuation for an individual annuity or pure endowment contract issued on or after January 1, 1987. (4-6-23)

3. The Annuity 2000 Mortality Table. Except as stated in Subsection 011.04, the Annuity 2000 Mortality Table is used to determine the minimum standard of valuation for an individual annuity or pure endowment contract issued on or after March 29, 2012. (4-6-23)

4. The 2012 IAR Mortality Table. Except as stated in Subsection 011.05, the 2012 IAR Mortality Table is used to determine the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 2015. (4-6-23)

5. The 1983 Table 'a.' The 1983 Table 'a' without projection is used to determine the minimum Idaho Department of Insurance for Annuities & Pure Endowment Contracts standard of valuation for an individual annuity or pure endowment contract issued on or after March 29, 2012, solely when the contract is based on life contingencies and issued to fund periodic benefits arising from: (4-6-23)

   a. Settlements of claims pertaining to court settlements or out of court settlements from tort actions; (4-6-23)

   b. Settlements involving similar actions like workers' compensation claims; or (4-6-23)

   c. Settlements of long-term disability claims where a temporary or life annuity is used in lieu of continuing disability payments. (4-6-23)

IDAPA 18.07.02.012 - Group Annuity Or Pure Endowment Contracts¶

1. Group Annuity Mortality Tables. Except as stated in Subsections 012.02, the 1983 GAM Table, the 1983 Table 'a' and the 1994 GAR Table are approved as group annuity mortality tables for valuation and, at the option of the company, any one (1) of these tables may be used for purposes of valuation for any annuity or pure endowment purchased on or after July 1, 1982, under a group annuity or pure endowment contract. (4-6-23)

2. Minimum Standard of Valuation. Except as stated in Subsection 012.03, either the 1983 GAM Table or the 1994 GAR Table is used to determine the minimum standard of valuation for an annuity or pure endowment purchased on or after January 1, 1987, under a group annuity or pure endowment contract. (4-6-23) 03 1994 GAR Table. The 1994 GAR Table is used to determine the minimum standard of valuation for an annuity or pure endowment purchased on or after March 29, 2012, under a group annuity or pure endowment contract. (4-6-23)

IDAPA 18.07.03¶

IDAPA 18.07.03.000 - Legal Authority¶

Title 41, Chapters 2 and 6, Sections 41-211 and 612, Idaho Code. (4-6-23)

IDAPA 18.07.03.001 - Scope¶

1. Scope. Provides Tables of select mortality factors and minimum standards for plan valuations with: (4-6-23)

   a. Nonlevel premiums or benefits; or (4-6-23)

   b. Secondary guarantees. (4-6-23)

2. Method. The method for calculating basic reserves defined herein will constitute the commissioners' reserve valuation method for applicable policies. (4-6-23)

3. Applicability. This chapter applies to all life insurance policies, with or without nonforfeiture values, issued on or after March 30, 2001,subject to these exceptions and conditions. (4-6-23)

   a. Exceptions. This chapter does not apply to: (4-6-23)

   i. An individual life insurance policy issued on or after March 30, 2001, if the policy is issued under, and because of, the exercise of a reentry provision in the original life insura nce policy of the same or greater face amount, issued before March 30, 2001, that guarantees the new policy's premium rates. This chapter also does not apply to later policies issued because of the exercise of such a provision, or a derivation of the provision, in the new policy. (4-6-23)
   
   ii. A universal life policy that meets all the following requirements: (4-6-23)
   
       (1) Secondary guarantee period, if any, is five (5) years or less; (4-6-23)
   
       (2) Specified premium for the secondary guarantee period is at least the net level reserve premium for the secondary guarantee period based on the CSO valuation tables, as defined, and the applicable valuation interest rate; and (4-6-23)
   
       (3) The initial surrender charge is at least one hundred percent (100%) of the first year annualized specified premium for the secondary guarantee period. (4-6-23)
   
   iii. A variable life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts. (4-6-23)
   
   iv. A variable universal life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts. (4-6-23)
   
   v. A group life insurance certificate unless the certificate provides for a stated or implied schedule of maximum gross premiums needed to continue coverage in force for a period beyond one (1) year. (4-6-23)
   

   b. Conditions: (4-6-23)

   i. The minimum valuation standard for policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits (other than universal life policies), or both, will be calculated per Section 012. (4-6-23)
   
   ii. The minimum valuation standard for flexible premium and fixed premium universal life insurance policies, which contain provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period, will be calculated per Section 013. (4-6-23)
   

IDAPA 18.07.03.002 - Incorporation By Reference¶

The tables of select mortality factors are incorporated by reference the Appendix to NAIC Model 830, published October 2009 and available on the Department's website, and are the bases to which the respective percentage of Paragraphs 011.01.b., 011.02.b., and 011.02.c. are applied. (4-6-23) Idaho Department of Insurance Including the Use of Select Mortality Factors

IDAPA 18.07.03.010 - Definitions¶

1. Basic Reserves. Reserves cal culated per Section 41-612(5), Idaho Code. (4-6-23)

2. Contract Segmentation Method. Method of dividing the period from issue to mandatory expiration of a policy into successive segments, where each segment's length is the period from the end of the prior segment (from policy inception, for the first segment) to the end of the latest policy year as determined below. All calculations are made using the 1980 CSO Valuation Tables, and, if elected, the optional minimum mortality standard for deficiency reserves set forth in Subsection 011.02. (4-6-23)

3. Deficiency Reserves. Excess, if greater th an zero (0), of (4-6-23)

   a. Minimum reserves calculated per Section 41-612(10), Idaho Code, over (4-6-23)

   b. Basic reserves. (4-6-23)

4. Guaranteed Gross Premiums. Life insurance policy premiums that are guaranteed and determined at issue. (4-6-23)

5. Maximum Valuation Interest Rates. Interest rates defined in Section 41-612(4b), Idaho Code (Computation of Minimum Standard by Calendar Year of Issue), used to determine the minimum standard for valuating life insurance policies. (4-6-23)

6. 1980 CSO Valuation Tables. Commissioners' 1980 Standard Ordinary Mortality Table (1980 CSO Table) without "ten year select factors," and variations of the 1980 CSO Table approved by the NAIC, such as the smoker and nonsmoker versions approved in December 1983. (4-6-23)

7. Scheduled Gross Premium. Smallest illustrated gross premium at issue for other than universal life insurance policies. For universal life insurance policies, scheduled gross premium means the smallest specified premium described in Paragraph 013.01.c., if any, or else the minimum premium described in Paragraph 013.01.d. (4-6-23)

8. Segmented Reserves. (4-6-23)

   a. Reserves calculated using segments produced by the contract segmentation method, equal to the present value of all future guaranteed benefits less the present value of all future net premiums to the policy's mandatory expiration, where the net premiums in each segment are a uniform percentage of the respective guaranteed gross premiums within the segment. The uniform percentage for each segment is such that, at the start of the segment, the present value of the net premiums within the segment equals: (4-6-23)

   i. The present value of the death benefits within the segment, plus (4-6-23)
   
   ii. The present value of any unusual, guaranteed cash value (see Subsection 012.04) occurring at the end of the segment, less (4-6-23)
   
   iii. Any unusual guaranteed cash value occurring at the start of the segment, plus (4-6-23)
   
   iv. For the first segment only, the excess of the Item one (1) over Item two (2), as follows: (4-6-23)
   
       (1) A net level annual premium equal to the present value, at the date of issue, of the benefits provided for in the first segment after the first policy year, divided by the present value, at the date of issue, of an annuity of one (1) per year payable on the first and each subsequent anniversary within the first segment on which a premium falls due. But the net level annual premium will not exceed the net level annual premium on the nineteen (19) year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one (1) year higher than the age at issue of the policy. (4-6-23) Idaho Department of Insurance Including the Use of Select Mortality Factors
   
       (2) A net one (1) year term premium for the benefits provided for in the first policy year. (4-6-23)
   

   b. Each segment's length is determined by the "contract segmentation method." (4-6-23)

   c. The interest rates in a policy's present value calculations cannot exceed the maximum valuation interest rate, determined with a guarantee duration equal to the sum of the lengths of the policy's segments. (4-6-23)

   d. For both basic reserves and deficiency reserves computed by the contract segmentation method, present values will include future benefits and net premiums in the current segment and in all subsequent segments. (4-6-23)

9. Tabular Cost of Insurance. The net single premium at the start of a policy year for one (1) year term insurance in the amount of the guaranteed death benefit in that policy year. (4-6-23)

10. Ten Year Select Factors. The factors adopted with the 1980 amendments to the NAIC Standard Valuation Law. (4-6-23)

11. Unitary Reserves. (4-6-23)

    a. The present value of all future guaranteed benefits less the present value of all future modified net premiums, where: (4-6-23)

    i. Guaranteed benefits and modified net premiums are considered to the mandatory expiration of the policy; and (4-6-23)
    
    ii. Modified net premiums are a uniform percentage of the respective guaranteed gross premiums, where the uniform percentage is such that, at issue, the present value of the net premiums equals the present value of all death benefits and pure endowments, plus the excess of Item one (1) over Item two (2), as follows: (4-6-23)
    
        (1) A net level annual premium equal to the present value, at the date of issue, of the benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one (1) per year payable on the first and each subsequent anniversary of the policy on which a premium falls due. But the net level annual premium will not exceed the net level annual premium on the nineteen (19) year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one (1) year higher than the age at issue of the policy. (4-6-23)
    
        (2) A net one (1) year term premium for the benefits provided for in the first policy year. (4-6-23)
    

    b. The interest rates used in the present value calculations for any policy will not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the length from issue to the mandatory expiration of the policy. (4-6-23)

12. Universal Life Insurance Policy. Any individual life insurance policy for which separately identified interest credits (other than in connection with dividend accumulations, premium deposit funds, or other supplementary accounts) and mortality or expense charges are made to the policy. (4-6-23)

IDAPA 18.07.03.011 - General Calculation Requirements For Basic Reserves And Premium¶

DEFICIENCY RESERVES.

1. Basic Reserves. At the company's election for any one (1) or more specified plans of life insurance, the minimum mortality standard for basic reserves may be calculated using the 1980 CSO valuation tables with select mortality factors. If select mortality factors are elected, they may be: (4-6-23)

   a. The "ten year select factors"; (4-6-23)

   b. The select mortality factors in the tables referenced in Section 002. (4-6-23) Idaho Department of Insurance Including the Use of Select Mortality Factors

2. Deficiency Reserves. Deficiency reserves, if any, are calculated for each policy as the excess, if greater than zero (0), of the quantity A over the basic reserve. The quantity A is obtained by recalculating the basic reserve for the policy using guaranteed gross premiums instead of net premiums when the guaranteed gross premiums are less than the corresponding net premiums. At the company's election, for any one or more specified plans of insurance, the quantity A and the corresponding net premiums used to determine quantity A may be based on the 1980 CSO valuation tables with select mortality factors. If select mortality factors are elected, they may be one (1) of: (4-6-23)

   a. The "ten year select factors"; (4-6-23)

   b. The select mortality factors in the tables as referenced in Section 002; (4-6-23)

   c. For durations in the first segment, X percent of the select mortality factors in the tables as referenced in Section 002, subject to: (4-6-23)

   i. X may vary by policy year, policy form, underwriting classification, issue age, or any other policy factor expected to affect mortality experience; (4-6-23)
   
   ii. X is such that, when using the valuation interest rate used for basic reserves, Item one (1) at least equals Item two (2); (4-6-23)
   
       (1) The actuarial present value of future death benefits, calculated using the mortality rates resulting from the application of X; (4-6-23)
   
       (2) The actuarial present value of future death benefits calculated using anticipated mortality experience without recognition of mortality improvement beyond the valuation date; (4-6-23)
   
   iii. X is such that the mortality rates resulting from the application of X are at least as great as the anticipated mortality experience, without recognition of mortality improvement beyond the valuation date, in each of the first five (5) years after the valuation date; (4-6-23)
   
   iv. The appointed actuary will increase X at any valuation date where it is necessary to continue to meet all the requirements of Paragraph 011.02.c.; (4-6-23)
   
   v. The appointed actuary may decrease X at any valuation date if X continues to meet all requirements of Paragraph 011.02.c.; and (4-6-23)
   
   vi. The appointed actuary will specifically consider the adverse effect on expected mortality and lapsation of any anticipated or actual increase in gross premiums. (4-6-23)
   
   vii. If X is less than one hundred percent (100%) at any duration for any policy, the following requirements are to be met: (4-6-23)
   
       (1) The appointed actuary will annually prepare an actuarial opinion and memorandum for the company in conformance with the requirements of [IDAPA 18.07.09](https://files.dfm.idaho.gov/dfm-admin-website/rules/current/18.07.09/0709.pdf), Section 022; (4-6-23)
   
       (2) The appointed actuary will disclose, in the Regulatory Asset Adequacy Issues Summary, the impact of the insufficiency of assets to support the payment of benefits and expenses and the establishment of statutory reserves during one (1) or more interim periods; and (4-6-23)
   
       (3) The appointed actuary will annually opine, for all policies subject to this chapter, on whether the mortality rates resulting from applying X meet the requirements of Paragraph 011.02.c. This opinion will be supported by an actuarial report, subject to appropriate Actuarial Standards of Practice promulgated by the Actuarial Standards Board of the American Academy of Actuaries. The X factors will reflect anticipated future mortality, without recognition of mortality improvement beyond the valuation date, taking into account relevant emerging experience. (4-6-23) Idaho Department of Insurance Including the Use of Select Mortality Factors
   

3. Applicability. Subsection 011.03 applies to both basic reserves and deficiency reserves. Any set of select mortality factors may be used only for the first segment. But if the first segment is less than ten (10) years, the appropriate "ten year select factors" may be used thereafter through the tenth policy year from the date of issue. (4-6-23)

4. Gross Premiums. In determining basic reserves or deficiency reserves, guaranteed gross premiums without policy fees may be used where the calculation involves the guaranteed gross premium but only if the policy fee is a level dollar amount after the first policy year. In determining deficiency reserves, policy fees may be included in guaranteed gross premiums, even if excluded from the actual calculation of basic reserves. (4-6-23)

5. Changes in Guarantees. Reserves for policies that have changes to guaranteed gross premiums, guaranteed benefits, guaranteed charges, or guaranteed credits that are unilaterally made by the insurer after issue and that are effective for more than one (1) year after the date of the change will be the greatest of the following:(4-6-23)

   a. Reserves calculated ignoring the guarantee; (4-6-23)

   b. Reserves assuming the guarantee was made at issue; and (4-6-23)

   c. Reserves assuming that the policy was issued on the date of the guarantee. (4-6-23)

6. Reserve Adequacy. The Director may require that the company document the extent of the adequacy of reserves for specified blocks, including but not limited to policies issued prior to the effective date of this chapter. This documentation may include a demonstration of the extent to which aggregation with other non-specified blocks of business is relied on in forming the appointed actuary opinion pursuant to and consistent with the requirements of the Actuarial and Memorandum Rule, IDAPA 18.07.09, Section 022. (4-6-23)

IDAPA 18.07.03.012 - Calculating Minimum Valuation Standard For Policies With Guaranteed¶

NONLEVEL GROSS PREMIUMS OR GUARANTEED NONLEVEL BENEFITS (BESIDES UNIVERSAL LIFE POLICIES).

1. Basic Reserves. Basic reserves are calculated as the greater of the segmented reserves and the unitary reserves. Both the segmented reserves and the unitary reserves for any policy will use the same valuation mortality table and selection factors. An insurer may make either of these adjustments when calculating segmented reserves and net premiums: (4-6-23)

   a. Treat the unitary reserve, if greater than zero (0), applicable at the end of each segment as a pure endowment and subtract the unitary reserve, if greater than zero (0), applicable at the start of each segment from the present value of guaranteed life insurance and endowment benefits for each segment; or (4-6-23)

   b. Treat the guaranteed cash surrender value, if greater than zero (0), applicable at the end of each segment as a pure endowment; and subtract the guaranteed cash surrender value, if greater than zero (0), applicable at the start of each segment from the present value of guaranteed life insurance and endowment benefits for each segment. (4-6-23)

2. Deficiency Reserves. (4-6-23)

   a. The deficiency reserve at any duration will be calculated: (4-6-23)

   i. On a unitary basis if the corresponding basic reserve determined by Subsection 012.01 is unitary; (4-6-23)
   
   ii. On a segmented basis if the corresponding basic reserve determined by Subsection 012.01 is segmented; or (4-6-23)
   
   iii. On the segmented basis if the corresponding basic reserve determined by Subsection 012.01 is equal to both the segmented reserve and the unitary reserve. (4-6-23) Idaho Department of Insurance Including the Use of Select Mortality Factors
   

   b. Subsection 012.02 applies to any policy for which the guaranteed gross premium at any duration is less than the corresponding modified net premium calculated by the method used in determining the basic reserves, but using the minimum valuation standards of mortality (specified in Subsection 011.02 and rate of interest).(4-6-23)

   c. Deficiency reserves, if any, are calculated for each policy as the excess if more than zero (0), for the current and all remaining periods, of the quantity A over the basic reserve, where A is obtained as indicated in Subsection 011.02. (4-6-23)

   d. For deficiency reserves determined on a segmented basis, the quantity A is determined using segment lengths equal to those determined for segmented basic reserves. (4-6-23)

3. Minimum Value. Basic reserves will at least equal the tabular cost of insurance for the balance of the policy year, if mean reserves are used. Basic reserves will at least equal the tabular cost of insurance for the balance of the current modal period or to the paid-to-date, if later, but not beyond the next policy anniversary, if mid- terminal reserves are used. The tabular cost of insurance will use the same valuation mortality table and interest rates as that used to calculate the segmented reserves. But if select mortality factors are used, they will be the "ten year select factors". Total reserves (including basic reserves, deficiency reserves and any reserves held for supplemental benefits that would expire at contract termination) never may be less than the amount that the policyowner would receive (including the cash surrender value of the supplemental benefits, if any, referred to above), exclusive of any deduction for policy loans, when the policy terminates. (4-6-23)

4. Unusual Pattern of Guaranteed Cash Surrender Values. (4-6-23)

   a. For any policy with an unusual pattern of guaranteed cash surrender values, the reserves held before the first unusual guaranteed cash surrender value will at least equal the reserves calculated by treating the first unusual guaranteed cash surrender value as a pure endowment and treating the policy as an n year policy providing term insurance plus a pure endowment equal to the unusual cash surrender value, where n is the number of years from the date of issue to the date the unusual cash surrender value is scheduled. (4-6-23)

   b. The reserves held after any unusual guaranteed cash surrender value will at least equal the reserves calculated by treating the policy as an n year policy providing term insurance plus a pure endowment equal to the next unusual guaranteed cash surrender value, and treating any unusual guaranteed cash surrender value at the end of the prior segment as a net single premium, where: (4-6-23)

   i. n is the number of years from the date of the last unusual guaranteed cash surrender value before the valuation date to the earlier of: (4-6-23)
   
       (1) The date of the next unusual guaranteed cash surrender value, if any, that is scheduled after the valuation date; or (4-6-23)
   
       (2) The mandatory expiration date of the policy; and (4-6-23)
   
   ii. The net premium for a given year during the n year period equals the product of the net to gross ratio and the respective gross premium; and (4-6-23)
   
   iii. The net to gross ratio equals Item One (1) divided by Item Two (2) as follows: (4-6-23)
   
       (1) The present value, at the start of the n year period, of death benefits payable during the n year period plus the present value, at the start of the n year period, of the next unusual guaranteed cash surrender value, if any, minus the amount of the last unusual guaranteed cash surrender value, if any, scheduled at the start of the n year period. (4-6-23)
   
       (2) The present value, at the start of the n year period, of the scheduled gross premiums payable during the n year period. (4-6-23)
   

   c. For Subsection 012.04, a policy has an unusual pattern of guaranteed cash surrender values if any Idaho Department of Insurance Including the Use of Select Mortality Factors future guaranteed cash surrender value exceeds the prior year's guaranteed cash surrender value by more than the sum of: (4-6-23)

   i. One hundred ten percent (110%) of the scheduled gross premium for that year; (4-6-23)
   
   ii. One hundred ten percent (110%) of one (1) year's accrued interest on the sum of the prior year's guaranteed cash surrender value and the scheduled gross premium using the nonforfeiture interest rate used for calculating policy guaranteed cash surrender values; and (4-6-23)
   
   iii. Five percent (5%) of the first policy year surrender charge, if any. (4-6-23)
   

5. Optional Exemption for Yearly Renewable Term (YRT) Reinsurance. A company may opt to use this approach for reserves on YRT reinsurance: (4-6-23)

   a. Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year; (4-6-23)

   b. Basic reserves will at least equal the tabular cost of insurance for the appropriate period, as defined in Subsection 012.03; (4-6-23)

   c. Deficiency reserves. (4-6-23)

   i. For each policy year, calculate the excess, if greater than zero (0), of the valuation net premium over the respective maximum guaranteed gross premium. (4-6-23)
   
   ii. Deficiency reserves will at least equal the sum of the present values, at the date of valuation, of the excesses determined in accordance with Subparagraph 012.05.c.i.; (4-6-23)
   

   d. For Subsection 012.05, the calculations use the maximum valuation interest rate and the 1980 CSO mortality tables with or without "ten year select factors"; (4-6-23)

   e. A reinsurance agreement is YRT reinsurance under Subsection 012.05 if only the mortality risk is reinsured; and (4-6-23)

   f. If the assuming company chooses this optional exemption, the ceding company's reinsurance reserve credit will be limited to the amount of reserve the assuming company holds for the affected policies. (4-6-23)

6. Optional Exemption for Attained-Age-Based Yearly Renewable Term Life Insurance Policies. A company may opt to use this approach for reserves for attained-age-based YRT life insurance policies: (4-6-23)

   a. Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year. (4-6-23)

   b. Basic reserves will at least equal to the tabular cost of insurance for the appropriate period, as defined in Subsection 012.03. (4-6-23)

   c. Deficiency reserves: (4-6-23)

   i. For each policy year, calculate the excess, if greater than zero (0), of the valuation net premium over the respective maximum guaranteed gross premium. (4-6-23)
   
   ii. Deficiency reserves at least equal to the sum of the present values, at the date of valuation, of the excesses determined in accordance with Subparagraph 012.06.c.i. (4-6-23)
   

   d. For Subsection 012.06, the calculations use the maximum valuation interest rate and the 1980 CSO valuation tables with or without "ten year select factors." (4-6-23) Idaho Department of Insurance Including the Use of Select Mortality Factors

   e. A policy is an attained-age-based YRT life insurance policy, under Subsection 012.06, if: (4-6-23)

   i. The premium rates (on both the initial current premium scale and the guaranteed maximum premium scale) are based on the attained age of the insured such that the rate for any given policy at a given attained age of the insured is independent of the year the policy was issued; and (4-6-23)
   
   ii. The premium rates (on both the initial current premium scale and the guaranteed maximum premium scale) are the same as the premium rates for policies covering all insureds of the same sex, risk class, plan of insurance and attained age. (4-6-23)
   

   f. For policies that become attained-age-based YRT policies after an initial coverage period, the approach of Subsection 012.06 may be used after the initial period if: (4-6-23)

   i. The initial period is constant for all insureds of the same sex, risk class and plan of insurance; or (4-6-23)
   
   ii. The initial period runs to a common attained age for all insureds of the same sex, risk class, and plan of insurance; and (4-6-23)
   
   iii. After the initial period, the policy meets the conditions of Paragraph 012.06.e.; and (4-6-23)
   

   g. If this election is made, this approach will be applied to determine reserves for all attained-age- based YRT life insurance policies issued on or after this chapter's effective date. (4-6-23)

7. Exemption from Unitary Reserves for Certain n-Year Renewable Term Life Insurance Policies. Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met: (4-6-23)

   a. The policy consists of a series of n-year periods, including the first period and all renewal periods, where n is the same for each period, except that for the final renewal period, n may be truncated or extended to reach the expiry age, provided that this final renewal period is less than ten (10) years and less than twice the size of the earlier n-year periods, and for each period, the premium rates on both the initial current premium scale and the guaranteed maximum premium scale are level; (4-6-23)

   b. The guaranteed gross premiums in all n-year periods are not less than the corresponding net premiums based on the 1980 CSO Table with or without the "ten year select factors;" and (4-6-23)

   c. There are no cash surrender values in any policy year. (4-6-23)

8. Exemption From Unitary Reserves for Certain Juvenile Policies. Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if these conditions are met, based on the initial current premium scale at issue: (4-6-23)

   a. At issue, the insured is age twenty-four (24) or younger; (4-6-23)

   b. Until the insured reaches the end of the juvenile period, which will occur at or before age twenty- five (25), the gross premiums and death benefits are level, and there are no cash surrender values; and (4-6-23)

   c. After the end of the juvenile period, gross premiums are level for the remainder of the premium paying period, and death benefits are level for the remainder of the life of the policy. (4-6-23)

IDAPA 18.07.03.013 - Calculating Minimum Valuation Standard For Flexible Premium And¶

FIXED PREMIUM UNIVERSAL LIFE INSURANCE POLICIES THAT CONTAIN PROVISIONS RESULTING IN THE ABILITY OF A POLICY OWNER TO KEEP A POLICY IN FORCE OVER A SECONDARY GUARANTEE PERIOD.

1. General. (4-6-23) Idaho Department of Insurance Including the Use of Select Mortality Factors

   a. Policies with a secondary guarantee include: (4-6-23)

   i. A policy with a guarantee that the policy will remain in force at the original schedule of benefits, subject only to paying specified premiums; (4-6-23)
   
   ii. A policy in which the minimum premium at any duration is less than the corresponding one (1) year valuation premium, calculated using the maximum valuation interest rate and the 1980 CSO valuation tables with or without "ten year select factors;" or (4-6-23)
   
   iii. A policy with any combination of Subparagraphs 013.01.a.i. and 013.01.a.ii. (4-6-23)
   

   b. A secondary guarantee period is the period for which the policy is guaranteed to remain in force subject only to a secondary guarantee. When a policy contains more than one secondary guarantee, the minimum reserve will be the greatest of the respective minimum reserves at that valuation date of each unexpired secondary guarantee, ignoring all other secondary guarantees. Secondary guarantees that the insurer unilaterally changes after issue will be considered to have been made at issue. Reserves described in Subsections 013.02 and 013.03 below will be recalculated from issue to reflect these changes. (4-6-23)

   c. Specified premiums mean the premiums specified in the policy, the payment of which guarantees that the policy will remain in force at the original schedule of benefits, but which otherwise would be insufficient to keep the policy in force in the absence of the guarantee if maximum mortality and expense charges and minimum interest credits were made and any applicable surrender charges were assessed. (4-6-23)

   d. For Section 013, the minimum premium for any policy year is the premium that, when paid into a policy with a zero (0) account value at the start of the policy year, produces a zero (0) account value at the end of the policy year. The minimum premium calculation will use the policy cost factors (including mortality charges, loads and expense charges) and the interest crediting rate, which are all guaranteed at issue. (4-6-23)

   e. The one (1) year valuation premium means the net one (1) year premium based on the original schedule of benefits for a given policy year. The one (1) year valuation premiums for all policy years are calculated at issue. The select mortality factors defined in Paragraphs 011.02.b., 011.02.c., and 011.02.d. cannot be used to calculate the one (1) year valuation premiums. (4-6-23)

   f. The one (1) year valuation premium should reflect the frequency of fund processing, and the distribution of deaths assumption employed in the calculation of the monthly mortality charges to the fund. (4-6-23)

2. Basic Reserves for Secondary Guarantees. Basic reserves for secondar y guarantees will be the segmented reserves for the secondary guarantee period. In calculating the segments and the segmented reserves, the gross premiums will be set equal to the specified premiums, if any, or otherwise to the minimum premiums, that keep the policy in force and the segments will be determined according to the "contract segmentation method." (4-6-23)

3. Deficiency Reserves for Secondary Guarantees. Any deficiency reserves for secondary guarantees will be calculated for the secondary guarantee period as described in Subsection 012.02 with gross premiums set equal to the specified premiums, if any, or otherwise to the minimum premiums that keep the policy in force. (4-6-23)

4. Minimum Reserves. The minimum reserves during the secondary guarantee period are the greater of: (4-6-23)

   a. The basic reserves for the secondary guarantee plus the deficiency reserve, if any, for the secondary guarantees; or (4-6-23)

   b. The minimum reserves prescribed by other rules or rules governing universal life plans. (4-6-23)

IDAPA 18.07.04¶

IDAPA 18.07.04.000 - Legal Authority¶

Title 41, Chapters 2 and 6, Idaho Code. (3-31-22)

IDAPA 18.07.04.001 - Title And Scope¶

1. Title. IDAPA 18.07.04, "Annual Financial Reporting." (3-31-22)

2. Scope. To improve the Department's surveillance of the financial condition of insurers by requiring: (1) an annual audit of the financial statements reporting the financial position and the results of operations of insurers by independent certified public accountants; (2) Communication of Internal Control Related Matters Noted in an Audit; and (3) Management's Report of Internal Control over Financial Reporting. Insurers having direct premiums written in this state of less than one million dollars ($1,000,000) in any calendar year and less than one thousand (1,000) policyholders or certificate holders of direct written policies nationwide at the end of such calendar year are exempt from this rule for such year (unless the Director makes a specific finding that compliance is necessary for the Director to carry out statutory responsibilities) except that insurers having assumed premiums pursuant to contracts or treaties of reinsurance of one million dollars ($1,000,000) or more, or both, will not be exempt. Foreign or alien insurers filing the audited financial report in another state, pursuant to that other state's requirement for filing of audited financial reports found by the Director to be substantially similar to the requirements herein, are exempt from Section 011 through Section 020 of this rule if conditions of Subsection 001.02.a. or 001.02.b., of this rule apply: (3-31-22)

   a. A copy of the Audited financial report, Communication of Internal Control Related Matters Noted in an Audit, and the Accountant's Letter of Qualifications that are filed with the other state are filed with the Director in accordance with the filing dates in Sections 011, 018, and 019 respectively (Canadian insurers may submit accountants' reports as filed with the Office of the Superintendent of Financial Institutions, Canada). (3-31-22)

   b. A copy of any Notification of Adverse Financial Condition Report filed with the other state is filed with the Director pursuant to Section 017. (3-31-22)

   c. Foreign or alien insurers need to file Management's Report of Internal Control over Financial Reporting in another state are exempt from filing the Report in this state provided the other state has substantially similar reporting requirements and the Report is filed with the Director of the other state within the time specified. (3-31-22)

   d. This rule does not prohibit, preclude or in any way limit the Director from ordering, conducting or performing examinations of insurers pursuant to the provisions of Title 41, Idaho Code, and the rules, practices and procedures of the Department. (3-31-22)

IDAPA 18.07.04.002 - Incorporation By Reference¶

This rule incorporates by reference the full text of the National Association of Insurance Commissioners Financial Condition Examiners Handbook and the National Association of Insurance Commissioners Annual Statement Instructions and Accounting Practices and Procedures Manual, pursuant to Sections 41-223 and 47-335, Idaho Code. (3-31-22)

IDAPA 18.07.04.010 - Definitions¶

1. Affiliate. Is a person that directly, or indirectly through one (1) or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. (3-31-22)

2. Audit Committee. A committee (or equivalent body) established by the board of directors of an entity for the purpose of overseeing the accounting and financial reporting processes of an insurer or group of insurers, and audits of financial statements of the insurer or group of insurers. The Audit committee of any entity that controls a group of insurers may be deemed to be the Audit committee for one (1) or more of these controlled insurers solely for the purposes of this rule at the election of the controlling person. Refer to Subsection 021.05 of this rule, for exercising this election. If an Audit committee is not designated by the insurer, the insurer's entire board of directors constitutes the Audit committee. (3-31-22)

3. Audited Financial Report. Includes those items specified in Section 012 of this rule. (3-31-22)

4. Indemnification. An agreement of indemnity or a release from liability where the intent or effect is to shift or limit in any manner the potential liability of the person or firm for failure to adhere to applicable auditing or professional standards, whether or not resulting in part from knowing or other misrepresentations made by the insurer or its representatives. (3-31-22)

5. Group of Insurers. Those licensed insurers included in the reporting requirements of Title 41, Chapter 38, Idaho Code, or a set of insurers as identified by management, for the purpose of assessing the effectiveness of Internal control over financial reporting. (3-31-22)

6. Internal Control over Financial Reporting. A process effected by an entity's board of directors, management and other personnel providing reasonable assurance of the reliability of the financial statements, such as those items specified in Subsections 012.02 through 012.07 of this rule, and includes those policies and procedures that: (3-31-22)

   a. Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets; (3-31-22)

   b. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements, such as those items specified in Subsections 012.02 through 012.07 of this rule, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and (3-31-22)

   c. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements, such as those items specified in Subsections 012.02 through 012.07 of this rule. (3-31-22)

7. Section 404. Section 404 of the Sarbanes-Oxley Act of 2002 and the SEC's rules and regulations promulgated thereunder. (3-31-22)

8. Section 404 Report. Management's report on "internal control over financial reporting" as defined by the SEC and the related attestation report of the independent certified public accountant as described in Section 3A. (3-31-22)

9. SOX Compliant Entity. An entity that needs to be compliant with, or voluntarily is compliant with, the following provisions of the Sarbanes-Oxley Act of 2002: (3-31-22)

   a. The preapproval requirements of Section 201 (Section 10A(i) of the Securities Exchange Act of 1934); (3-31-22)

   b. The Audit committee independence requirements of Section 301 (Section 10A(m)(3) of the Securities Exchange Act of 1934); and (3-31-22)

   c. The Internal control over financial reporting requirements of Section 404 (Item 308 of SEC Regulation S-K). (3-31-22)

IDAPA 18.07.04.011 - General Requirements Related To Filing And Extensions For Filing Of¶

ANNUAL AUDITED FINANCIAL REPORTS AND AUDIT COMMITTEE APPOINTMENT.

1. Annual Audit Filing Date. All insurers will have an annual audit by an independent certified public accountant and file an audited financial report with the Director on or before June 1 for the year ended December 31 immediately preceding. The Director may require an insurer to file an audited financial report earlier than June 1 with ninety (90) days advance notice. (3-31-22)

2. Request for Extension. Extensions of the June 1 filing date may be granted by the Director for thirty (30) day periods upon a showing by the insurer and its independent certified public accountant of the reasons for the request and a determination by the Director of good cause fo r an extension. The request for extension needs to be submitted in writing at least ten (10) days prior to the due date in sufficient detail to permit the Director to make an informed decision with respect to the extension. If an extension is granted, an extension of thirty (30) days is also granted to the filing of Management's Report of Internal Control over Financial Reporting. (3-31-22)

3. Designation of Audit Committee. Every insurer needs to file an annual audited financial report pursuant to this chapter will designate an Audit committee, as defined in Section 010. The Audit committee of an entity controlling an insurer may be deemed to be the insurer's Audit committee for purposes of this rule at the controlling person's election. (3-31-22)

IDAPA 18.07.04.012 - Contents Of Annual Audited Financial Report¶

1. Contents of Report. The annual audited financial report will report the financial position of the insurer as of the end of the most recent calendar year and the results of it s operations, cash flows and changes in capital and surplus for the year then ended in conformity with statutory accounting practices prescribed, or otherwise permitted, by the Department of Insurance of the state of domicile. The annual Audited financial report will include the following: (3-31-22)

   a. Report of independent certified public accountant; (3-31-22)

   b. Balance sheet reporting admitted assets, liabilities, capital and surplus; (3-31-22)

   c. Statement of operations; (3-31-22)

   d. Statement of cash flow; (3-31-22)

   e. Statement of changes in capital and surplus; (3-31-22)

   f. Notes to financial statements, which will those prescribed by the appropriate NAIC Annual Statement Instructions and NAIC Accounting Practices and Procedures Manual. The notes will include a reconciliation of differences, if any, between the audited statutory financial statements and the an nual statement filed pursuant to Section 41-335, Idaho Code, or other applicable section of Idaho Code with a written description of the nature of these differences. (3-31-22)

   g. The financial statements included in the audited financial report will be prepared in a form and using language and groupings substantially the same as the relevant sections of the annual statement of the insurer filed with the Director. The financial statement will be comparative, presenting the amounts as of December 31 of the current year and the amounts as of the immediately preceding December 31. (In the first year in which an insurer needs to file an audited financial report, the comparative data may be omitted.) (3-31-22)

IDAPA 18.07.04.013 - Designation Of Independent Certified Public Accountant¶

1. Registration with the Director. Each insurer prescribed by this rule to file an annual audited financial report needs, within sixty (60) days after becoming subject to the requirement, to register with the Director in writing the name and address of the independent certified public accountant or accounting firm retained to conduct the annual audit. Insurers not retaining an independent certified public accountant on the effective date of this rule will register the name and address of their retained independent certified public accountant not less than six (6) months before the date when the first audited financial report is to be filed. (3-31-22)

2. Letter of Awareness. The insurer will obtain a letter from the accountant, and file a copy with the Director stating that the accountant is aware of the provisions of the Insurance Code and the Department's rules of the state of domicile that relate to accounting and financial matters and affirming that they will express his opinion on the financial statements in terms of their conformity to the statutory accounting practices prescribed or otherwise permitted by that Department, specifying appropriate exceptions. (3-31-22)

3. Dismissal or Resignation. If an accountant who was the accountant for the immediately preceding filed audited financial report is dismissed or resigns, the insurer will within five (5) business days notify the Department. The insurer will also furnish the Director with a separate letter within ten (10) business days after the above notification stating whether in the twenty-four (24) months preceding such event there were any disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure; which disagreements, if not resolved to the satisfaction of the former accountant, would have caused the accountant to make reference to the subject matter of the disagreement in connection with the opinion. The disagreements need to be reported in response to this rule include those resolved to the former accountant's satisfaction and not resolved to the former accountant's satisfaction. Disagreements contemplated by this section occur at the decision-making level, such as between personnel of the insurer responsible for presentation of financial statements and personnel of the accounting firm responsible for rendering the report. The insurer will also in writing request the former accountant to furnish a letter addressed to th e insurer stating whether the accountant agrees with the statements contained in the insurer's letter and, if not, stating the reasons for which the accountant does not agree; and the insurer will furnish such responsive letter from the former accountant to the Director with its own. (3-31-22)

IDAPA 18.07.04.014 - Qualifications Of Independent Certified Public Accountant¶

1. In Good Standing. The Director will not recognize any person or firm as a qualified independent certified public accountant that is not in good standing with the AICPA in all states in which the accountant is licensed to practice, or, for a Canadian or British company, that is not a chartered accountant; or has either directly or indirectly entered into an agreement of indemnity or release from liability ("indemnification") with respect to the insurer's audit. (3-31-22)

2. Conformance with Ethical and Professional Standards. Except as otherwise provided in this rule, the Director will recognize an independent certified public accountant as qualified if the accountant conforms to the standards contained in the Code of Professional Ethics of the AICPA and Rules and Regulations and Code of Ethics and Rules of Professional Conduct of the Idaho Board of Public Accountancy, or similar code. (3-31-22)

3. Resolution of Disputes and Delinquency Proceedings. A qualified independent certified public accountant may enter into an agreement with an insurer to have audit-related disputes resolved by mediation or arbitration. In the event of a delinquency proceeding commenced against the in surer under Title 41, Chapter 33, the mediation or arbitration provisions operates at the option of the statutory successor. (3-31-22)

4. Capacity to Render Report for Consecutive Years. The lead (or coordinating) audit partner (primarily responsible for the audit) cannot act in the capacity for more than five (5) consecutive years. The person will be disqualified from acting in that or a similar capacity for the same company or its insurance subsidiaries or affiliates for a period of five (5) consecutive years. An insurer may make application to the Director for relief from the above requirement due to unusual circumstances. Application should be made at least thirty (30) days before the end of the calendar year. The Director may consider the following factors in determining if the relief should be granted: (3-31-22)

   a. Number of partners, expertise of the partners or the number of insurance clients in the currently registered firm; (3-31-22)

   b. Premium volume; or (3-31-22)

   c. Number of jurisdictions in which the insurer transacts business. (3-31-22)

5. Relief from Limitation on Consecutive Appointment of Lead Partner. The insurer will file, with its annual statement filing, the approval for relief from Subsection 014.04 of this rule, with the states that it is licensed in or doing business in and the NAIC. If the nondomestic state accepts electronic filing with the NAIC, the insurer will file the approval in an electronic format acceptable to the NAIC. (3-31-22)

6. Grounds for Not Recognizing as Qualified. The Director will neither recognize as a qualified independent certified public accountant, nor accept any annual Audited financial report, prepared in whole or in part by, any natural person who: (3-31-22)

   a. Has been convicted of fraud, bribery, a violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Sections 1961 to 1968, or any dishonest conduct or practices under federal or state law; (3-31-22)

   b. Has been found to have violated the insurance laws of this state with respect to any previous reports submitted under this rule; or (3-31-22)

   c. Has demonstrated a pattern or practice of failing to detect or disclose material information in previous reports filed under the provisions of this rule. (3-31-22)

7. Hearings. The Director of insurance may, as provided in Chapter 52, Title 67 and Chapter 2, Title 41, Idaho Code and IDAPA 04.11.01, hold a hearing to determine whether an independent certified public accountant is qualified and, considering the evidence presented, may rule that the accountant is not qualified for purposes of expressing his opinion on the financial statements in the annual Audited financial report made pursuant to this rule and require the insurer to replace the accountant with another whose relationship with the insurer is qualified within the meaning of this rule. (3-31-22)

8. Banned Services. The Director will not recognize as a qualified independent certified public accountant, nor accept an annual audited financial report, prepared in whole or in part by an accountant who provides to an insurer, contemporaneously with the audit, the following non-audit services: (3-31-22)

   a. Bookkeeping or other services related to the accounting records or financial statements of the insurer; (3-31-22)

   b. Financial information systems design and implementation; (3-31-22)

   c. Appraisal or valuation services, fairness opinions, or contribution-in-kind reports. (3-31-22)

   d. Actuarially-oriented advisory services involving the determination of amounts recorded in the financial statements. The accountant may assist an insurer in understanding the methods, assumptions and inputs used in the determination of amounts recorded in the financial statement only if it is reasonable to conclude that the services provided will not be subject to audit procedures during an audit of the insurer's financial statements. An accountant's actuary may also issue an actuarial opinion or certification ("opinion") on an insurer's reserves if the following conditions have been met: (3-31-22)

   i. Neither the accountant nor the accountant's actuary has performed any management functions or made any management decisions; (3-31-22)
   
   ii. The insurer has competent personnel (or engages a third party actuary) to estimate the reserves for which management takes responsibility; and (3-31-22)
   
   iii. The accountant's actuary tests the reasonableness of the reserves after the insurer's management has determined the amount of the reserves; (3-31-22)
   

   e. Internal audit outsourcing services; (3-31-22)

   f. Management functions or human resources; (3-31-22)

   g. Broker or dealer, investment adviser, or investment banking services; (3-31-22)

   h. Legal services or expert services unrelated to the audit; or (3-31-22)

   i. Any other services that the Director determines, by rule, are impermissible. (3-31-22)
   

9. Principles of Independence. In general, the principles of independence with respect to services provided by the qualified independent certified public accountant are largely predicated on three (3) basic principles, violations of which would impair the accountant's independence. The principles are that the accountant: (3-31-22)

   a. Cannot function in the role of management; (3-31-22)

   b. Cannot audit his own work; and (3-31-22)

   c. Cannot serve in an advocacy role for the insurer. (3-31-22)

10. Exemption from Banned Services. Insurers having direct written and assumed premiums of less than one hundred million dollars ($100,000,000) in any calendar year may request an exemption from Subsection 014.08 of this rule. The insurer will file with the Director a written statement discussing the reasons why the insurer should be exempt from these provisions. If the Director finds, upon review of this statement, that compliance with this regulation would constitute a financial or organizational hardship upon the insurer, an exemption may be granted. (3-31-22)

11. Permitted Non-Audit Services. A qualified independent certified public accountant who performs the audit may engage in other non-audit services, including tax services, that are not described in Subsection 014.08 of this rule, or that do not conflict with Subsection 014.09 of this rule, only if the activity is approved in advance by the Audit committee, in accordance with Subsection 014.12 of this rule. (3-31-22)

12. Preapproval Requisite by Audit Committee. All auditing services and non-audit services provided to an insurer by the qualified independent certified public accountant of the insurer will be preapproved by the Audit committee. The preapproval requirement is waived with respect to non-audit services if the insurer is a SOX Compliant Entity or a direct or indirect wholly-owned subsidiary of a SOX Compliant Entity; or (3-31-22)

    a. The aggregate amount of all such non-audit services provided to the insurer constitutes not more than five percent (5%) of the total amount of fees paid by the insurer to its qualified independent certified public accountant during the fiscal year in which the non-audit services are provided; (3-31-22)

    b. The services were not recognized by the insurer at the time of the engagement to be non-audit services; and (3-31-22)

    c. The services are promptly brought to the attention of the Audit committee and approved prior to the completion of the audit by the Audit committee or by one (1) or more members of the Audit committee who are the members of the board of directors to whom authority to grant such approvals has been delegated by the Audit committee. (3-31-22)

13. Delegation by Audit Committee. The Audit committee may delegate to one (1) or more designated members of the Audit committee the authority to grant the preapprovals prescribed by Subsection 014.12 of this rule. The decisions of any member to whom this authority is delegated will be presented to the full Audit committee at each of its scheduled meetings. (3-31-22)

14. Prior Employment Banned. The Director will not recognize an independent certified public accountant as qualified for a particular insurer if a member of the board, president, chief executive officer, controller, chief financial officer, chief accounting officer, or any person serving in an equivalent position for that insurer, was employed by the independent certified public accountant and participated in the audit of that insurer during the one

        (1) year period preceding the date that the most current statutory opinion is due. Subsection 014.14 of this rule, will only apply to partners and senior managers involved in the audit. (3-31-22)
    

    a. An insurer may make application to the Director for relief from Subsection 014.14 of this rule, on the basis of unusual circumstances. (3-31-22)

    b. The insurer will file, with its annual statement filing, the approval for relief from Subsection 014.14 of this rule, with the states that it is licensed in or doing business in and the NAIC. If the nondomestic state accepts electronic filing with the NAIC, the insurer will file the approval in an electronic format acceptable to the NAIC. (3-31-22)

IDAPA 18.07.04.015 - Consolidated Or Combined Audits¶

An insurer may make written application to the Director for approv al to file audited consolidated or combined financial statements in lieu of separate annual audited financial statements if the insurer is part of a group of insurance companies that utilizes a pooling or one hundred percent (100%) reinsurance agreement that affects the solvency and integrity of the insurer's reserves and such insurer cedes all of its direct and assumed business to the pool. In such cases, a columnar consolidating or combining worksheet will be filed with the report, as follows: (3-31-22)

1. Worksheet. Amounts shown on the consolidated or combined Audited financial report will be shown on the worksheet; (3-31-22)

2. Separate Amounts. Amounts for each insurer subject to this section will be stated separately; (3-31-22)

3. Noninsurance Operations. Noninsurance operations may be shown on the worksheet on a combined or individual basis; (3-31-22)

4. Explanations of Consolidating and Eliminating Entries. Explanations of consolidating and eliminating entries will be included; and (3-31-22)

5. Reconciliation. A reconciliation will be included of any differences between the amounts shown in the individual insurer columns of the worksheet and comparable amounts shown on the annual statement of the insurers. (3-31-22)

IDAPA 18.07.04.016 - Scope Of Audit And Report Of Independent Certified Public Accountant¶

Financial statements furnished pursuant to Section 012 hereof will be examined by the independent certified public accountant. The audit of the insurer's financial statements will be conducted in accordance with generally accepted auditing standards. The independent certified public accountant should obtain an understanding of internal control sufficient to plan the audit. To the extent prescribed by the standards of his profession, fo r those insurers prescribed to file a Management's Report of Internal Control over Financial Reporting pursuant to Section 023, the independent certified public accountant should consider (as that term is defined in generally accepted auditing standards) the most recently available report in planning and performing the audit of the statutory financial statements. Consideration will be given to the other procedures illustrated in the Financial Condition Examiner's Handbook promulgated by the National Association of Insurance Commissioners as the independent certified public accountant deems necessary. (3-31-22)

IDAPA 18.07.04.017 - Notification Of Adverse Financial Condition¶

The insurer needed to furnish the annual Audited financial report will require the independent certified public accountant to report, in writing, within five (5) business days to the board of directors or its Audit committee any determination by the independent certified public accountant that the insurer has materially misstated its financial condition as reported to the Director as of the balance sheet date currently under audit or that the insurer does not meet the minimum capital and surplus requirements of Title 41, Idaho Code, as of that date. An insurer that has received a report pursuant to this paragraph will forward a copy of the report to the Director within five (5) business days of receipt of the report and will provide the independent certified public accountant making the report with evidence of the report being furnished to the Director. If the independent certified public accountant fails to receive such evidence within the mandatory five (5) business day period, the independent certified public accountant will furnish to the Director a copy of its report within the next five (5) business days. No independent certified public accountant will be liable in any manner to any person for any statement made in connection with Section 017 if the statement is made in good faith in compliance with Section 017. If the accountant, subsequent to the date of the Audited financial report filed pursuant to this rule, becomes aware of facts which might have affected his report, the Director notes the obligation of the accountant to take action as prescribed by the standards of his profession. (3-31-22)

IDAPA 18.07.04.018 - Communication Of Internal Control Related Matters Noted In An Audit¶

In addition to the annual audited financial report, each insurer will furnish the Director with a written communication as to any unremediated material weaknesses in its Internal control over financial reporting noted during the audit. Such communication will be prepared by the accountant within sixty (60) days after the filing of the annual audited financial report, and will contain a description of any unremediated material weakness (as the term material weakness is defined by the standards of his profession) as of December 31 immediately preceding (so as to coincide with the audited financial report discussed in Subsection 011.01, of this rule) in the insurer's Internal control over financial reporting noted by the accountant during the course of their audit of the financial statements. If no unremediated material weaknesses were noted, the communication should so state. The insurer needs to provide a description of remedial actions taken or proposed to correct unremediated material weaknesses, if the actions are not described in the accountant's communication. (3-31-22)

IDAPA 18.07.04.019 - Accountant'S Letter Of Qualification¶

The accountant will furnish the insurer in connection with, and for inclusion in, the filing of the annual audited financial report, a letter stating: (3-31-22)

1. Independence. That the accountant is independent with respect to the insurer and conforms to the standards of his profession as contained in the Code of Professional Ethics and pronouncements of the AICPA and the Rules of Professional Conduct of the Idaho Board of Public Accountancy, or similar code; (3-31-22)

2. Background and Experience. The background and experience in general, and the experience in audits of insurers of the staff assigned to the engagement and whether each is an independent certified public accountant. Nothing within this rule will be construed as prohibiting the accountant from utilizing such staff as he deems appropriate where use is consistent with the standards prescribed by generally accepted auditing standards; (3-31-22)

3. Compliance with Rule. That the accountant understands the annual audited financial report and his opinion thereon will be filed in compliance with this rule and that the Director will be relying on this information in the monitoring and regulation of the financial position of insurers; (3-31-22)

4. Consent to Requirements of Section 020. That the accountant consents to the requirements of the Director's designee or appointed agent, the workpapers, as defined in Section 020; (3-31-22)

5. Properly Licensed. A representation that the accountant is properly licensed by an appropriate state licensing authority and is a member in good standing in the AICPA; and (3-31-22)

6. Compliance with Section 014. A representation that the accountant is in compliance with the requirements of Section 014 of this rule. (3-31-22)

IDAPA 18.07.04.020 - Definition, Availability And Maintenance Of Certified Public¶

ACCOUNTANTS WORKPAPERS. Workpapers are the records kept by the independent certified public accountant of the procedures followed, the tests performed, the information obtained, and the conclusions reached pertinent to the accountant's audit of the financial statements of an insurer. Workpapers, accordingly, may include audit planning documentation, work programs, analyses, memoranda, letters of confirmation and representation, abstracts of company documents and schedules or commentaries prepared or obtained by the independent certified public accountant in the course of his audit of the financial statements of an insurer and which support the accountant's opinion. Every insurer needs to file an Audited financial report pursuant to this rule, will require the accountant to make available for review by the insurance department examiners, all workpapers prepared in the conduct of the accountant's audit and any communications related to the audit between the accountant and the insurer, at the office of the insurer, at the insurance department or at any other reasonable place designated by the Director. The insurer will require that the accountant retain the audit workpapers and communications until the insurance department has filed a report on examination covering the period of the audit but no longer than seven (7) years from the date of the audit report. In the conduct of the aforementioned periodic review by the insurance. department examiners, it will be agreed that photocopies of pertinent audit workpapers may be made and retained by the department. Such reviews by the department examiners will be considered investigations and all working papers and communications obtained during the course of such investigations will be afforded the same confidentiality as other examination workpapers generated by the department. (3-31-22)

IDAPA 18.07.04.021 - Requirements For Audit Committees¶

This section will not apply to foreign or alien insurers licensed in this state or an insurer that is a SOX Compliant Entity or a direct or indirect wholly-owned subsidiary of a SOX Compliant Entity. (3-31-22)

1. Responsibility. The Audit committee will be directly responsible for the appointment, compensation and oversight of the work of any accountant (including resolution of disagreements between management and the accountant regarding financial reporting) for the purpose of preparing or issuing the audited financial report or related work pursuant to this chapter. Each accountant will report directly to the Audit committee. (3-31-22)

2. Corporate Membership. Each member of the Audit committee will need to be a member of the board of directors of the insurer or a member of the board of directors of an entity elected pursuant to Subsection 021.05 and Section 010 of this rule. (3-31-22)

3. Independence. In order to be considered independent for purposes of Section 021, a member of the Audit committee will not, other than in his capacity as a member of the Audit committee, the board of directors, or any other board committee, accept any consulting, advisory or other compensatory fee from the entity or be an affiliated person of the entity or any subsidiary thereof. However, if law requires board participation by otherwise non-independent members, that law will prevail and such members may participate in the Audit committee and be designated as independent for Audit committee purposes, unless they are an officer or employee of the insurer or one

       (1) of its affiliates. (3-31-22)
   

4. Continuation of Service. If a member of the Audit committee ceases to be independent for reasons outside the member's reasonable control, that person, with notice by the responsible entity to the Director, may remain an Audit committee member of the responsible entity until the earlier of the next annual meeting of the responsible entity or one (1) year from the occurrence of the event that caused the member to be no longer independent. (3-31-22)

5. Controlling Person. To exercise the election of the controlling person to designate the Audit committee for purposes of this rule, the ultimate controlling person will provide written notice to the directors of insurance of the affected insurers. Notification will be made timely prior to the issuance of the statutory audit report and include a description of the basis for the election. The election can be changed through notice to the Director by the insurer, which needs to include a description of the basis for the change. The election will remain in effect for perpetuity, until rescinded. (3-31-22)

6. Accountant's Reports to Audit Committee. The Audit committee will require the accountant that performs for an insurer any audit prescribed by this rule to timely report to the Audit committee in accordance with the standards of his profession. If an insurer is a member of an insurance holding company system, the reports prescribed by Subsection 021.06 of this rule, may be provided to the Audit committ ee on an aggregate basis for insurers in the holding company system, provided that any substantial differences among insurers in the system are identified to the Audit committee. The accountant's reports need to include: (3-31-22)

   a. All significant accounting policies and material permitted practices; (3-31-22)

   b. All material alternative treatments of financial information within statutory accounting principles that have been discussed with management officials of the insurer, ramifications of the use of the alternative disclosures and treatments, and the treatment preferred by the accountant; and (3-31-22)

   c. Other material written communications between the accountant and the management of the insurer, such as any management letter or schedule of unadjusted differences. (3-31-22)

7. Requisite Proportion of Independent Audit Committee Members. The proportion of independent Audit committee members will meet or exceed the following criteria: (3-31-22) Prior Calendar Year Direct Written and Assumed Premiums $0 - $300,000,000 Over $300,000,000 - $500,000,000 Over $500,000,000 No minimum requirements. Majority (50% or more) of members will Supermajority of members (75% See also Note A and B. be independent. See also Note A and B. or more) will be independent. See also Note A. Prior Calendar Year Direct Written and Assumed Premiums Note A: The Director has authority afforded by state law to require the entity's board to enact improvements to the independence of the Audit committee membership if the insurer is in a RBC action level event, meets one or more of the standards of an insurer deemed to be in hazardous financial condition, or otherwise exhibits qualities of a troubled insurer. Note B: All insurers with less than $500,000,000 in prior year direct written and assumed premiums are encouraged to structure their Audit committees with at least a supermajority of independent Audit committee members. Note C: Prior calendar year direct written and assumed premiums will be the combined total of direct premiums and assumed premiums from non-affiliates for the reporting entities. (3-31-22)

8. Hardship Waiver. An insurer with direct written and assumed premium, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than five hundred million dollars ($500,000,000) may make application to the Director for a waiver from the Section 021 requirements based upon hardship. The insurer will file, with its annual statement filing, the approval for relief from Section 021 with the states that it is licensed in or doing business in and the NAIC. If the nondomestic state accepts electronic filing with the NAIC, the insurer will file the approval in an electronic format acceptable to the NAIC. (3-31-22)

IDAPA 18.07.04.022 - Conduct Of Insurer In Connection With The Preparation Of Requisite¶

REPORTS AND DOCUMENTS.

1. False or Misleading Statements. No director or officer of an insurer may, directly or indirectly make or cause to be made a materially false or misleading statement to an accountant in connection with any audit, review or communication prescribed under this chapter. (3-31-22)

2. Omissions. No director or officer of an insurer may, directly or indirectly omit to state, or cause another person to omit to state, any material fact necessary in order to make statements made, in light of the circumstances under which the statements were made, not misleading to an accountant in connection with any audit, review or communication prescribed under this chapter. (3-31-22)

3. Coercion. No officer or director of an insurer, or any other person acting under the direction thereof, may directly or indirectly take any action to coerce, manipulate, mislead or fraudulently influence any accountant engaged in the performance of an audit pursuant to this chapter if that person knew or should have known that the action, if successful, could result in rendering the insurer's financial statements materially misleading. For purposes of Subsection 022.03 of this rule, actions that, "if successful, could result in rendering the insurer's financial statements materially misleading" include, but are not limited to, actions taken at any time with respect to the professional engagement period to coerce, manipulate, mislead or fraudulently influence an accountant: (3-31-22)

   a. To issue or reissue a report on an insurer's financial statements that is not warranted in the circumstances (due to material violations of statutory accounting principles prescribed by the Director, generally accepted auditing standards, or other professional or regulatory standards); (3-31-22)

   b. Not to perform audit, review or other procedures prescribed by generally accepted auditing standards or other professional standards; (3-31-22)

   c. Not to withdraw an issued report; or (3-31-22)

   d. Not to communicate matters to an insurer's Audit committee. (3-31-22)

IDAPA 18.07.04.023 - Management¶

1. Premium Threshold. Every insurer needs to file an audited financial report pursuant to this chapter that has annual direct written and assumed premiums, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of five hundred million dollars ($500,000,000) or more will prepare a report of the insurer's or group of insurers' internal control over financial reporting, as these terms are defined in Section 010. The report will be filed with the Director along with the Communication of Internal Control Related Matters Noted in an Audit described under Section 018. Management's Report of Internal Control over Financial Reporting will be as of December 31 immediately preceding. (3-31-22)

2. RBC Level or Other Event. Notwithstanding the premium threshold in Subsection 023.01 of this rule, the Director may require an insurer to file Management's Report of Internal Control over Financial Reporting if the insurer is in any RBC level event, or meets any one (1) or more of the standards of an insurer deemed to be in hazardous financial condition as defined in IDAPA 18.07.05, "Director's Authority for Companies Deemed to be in Hazardous Financial Condition." (3-31-22)

3. Section 404. An insurer or a group of insurers may file its or its parent's Section 404 Report and an addendum in satisfaction of this Section 023 requirement provided that those internal controls of the insurer or group of insurers having a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements (those items included in Subsections 012.02 through 012.07 of this rule) were included in the scope of the Section 404 Report. The addendum will be a positive statement by management that there are no material processes with respect to the preparation of the insurer's or group of insurers' audited statutory financial statements (those items included in Subsections 012.02 through 012.07 of this rule) excluded from the Section 404 Report. If there are internal controls of the insurer or group of insurers that have a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements and those internal controls were not included in the scope of the Section 404 Report, the insurer or group of insurers may either file: (3-31-22)

   a. A Section 023 report; or (3-31-22)

   b. The Section 404 Report and a Section 023 report for those internal controls that have a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements not covered by the Section 404 Report, providing the insurer or group of insurers is: (3-31-22)

   i. Directly subject to Section 404; (3-31-22)
   
   ii. Part of a holding company system whose parent is directly subject to Section 404; (3-31-22)
   
   iii. Not directly subject to Section 404 but is a SOX Compliant Entity; or (3-31-22)
   
   iv. A member of a holding company system whose parent is not directly subject to Section 404 but is a SOX Compliant Entity. (3-31-22)
   

4. Requisite Elements. Management's Report of Internal Control over Financial Reporting will include: (3-31-22)

   a. A statement that management is responsible for establishing and maintaining adequate Internal control over financial reporting; (3-31-22)

   b. A statement that management has established Internal control over financial reporting and an assertion, to the best of management's knowledge and belief, after diligent inquiry, as to whether its Internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles; (3-31-22)

   c. A statement that briefly describes the approach or processes by which management evaluated the effectiveness of its Internal control over financial reporting; and (3-31-22)

   d. A statement that briefly describes the scope of work that is included and whether any internal controls were excluded; (3-31-22)

   e. Disclosure of any unremediated material weaknesses in the Internal control over financial reporting identified by management as of December 31 immediately preceding. Management is not permitted to conclude that the Internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles if there is one (1) or more unremediated material weaknesses in its Internal control over financial reporting; (3-31-22)

   f. A statement regarding the inherent limitations of internal control systems; and (3-31-22)

   g. Signatures of the chief executive officer and the chief financial officer (or equivalent position/title). (3-31-22)

5. Documentation by Management. Management will document and make available upon financial condition examination the basis upon which its assertions, prescribed in Subsection 023.04 of this rule, are made. Management may base its assertions, in part, upon its review, monitoring and testing of internal controls undertaken in the normal course of its activities. Management may have discretion as to the nature of the internal control framework used, and the nature and extent of documentation, in order to make its assertion in a cost effective manner and, as such, may include assembly of or reference to existing documentation. Management's Report on Internal Control over Financial Reporting, prescribed by Subsection 023.01 of this rule, and any documentation provided in support thereof during the course of a financial condition examination, will be kept confidential by the Idaho

IDAPA 18.07.04.024 - Exemptions And Effective Dates¶

1. Exemptions Not Otherwise Provided. Upon written application of any insurer, the Director may grant an exemption from compliance with any and all provisions of this rule if the Director finds, upon review of the application, that compliance with this rule would constitute a financial or organizational hardship upon the insurer. An exemption may be granted at any time and from time to time for a specified period or periods. Within ten (10) days from a denial of an insurer's written request for an exemption from this chapter, the insurer may request in writing a hearing on its application for an exemption. The hearing will be held in accordance with the IDAPA 04.11.01, "Idaho Rules of Administrative Procedure of the Attorney General," pertaining to administrative hearing procedures. (3-31-22)

2. Alternate Effective Date for Section 021 [Requirements for Audit Committees]. An insurer or group of insurers that is not prescribed to have independent Audit committee members or only a majority of independent Audit committee members (as opposed to a supermajority) because the total written and assumed premium is below the threshold and subsequently becomes subject to one (1) of the independence requirements due to changes in premium will have one (1) year following the year the threshold is exceeded to comply with the independence requirements. Likewise, an insurer that becomes subject to one (1) of the independence requirements as a result of a business combination will have one (1) calendar year following the date of acquisition or combination to comply with the independence requirements. (3-31-22)

3. Effective Date for Section 023 [Management's Report of Internal Control Over Financial Reporting]. An insurer or group of insurers that is not prescribed to file a report because the total written premium is below the threshold and subsequently becomes subject to the reporting requirements will have two (2) years following the year the threshold is exceeded to file a report. Likewise, an insurer acquired in a business combination will have two (2) calendar years following the date of acquisition or combination to comply with the reporting requirements. (3-31-22)

IDAPA 18.07.04.025 - Canadian And British Companies¶

1. Annual Audited Financial Report. In the case of Canadian and British insurers, the annual audited financial report is defined as the annual statement of total business on the form filed by such companies with their supervision authority duly audited by an independent chartered accountant. (3-31-22)

2. Letter Requisite in Section 013. For such insurers, the letter prescribed in Section 013 states that the accountant is aware of the requirements relating to the annual Audited statement filed with the Director pursuant to section 011 and affirms that the opinion expressed is in conformity with such requirements. (3-31-22)

IDAPA 18.07.04.026 - Internal Audit Function Requirements¶

1. Exemption. An insurer is exempt from the requirements of this section if: (3-31-22)

   a. The insurer has annual direct written and unaffiliated assumed premium, including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than five hundred million dollars ($500,000,000); and (3-31-22)

   b. If the insurer is a member of a group of insurers, the group has annual direct written and unaffiliated assumed premium including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than one billion dollars ($1,000,000,000). (3-31-22)

2. Function. The insurer or group of insurers need to establish an internal audit function providing independent, objective and reasonable assurance to the audit committee and insurer management regarding the insurer's governance, risk management and internal controls. This assurance will be provided by performing general and specific audits, reviews and tests and by employing other techniques deemed necessary to protect assets, evaluate control effectiveness and efficiency, and evaluate compliance with policies and regulations. (3-31-22)

3. Independence. In order to ensure that internal auditors remain objective, the internal audit function needs to be organizationally independent. Specifically, the internal audit function will not defer ultimate judgment on audit matters to others, and will appoint an individual to head the internal audit function who will have direct and unrestricted access to the board of directors. Organizational independence does not preclude dual-reporting relationships. (3-31-22)

4. Reporting. The head of the internal audit function will report to the audit committee regularly, but no less than annually, on the periodic audit plan, factors that may adversely impact th e internal audit function's independence or effectiveness, material findings from completed audits and the appropriateness of corrective actions implemented by management as a result of audit findings. (3-31-22)

5. Additional Requirements. If an insurer is a member of an insurance holding company system or included in a group of insurers, the insurer may satisfy the internal audit function requirements set forth in this section at the ultimate controlling parent level, an intermediate holding company level or the individual legal entity level. (3-31-22)

IDAPA 18.07.04.027 - Minimum Reserve Standards¶

In addition to the requirements in this rule, unless otherwise prescribed or permitted, the minimum reserve standards for individual and group health insurance contracts set forth in the NAIC Accounting Practices and Procedures Manual apply to all individual and group health (disability) insurance coverages including single premium credit disability insurance. All other credit insurance is not subject to this section. (3-31-22)

IDAPA 18.07.05¶

IDAPA 18.07.05.000 - Legal Authority¶

Title 41, Chapters 2, 3, and 33, Sections 4 1-211, 41-327 and 41-3309, Idaho Code. (3-31-22)

IDAPA 18.07.05.001 - Title And Scope¶

1. Title. IDAPA 18.07.05, "Director's Authority for Companies Deemed to be in Hazardous Financial Condition." (3-31-22)

2. Scope. This rule establishes standards that the Director may use for identifying insurers found to be in such condition as to render the continuance of their business hazardous to the public or to holders of their policies or certificates of insurance. This rule cannot be interpreted to limit the powers granted the Director by any laws or parts of laws of this state, nor supersedes any laws or parts of laws of this state. (3-31-22)

IDAPA 18.07.05.002 - Incorporation By Reference¶

This rule incorporates by reference the full text of the National Association of Insurance Commissioners (NAIC) Financial Condition Examiners Handbook and the NAIC Annual Statement Instructions and Accounting Practices and Procedures Manual, pursuant to Sections 41-223 and 41-335, Idaho Code. (3-31-22)

IDAPA 18.07.05.011 - Standards¶

The following standards, either singly or in combination of two (2) or more, may be considered by the Director to determine whether the continued operation of any insurer transacting insurance business in this state might be deemed to be hazardous to its policyholders or creditors or to the general public. The Director may consider: (3-31-22)

1. Examination Reports. Adverse findings reported in financial condition and market conduct examination reports, audit reports, and actuarial opinions, reports or summaries. (3-31-22)

2. NAIC Insurance Regulatory Information System. The NAIC Regulatory Information System and its other financial analysis solvency tools and reports. (3-31-22)

3. Adequate Cash Provision. Whether the insurer has made adequate provision, according to presently accepted actuarial standards of practice, for the anticipated cash flows needed 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. (3-31-22)

4. Reinsurance Program. The ability of an assuming reinsurer to perform and whether the insurer's reinsurance program provides sufficient protection for the company's remaining surplus after taking into account the insurer's cash flow and the classes of business written as well as the financial condition of the assuming reinsurer. (3-31-22)

5. Operating Loss (50% of Surplus). Whether the insurer's operating loss in the last twelve (12) month period or any shorter period of time, including but not limited to net capital gain or loss, change in non- admitted assets, and cash dividends paid to shareholders, is greater than fifty percent (50%) of the insurer's remaining surplus as regards policyholders in excess of the minimum mandatory. (3-31-22)

6. Operating Loss (20% of Surplus). 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 mandatory. (3-31-22)

7. Insolvency of Affiliate, Subsidiary or Reinsurer. Whether a reinsurer, obligor, or any entity within the insurer's insurance holding company system is insolvent, threatened with insolvency, or delinquent in payment of its monetary or other obligations, and which in the opinion of the Director may affect the solvency of the insurer. (3-31-22)

8. Contingent Liabilities. Contingent liabilities, pledges or guaranties which either individually or collectively involve a total amount which in the opinion of the Director may affect the solvency of the insurer. (3-31-22)

9. Controlling Person. Whether any "controlling person" of an insurer is delinquent in the transmitting to, or payment of, net premiums to such insurer. (3-31-22)

10. Receivables. The age and collectibility of receivables. (3-31-22)

11. Competence of Management. Whether the management of an insurer, including officers, directors, or any other person who directly or indirectly controls the operation of such insurer, fails to possess and demonstrate the competence, fitness and reputation deemed necessary to serve the insurer in such position. (3-31-22)

12. Failure to Respond to Inquiries. Whether management of an insurer has failed to respond to inquiries relative to the condition of the insurer or has furnished false and misleading information concerning an inquiry. (3-31-22)

13. Failure to Meet Filing Requirements. Whether the insurer has failed to meet financial and holding company filing requirements in the absence of a reason satisfactory to the Director. (3-31-22)

14. False or Misleading Financial Statements. Whether management of an insurer either has filed any false or misleading sworn financial statement, or has released false or misleading financial statement to lending institutions or to the general public, or has made a false or misleading entry, or has omitted an entry of material amount in the books of the insurer. (3-31-22)

15. Extensive Growth. Whether the insurer has grown so rapidly and to such an extent that it lacks adequate financial and administrative capacity to meet its obligations in a timely manner. (3-31-22)

16. Cash Flow. Whether the company has experienced or will experience in the foreseeable future cash flow and/or liquidity problems. (3-31-22)

17. Reserves Compliance with Minimum Standards. Whether management has established reserves that do not comply with minimum standards established by state insurance laws, regulations, statutory accounting standards, sound actuarial principles and standards of practice. (3-31-22)

18. Material Under-Reserving. Whether management persistently engages in material under- reserving that results in adverse development. (3-31-22)

19. Transactions Among Affiliates. Whether transactions among affiliates, subsidiaries or controlling persons for which the insurer receives assets, capital gains or both do not pr ovide sufficient value, liquidity or diversity to assure the insurer's ability to meet its outstanding obligations as they mature. (3-31-22)

20. Any Other Finding. Any other finding determined by the Director to be hazardous to the insurer's policyholders or creditors or to the general public. (3-31-22)

IDAPA 18.07.05.012 - Director'S Authority¶

1. Determination of Financial Condition. For the purposes of making a determination of an insurer's financial condition under this rule, the Director may: (3-31-22)

   a. Disregard any credit or amount receivable resulting from transactions with a reinsurer which is insolvent, impaired or otherwise subject to a delinquency proceeding; (3-31-22)

   b. Make appropriate adjustments, including disallowance, to asset values attributable to investments in or transactions with parents, subsidiaries, or affiliates, consistent with the NAIC Accounting Policies and Procedures Manual, state laws, and regulations; (3-31-22)

   c. Refuse to recognize the stated value of accounts receivable if the ability to collect receivables is highly speculative in view of the age of the account or the financial condition of the debtor; (3-31-22)

   d. Increase the insurer's liability in an amount equal to any contingent liability, pledge, or guarantee not otherwise included if there is a substantial risk that the insurer will be called upon to meet the obligation undertaken within the next twelve (12) month period. (3-31-22)

2. Issuance of Order. If the Director determines that the continued operation of the insurer licensed to transact business in this state may be hazardous to the policyholders or creditors or to the general public, then the Director may, upon a determination, issue an order requiring the insurer to: (3-31-22)

   a. Reduce the total amount of present and potential liability for policy benefits by reinsurance; (3-31-22)

   b. Reduce, suspend or limit the volume of business being accepted or renewed; (3-31-22)

   c. Reduce general insurance and commission expenses by specified methods; (3-31-22)

   d. Increase the insurer's capital and surplus; (3-31-22)

   e. Suspend or limit the declaration and payment of dividend by an insurer to its stockholders or to its policyholders; (3-31-22)

   f. File reports in a form acceptable to the Director concerning the market value of an insurer's assets; (3-31-22)

   g. Limit or withdraw from certain investments or discontinue certain investment practices to the extent the Director deems necessary; (3-31-22)

   h. Document the adequacy of premium rates in relation to the risks insured; (3-31-22)

   i. File, in addition to regular annual statements, interim financial reports on the form adopted by the NAIC or in such format as promulgated by the Director; (3-31-22)
   

   j. Correct corporate governance practice deficiencies and adopt and utilize governance practices acceptable to the Director; (3-31-22)

   k. Provide a business plan to the Director in order to continue to transact business in the state; or (3-31-22)

   l. Adjust rates for any non-life insurance product written by the insurer that the Director considers necessary to improve the financial condition of the insurer. (3-31-22)

3. Hearing. Any insurer subject to an order under Subsection 012.02 may request a hearing to review that order pursuant to Title 41, Chapter 2, Idaho Code. (3-31-22)

IDAPA 18.07.06¶

IDAPA 18.07.06.000 - Legal Authority¶

Sections 41-211, 41-335, 41-510, 41-511, 41-512 and 41-514, Idaho Code. (7-1-24)

IDAPA 18.07.06.001 - Scope¶

This rule applies to all domestic life and accident and health insurers and to all other licensed life and accident and health insurers not subject to substantially similar rules in their domiciliary state.Similarly, it applies to licensed property and casualty insurers with respect to their accident and health business. This rule does not apply to assumption reinsurance or yearly renewable term reinsurance. (7-1-24)

IDAPA 18.07.06.002 - Purpose¶

Insurers routinely enter into reinsurance agreements that yield legitimate surplus relief to the ceding insurer. However, it is improper for a ceding insurer to enter into reinsurance agreements for the principal purpose of producing significant surplus aid, typically on a temporary basis, while not transferring all the significant risks inherent in the business being reinsured. In substance or effect, the expected potential liability to the ceding insurer remains basically unchanged by the reinsurance transaction, notwithstanding certain risk elements in the reinsurance agreement, such as catastrophic mortality or extraordinary survival. The terms of such agreements referred to herein and described in Section 011 of this rule violate Sections 41-1306, 41-515, 41-308(3), 41-327, and 41-3309, Idaho Code. (7-1-24)

IDAPA 18.07.06.011 - Accounting Requirements¶

1. Credits on Financial Statements. No insurer will, for reinsurance ceded, reduce any liability or establish any asset in any financial statement filed with the Department if, by the terms of the reinsurance agreement, in substance or effect, any of the following conditions exist: (7-1-24)

   a. Renewal expense allowances provided or to be provided to the ceding insurer by the reinsurer in any accounting period, are not sufficient to cover anticipated allocable renewal expenses of the ceding insurer on the portion of the business reinsured, unless a liability is established for the present value of the shortfall (using assumptions equal to the applicable statutory reserve basis on the business reinsured). Those expenses include commissions, premium taxes and direct expenses including, but not limited to, billing, valuation, claims and maintenance expected by the company at the time the business is reinsured; (7-1-24)

   b. The ceding insurer can be deprived of surplus or assets at the reinsurer's option or automatically upon the occurrence of some event, such as the insolvency of the ceding insurer, except that termination of the reinsurance agreement by the reinsurer for nonpayment of reinsurance premiums or other amounts due, such as modified coinsurance reserve adjustments, interest and adjustments on funds withheld, and tax reimbursements, will not be considered to be such a deprivation of surplus or assets; (7-1-24)

   c. The ceding insurer needs to reimburse the reinsurer for negative experience under the reinsurance agreement, except that neither offsetting experience refunds against current and prior years' losses under the agreement nor payment by the ceding insurer of an amount equal to the current and prior years' losses under the agreement upon voluntary termination of in force reinsurance by the ceding insurer will be considered such a reimbursement to the reinsurer for negative experience. Voluntary termination does not include situations where termination occurs because of unreasonable provisions which allow the reinsurer to reduce its risk under the agreement. An example of such a provision is the right of the reinsurer to increase reinsurance premiums or risk and expense charges to excessive levels forcing the ceding company to prematurely terminate the reinsurance treaty; (7-1-24)

   d. The ceding insurer needs to, at specific points in time scheduled in the agreement, terminate or automatically recapture all or part of the reinsurance ceded; (7-1-24)

   e. The reinsurance agreement involves the possible payment by the ceding insurer to the reinsurer of amounts other than from income realized from the insured policies. For example, it is improper for a ceding company to pay reinsurance premiums, or other fees or charges to a reinsurer which are greater than the direct premiums collected by the ceding company; (7-1-24)

   f. The treaty does not transfer all of the significant risk inherent in the business being reinsured. The following table identified for a representative sampling of products or type of business, the risks which are considered to be significant. For products not specifically included, the risks determined to be significant will be consistent with this table. Risk categories: (7-1-24)

   i. Morbidity. (7-1-24)
   
   ii. Mortality. (7-1-24)
   
   iii. Lapse. The risk that a policy voluntarily terminates prior to the recoupment of a statutory surplus strain experienced at issue of the policy. (7-1-24)
   
   iv. Credit Quality (C1). The risk that invested assets supporting the reinsured business decrease in value. The main hazards are that assets default or there will be a decrease in earning po wer. It excludes market value declines due to changes in interest rate. (7-1-24)
   
   v. Reinvestment (C3). The risk that interest rates fall and funds reinvested (coupon payments or monies received upon asset maturity or call) will therefore earn less than expected. If asset durations are less than liability durations, the mismatch will increase. (7-1-24)
   
   vi. Disintermediation (C3). The risk that interest rates rise and policy loans and surrenders increase or maturing contracts do not renew at anticipated rates. If asset durations are greater than the liability durations, the mismatch will increase. Policyholders will move their funds into new products offering higher rates. The company may have to sell assets at a loss to provide for these withdrawals.
   

   Table: Life & Health Reinsurance Risk Transfer Categories¶

Key: + = Significant, 0 = Insignificant **LTC = Long Term Care Insurance | LTD = Long Term Disability Insurance (7-1-24)

g. Significant Risk. (7-1-24)

    i. The credit quality, reinvestment, or disintermediation risk is significant for the business reinsured and the ceding company does not (other than those excepted in Subsection 011.01.g.ii.) either transfer the underlying assets to the reinsurer or legally segregate such assets in a trust or escrow account or otherwise establish a mechanism satisfactory to the Director which legally segregates, by contract or contract provision, the underlying assets.(7-1-24)

    ii. Notwithstanding the requirements of Subsection 011.01.g.i., the assets supporting the reserves for the following classes of business and any classes of business which do not have a significant credit quality, reinvestment or disintermediation risk may be held by the ceding company without segregation of such assets: - Health Insurance - LTC/LTD - Traditional Non-Par Permanent - Traditional Par Permanent - Adjustable Premium Permanent - Indeterminate Premium Permanent - Universal Life Fixed Premium (no dump-in premiums allowed) The associated formula for determining the reserve interest rate adjustment needs to use a formula that reflects the ceding company's investment earnings and incorporates all realized and unrealized gains and losses reflected in the statutory statement. The following is an acceptable formula: Rate = -----------------------------------2IC+G- XYI+ – CG– Where: "I" is the net investment income as reported in Annual Statement "CG" is capital gains less capital losses as reported in Annual Statement "X" is the current year cash and invested assets plus investment income due and accrued less borrowed money as reported in Annual Statement "Y" is the same as X but for the prior year (7-1-24)

h. Settlements are made less frequently than quarterly or payments due from the reinsurer are not made in cash within ninety (90) days of the settlement date. (7-1-24)

    i. The ceding insurer needs to make representations or warranties not reasonably related to the business being reinsured. (7-1-24)

j. The ceding insurer needs to make representations or warranties about future performance of the business being reinsured. (7-1-24)

k. Reinsurance agreements entered for the principal purpose of producing significant surplus aid for the ceding insurer, typically on a temporary basis, while not transferring all the significant risks inherent in the business reinsured and, in substance or effect, the expected potential liability to the ceding insurer remains basically unchanged. (7-1-24)

1. Director's Approval. An insurer may, with the prior Director approval, take such reserve credit or establish such asset as the Director deems consistent with Insurancelaw, incl uding actuarial interpretations or standards adopted by the Department. (7-1-24)

2. Filing Agreements. (7-1-24)

   a. Agreements entered into after the effective date of this rule which involve the reinsurance of business issued prior to the effective date of the agreements, along with any subsequent amendments thereto, will be filed by the ceding company with the Director within thirty (30) days from its date of execution. Each filing will include data detailing the financial impact of the transaction. The ceding insurer's actuary who signs the financial statement actuarial opinion with respect to valuation of reserves will consider this rule and any applicable actuarial standards of practice when determining the proper credit in financial statements filed with this Department. The actuary should maintain adequate documentation and be prepared upon request to describe the actuarial work performed for inclusion in the financial statements and to demonstrate that such work conforms to this rule. (7-1-24)

   b. Any increase in surplus net of federal income tax resulting from arrangements described in Subsection 011.03.a. will be identified separately on the insurer's statutory financial statement as a surplus item (aggregate write-ins for gains and losses in surplus in the Capital and Surplus Account line of the Annual Statement) and recognition of the surplus increase as income will be reflected on a net of tax basis in the "Reinsurance ceded" line of the annual statement as earnings emerge from the business reinsured. (7-1-24)

IDAPA 18.07.06.012 - Written Agreements¶

1. Execution Date. No reinsurance agreement or amendment there to may be used to reduce any liability or to establish any asset in any financial statement filed with the Department, unless the agreement, amendment or a binding letter of intent has been duly executed by both parties no later than the "as of date" of the financial statement. (7-1-24)

2. Letter of Intent. In the case of a letter of intent, a reinsurance agreement or an amendment there to needs to be executed within a reasonable period of time, not exceeding ninety (90) days from the execution date of the letter of intent, for credit to be granted for the reinsurance ceded. (7-1-24)

3. Requisite Provisions. The reinsurance agreement will contain provisions that provide: (7-1-24)

   a. The agreement constitutes the entire agreement between the parties with respect to the business being reinsured thereunder and that there are no understandings between the parties other than as expressed in the agreement; and (7-1-24)

   b. Any change or modification to the agreement will be null and void unless made by amendment to the agreement and signed by both parties. (7-1-24)

IDAPA 18.07.06.013 - Existing Agreements¶

Insurers will not recognize any reserve credits o r assets established with respect to reinsurance agreements entered into prior to the effective date of this rule which, under the provisions of this rule would not be entitled to recognition of the reserve credits or assets; provided, however, that the reinsurance agreements will have been in compliance with laws or rules in existence immediately preceding the effective date of this rule. (7-1-24)

IDAPA 18.07.08¶

IDAPA 18.07.08.000 - Legal Authority¶

Title 41, Chapter 2, Idaho Code. (4-6-23)

IDAPA 18.07.08.001 - Scope¶

This rule applies to annual statements filed by property and casualty companies doing business in Idaho, and provides the Director the means to monitor an insurer's loss reserves per Section 41-610, Idaho Code. (4-6-23)

IDAPA 18.07.08.021 - Actuarial Opinion Of Reserves And Supporting Documentation¶

1. Statement of Actuarial Opinion, Opinion Summary and Actuarial Report and Work Papers. (4-6-23)

   a. A property and casualty insurance company doing business in Idaho, unless exempted by the domiciliary commissioner, will annually file an Appointed Actuary's "Statement of Actuarial Opinion," per NAIC Property and Casualty Annual Statement Instructions. (4-6-23)

   b. Every property and casualty insurance company domiciled in Idaho filing a Statement of Actuarial Opinion will, it must also file an Actuarial Opinion Summary, written by the company's Appointed Actuary, per the NAIC Property and Casualty Annual Statement Instructions. (4-6-23)

   c. A company licensed, but not domiciled, in Idaho will file the Actuarial Opinion Summary upon request. (4-6-23)

   d. An Actuarial Report and work papers as prescribed by the NAIC Property and Casualty Annual Statement Instructions will support each Actuarial Opinion. (4-6-23)

   e. If the company fails to file a supporting Actuarial Report or work papers at the Director's request, or the Director determines the Actuarial Report or work papers do not comply with the NAIC Property and Casualty Annual Statement Instructions or are otherwise unacceptable, the Director may hire a qualified actuary, at company expense, to review the Actuarial Opinion, and prepare the supporting Actuarial Report or work papers. (4-6-23)

IDAPA 18.07.08.022 - Confidentiality¶

1. The Statement of Actuarial Opinion. Will be filed with the Annual Statement per NAIC Property and Casualty Annual Statement Instructions and be a public record. (4-6-23)

2. Actuarial Report. (4-6-23)

   a. The Actuarial Report, work papers or Actuarial Opinion Summary in support of the Actuarial Opinion, and any other records the company provides to the Director in connection thereto, are exempt from public disclosure under Section 74-107(5), Idaho Code. (4-6-23)

   b. This provision does not limit the Director's authority to release these records to the Actuarial Board for Counseling and Discipline (ABCD) so long as they are needed for professional disciplinary proceedings and the ABCD establishes procedures satisfactory to the Director regarding disclosing the records; nor the Director's authority to use the records to further the Director's regulatory or legal actions. (4-6-23)

3. Waiver. Disclosing records to the Dir ector waives no privilege or claim of confidentiality in the records. (4-6-23)

IDAPA 18.07.09¶

IDAPA 18.07.09.000 - Legal Authority¶

Title 41, Chapter 2, Idaho Code. (4-6-23)

IDAPA 18.07.09.001 - Scope¶

1. Application of Rule. This rule applies to all life insurance companies and fraternal benefit societies doing business in Idaho and to all life insurance companies and fraternal benefit societies that are authorized to reinsure life insurance, annuities or accident and health insurance business in Idaho. This regulation will be applied to allow the appointed actuary to use their professional judgment in performing the asset analysis and developing the actuarial opinion and supporting memoranda, consistent with actuarial standards of practice. But the Director may specify methods of actuarial analysis and actuarial assumptions that the Director deems necessary for an acceptable opinion to be rendered on the adequacy of reserves and related items. (4-6-23)

2. Application to All Annual Statements. This rule applies to all annual statements filed with the Director. A statement of opinion on the adequacy of reserves and related actuarial items based on an asset adequacy analysis per Section 022, and a supporting memorandum per Section 023, will be needed each year. (4-6-23)

3. Purpose. This rule prescribes: (4-6-23)

   a. Guidelines and standards for statements of actuarial opinion which are to be submitted per Section 41-612(12), Idaho Code, and for supporting memoranda; (4-6-23)

   b. Rules for appointing an appointed actuary; and (4-6-23)

   c. Guidelines on the meaning of adequacy of reserves. (4-6-23)

IDAPA 18.07.09.010 - Definitions¶

1. Actuarial Opinion. An Appointed Actuary's opinion on reserve adequacy and related actuarial items based on an asset adequacy test per Section 022 and presently accepted actuarial standards. (4-6-23)

2. Actuarial Standards Board. The board established by the American Academy of Actuaries to develop standards of actuarial practice. (4-6-23)

3. Asset Adequacy Analysis. An analysis that meets the standards and requirements in Subsection 021.04. (4-6-23)

4. Company. A life insurance company, fraternal benefit society or reinsurer subject to this rule. (4-6-23)

IDAPA 18.07.09.021 - General Requirements¶

1. Submitting Statement of Actuarial Opinion. (4-6-23)

   a. For each year, starting with the year in which this rule takes ef fect, the annual statement's first page will include or attach the statement of an appointed actuary, entitled "Statement of Actuarial Opinion," setting forth an opinion on reserves and related actuarial items held in support of policies and contracts, per Section 022. (4-6-23)

   b. Upon written request by the company, the Director may grant an extension to submit the statement of actuarial opinion. (4-6-23)

2. Qualified Actuary. An individual who: (4-6-23)

   a. Is a member in good standing of the American Academy of Actuaries; and (4-6-23)

   b. Is qualified to sign statements of actuarial opinion for life an d health insurance company annual statements per the American Academy of Actuaries qualification standards; and (4-6-23) Idaho Department of Insurance Actuarial Opinion & Memorandum Rule

   c. Is familiar with the valuation requirements applicable to life and health insurance companies; and (4-6-23)

   d. Has not been found by the Director (or if so found has later been reinstated as a qualified actuary), after appropriate notice and hearing, to have; (4-6-23)

   i. Violated any provision of, or any obligation imposed by any law in the course of their dealings as a qualified actuary; or (4-6-23)
   
   ii. Been found guilty of fraudulent or dishonest practices; or (4-6-23)
   
   iii. Demonstrated incompetency, lack of cooperation, or untrustworthiness to act as a qualified actuary; or (4-6-23)
   
   iv. Filed with the Director during the past five (5) years, pursuant to this rule, an actuarial opinion or memorandum that the Director rejected because it violated this rule, including standards set by the Actuarial Standards Board; or (4-6-23)
   
   v. Resigned, or been removed as an actuary, within the past five (5) years because of acts or omissions indicated in any adverse report on examination or as a result not adhering to generally accepted actuarial standards; and (4-6-23)
   

   e. Has not failed to notify the Director of any action taken by any Director of any other state similar to that under Paragraph 021.02.d. (4-6-23)

3. Appointed Actuary. A qualified actuary who is appointed or retained to prepare the Statement of Actuarial Opinion prescribed by this rule; either directly by or by the authority of the board of directors through an executive officer of the company. The company will timely notify the Director in writing of the name, title (and, in the case of a consulting actuary, the name of the firm) and manner of appointment or retention of each person appointed or retained by the company as an appointed actuary. The notice will state that the person meets the requirements of Subsection 021.02. The company will timely notify the Director if the actuary ceases to be appointed or retained as an appointed actuary or to meet the requirements of Subsection 021.02. If any person appointed or retained as an appointed actuary replaces a previously appointed actuary, the notice will so state and give the reasons for replacement. (4-6-23)

4. Standards for Asset Adequacy Analysis. The asset adequacy analysis prescribed by this rule: (4-6-23)

   a. Will conform to the standards of practice promulgated by the Actuarial Standards Board and to any additional standards under this rule, which standards are to form the basis of the statement of actuarial opinion per

   b. Will be based on methods of analysis as are deemed appropriate for such purposes by the Actuarial Standards Board. (4-6-23)

5. Liabilities to Be Covered. (4-6-23)

   a. Under authority of Section 41-612(12), Idaho Code, the statement of actuarial opinion will apply to all in force business on the statement date regardless of when or where issued, e.g., Aggregate Reserve for Life Contracts, Aggregate Reserve for Accident and Health Contracts, reserves for Deposit Type Contracts, and Claims for Life and Health Contracts as reported in Exhibits of the annual statement, and equivalent items in the separate account statement or statements of the annual statement. (4-6-23)

   b. If the appointed actuary determines from asset adequacy analysis that the company should hold a reserve in addition to the company's aggregate reserve and calculated as described in Section 41-612(12), Idaho Code, the company will establish such additional reserve. (4-6-23) Idaho Department of Insurance Actuarial Opinion & Memorandum Rule

   c. Additional reserves established under this Subsection and deemed unnecessary in later years may be released. Released amounts need to be disclosed in the actuarial opinion for the applicable year. The Director will not deem the release of such reserves to reflect a lower standard of valuation. (4-6-23)

IDAPA 18.07.09.022 - Statement Of Actuarial Opinion Based On An Asset Adequacy Analysis¶

1. General Description. The statement of actuarial opinion submitted under this section will consist of; (4-6-23)

   a. A paragraph identifying the appointed actuary and qualifications; (4-6-23)

   b. A scope paragraph identifying the subjects on which an opinion is to be expressed and describing the scope of the appointed actuary's work, including a tabulation delineating the reserves and related actuarial items that have been analyzed for asset adequacy and the analysis method, and identifying the reserves and related actuarial items covered by the opinion that have not been so analyzed; (4-6-23)

   c. A reliance paragraph describing those areas, if any, where the appointed actuary has deferred to other experts in developing data, procedures or assumptions, (e.g., anticipated cash flows from currently owned assets, including variation in cash flows according to economic scenarios. Supported by a statement of each such expert in the form prescribed by Subsection 022.05; and (4-6-23)

   d. An opinion paragraph expressing the appointed actuary's opinion on the adequacy of the supporting assets to mature the liabilities. (4-6-23)

   e. One (1) or more additional paragraphs will be needed in these cases; (4-6-23)

   i. If the appointed actuary considers it necessary to state a qualification of his opinion; (4-6-23)
   
   ii. If the appointed actuary needs to disclose an inconsistency between the analysis method or basis of asset allocation used on the prior opinion date and those used for this opinion; (4-6-23)
   
   iii. If the appointed actuary needs to disclose whether additional reserves of the prior opinion date are released as of this opinion date, and the extent of the release; or (4-6-23)
   
   iv. If the appointed actuary chooses to add a paragraph briefly describing the assumptions forming the basis for the actuarial opinion. (4-6-23)
   

2. Recommended Language. The Department has adopted recommended language, available on the Department's website, which in typical circumstances should be in the statement of actuarial opinion. The language may be modified to meet the circumstances of a particular case, but the appointed actuary should use language that clearly expresses their professional judgment. The opinion will, in any event, retain all pertinent aspects of the language provided. (4-6-23)

3. Assumptions for New Issues. Changing an actuarial assumption for new issues, claims, or other liabilities that used for prior new issues, claims, or other liabilities is not a change in actuarial assumptions within the meaning of this Section. (4-6-23)

4. Adverse Opinions. If the appointed actuary cannot form an opinion, then they will refuse to issue a statement of actuarial opinion. If the appointed actuary's opinion is adverse or qualified, then they will issue an adverse or qualified actuarial opinion expressing the reason(s) for such opinion. This statement should follow the scope paragraph and precede the opinion paragraph. (4-6-23)

5. Reliance on Data Furnished by Other Persons. If the appointed actuary relies on the certification of others on matters concerning the accuracy or completeness of any data underlying the actuarial opinion, or the appropriateness of any other information used by the appointed actuary in forming the actuarial opinion, then the actuarial opinion should identify the persons the actuary relies upon and precisely identify the items subject to Idaho Department of Insurance Actuarial Opinion & Memorandum Rule reliance. The persons on whom the appointed actuary relies will also certify precisely what items the person provided information on and the extent to which those items are accurate, complete, or reasonable. The certification will include the person's signature, title, company, address and telephone number and the date on which it is signed. (4-6-23)

IDAPA 18.07.09.023 - Alternate Option¶

1. Standard Valuation Law. The Standard Valuation Law broadly authorizes the Director to accept a foreign insurer's valuation that meets the requirements for an Idaho-domiciled.company. As an alternative to meeting the minimum aggregate amounts for Idaho, the Director may make one (1) or more of these approaches available to the opining actuary: (4-6-23)

   a. A statement that the reserves "meet the requirements of the insurance laws and regulations of the State of [state of domicile] and the formal written standards and conditions of this state for filing an opinion based on the law of the state of domicile." If the Director chooses to allow this alternative, a formal written list of standards and conditions will be made available. If a company chooses to use this alternative, the standards and conditions in effect on July 1 of a calendar year will apply to statements for that calendar year, and they will remain in effect until they are revised or revoked. If no list is available, this alternative is not available. (4-6-23)

   b. A statement that the reserves "meet the requirements of the insurance laws and regulations of the State of [state of domicile] and I have verified that the company's request to file an opinion based on the law of the state of domicile has been approved and that any conditions prescribed by the Di rector for approval of that request have been met." If the Director chooses to allow this alternative, a formal written statement of such allowance will be issued no later than March 31 of the year it is first effective. It will remain valid until rescinded or modified by the Director. The rescission or modifications will be issued no later than March 31 of the year they are first effective. After that statement has issued, if a company chooses to use this alternative, the company will file a request to do so, along with justification for its use, no later than April 30 of the year of the opinion to be filed. The request is deemed approved on October 1 of that year if the Director has not denied it. (4-6-23)

   c. A statement that the reserves "meet the requirements of the insurance laws and regulations of the State of [state of domicile] and I have submitted the prescribed comparison as specified by this state." (4-6-23)

   i. If the Director chooses to allow this alternative, a formal written list of products (to be added to the table in Item (ii) below) for which the prescribed comparison will be provided will be published. If a company chooses to use this alternative, the list in effect on July 1 of a calendar year will apply to statements for that calendar year, and it will remain in effect until revised or revoked. If no list is available, this alternative is not available. (4-6-23)
   
   ii. If a company desires to use this alternative, the appointed actuary will provide a comparison of the gross nationwide reserves held to the gross nationwide reserves that would be held under NAIC codification standards. Gross nationwide reserves are the total reserves calculated for the total company in force business directly sold and assumed, indifferent to the state in which the risk resides, without reduction for reinsurance ceded. The information provided will be at least:
   
       (1) (2) (3) (4) (5) Product Type Death Benefit or Reserves Held Codification Reserves Codification Standard Account Value (4-6-23)
   
   iii. The information listed will include all products identified by either the state of filing or any other states subscribing to this alternative. (4-6-23) Idaho Department of Insurance Actuarial Opinion & Memorandum Rule
   
   iv. If there is no codification standard for the type of product or risk in force, or if the codification standard does not directly address the type of product or risk in force, the appointed actuary will detail the specific method and assumptions used to determine the reserves held. (4-6-23)
   
   v. The comparison provided by the company is to be kept confidential to the same extent and under the same conditions as the actuarial memorandum. (4-6-23)
   

   d. Notwithstanding the above, the Director may reject an opinion based on the laws and regulations of the state of domicile and require an opinion based on Idaho law. If a company does not provide the opinion within sixty (60) days of the request or such other time period set by the Director after consulting with the company, the Director may hire an independent actuary at the company's expense to prepare and file the opinion. (4-6-23)

IDAPA 18.07.09.024 - Description Of Actuarial Memorandum Including An Asset Adequacy¶

ANALYSIS AND REGULATORY ASSET ADEQUACY ISSUES SUMMARY.

1. General. (4-6-23)

   a. Per Section 41-612(12), Idaho Code, the appointed actuary will prepare a memorandum to the company describing the analysis done to support their opinion on the reserves. The memorandum will be made available for the Director's examination upon request, but it will be returned to the company after the examination and cannot be considered a record of the insurance Department or subject to automatic filing with the Director. (4-6-23)

   b. In preparing the memorandum, the appointed actuary may rely on, and include as a part of their own memorandum, memoranda prepared and signed by other actuaries who are qualified within the meaning of Subsection 021.02, with respect to the areas covered in such memoranda, and so state in their memorandum. (4-6-23)

   c. If the Director requests a memorandum that does not exist, or if the Director finds the memorandum's analysis violates the standards of the Actuarial Standards Board or the standards and requirements of this rule, the Director may designate a qualified actuary to review the opinion and prepare supporting memorandum. The company will pay, subject to the Director's direction and control, the reasonable and necessary expense of the independent review. (4-6-23)

   d. The reviewing actuary will have the same status as an examiner for purposes of obtaining data from the company, and the Director will retain the reviewing actuary's work papers and documentation. But any information provided by the company to the reviewing actuary and included in the work papers will be considered as examination workpapers and will be kept confidential to the same extent as prescribed by Section 41-227, Idaho Code. The reviewing actuary cannot be an employee of a consulting firm involved with the preparation of any prior memorandum or opinion for the insurer under this rule for the current year or any of the preceding three (3) years. (4-6-23)

   e. Per Section 41-612(12), Idaho Code, the appointed actuary will prepare a regulatory asset adequacy issues summary, the contents of which are specified in Subsection 024.03. This summary will be submitted by March 15 of the year after the year for which a statement of actuarial opinion based on asset adequacy is mandatory. The summary is confidential and exempt from public disclosure under Sections 41-612(12) and 74-107(5), Idaho Code. (4-6-23)

   f. Per Section 41-612(12)(d)(iv), the Director will accept a foreign or alien company's regulatory asset adequacy issues summary, on file with the insurance supervisory official of another state, if the Director determines the summary reasonably meets the requirements for a company domiciled in Idaho. Thus, foreign or alien insurers that had to file the regulatory asset adequacy issues summary in their home st ate are exempt from filing in Idaho, except upon Director request, if the other state has substantially similar reporting requirements and the summary is timely filed with the other state's commissioner. (4-6-23)

2. Details of the Memorandum Section Documenting Asset Adequacy Analysis (Section 022). When an actuarial opinion under Section 022 is provided, the memorandum will show the analysis has been done per Idaho Department of Insurance Actuarial Opinion & Memorandum Rule the asset-adequacy standards in Subsection 021.04 and any additional standards under this rule. It will specify; (4-6-23)

   a. For reserves; (4-6-23)

   i. Product descriptions including market description, underwriting and other aspects of a risk profile and the specific risks the appointed actuary deems significant; (4-6-23)
   
   ii. Source of liability in force; (4-6-23)
   
   iii. Reserve method and basis; (4-6-23)
   
   iv. Investment reserves; (4-6-23)
   
   v. Reinsurance arrangements; and (4-6-23)
   
   vi. Identification of any explicit or implied guarantees made by the general account in support of benefits provided through a separate account or under a separate account policy or contract and the methods used by the appointed actuary to provide for the guarantees in the asset adequacy analysis. (4-6-23)
   

   b. Documentation of assumptions to test reserves, such that an actuary reviewing the actuarial memorandum could form a conclusion as to their reasonableness, for: (4-6-23)

   i. Lapse rates (both base and excess); (4-6-23)
   
   ii. Interest crediting rate strategy; (4-6-23)
   
   iii. Mortality; (4-6-23)
   
   iv. Policyholder dividend strategy; (4-6-23)
   
   v. Competitor or market interest rate; (4-6-23)
   
   vi. Annuitization rates; (4-6-23)
   
   vii. Commissions and expenses; and (4-6-23)
   
   viii. Morbidity. (4-6-23)
   

   c. For assets: (4-6-23)

   i. Portfolio descriptions, including a risk profile disclosing the quality, distribution and types of assets; (4-6-23)
   
   ii. Investment and disinvestment assumptions; (4-6-23)
   
   iii. Asset data source; (4-6-23)
   
   iv. Asset valuation bases. (4-6-23)
   

   d. Documentation of assumptions, such that an actuary reviewing the actuarial memorandum could form a conclusion as to their reasonableness, for: (4-6-23)

   i. Default costs; (4-6-23)
   
   ii. Bond call function; (4-6-23) Idaho Department of Insurance Actuarial Opinion & Memorandum Rule
   
   iii. Mortgage prepayment function; (4-6-23)
   
   iv. Determining market value for assets sold due to disinvestment strategy; and (4-6-23)
   
   v. Determining yield on assets acquired through the investment strategy. (4-6-23)
   

   e. For the analysis basis: (4-6-23)

   i. Methodology; (4-6-23)
   
   ii. Rationale for inclusion/exclusion of different blocks of business and how pertinent risks were analyzed; (4-6-23)
   
   iii. Rationale for degree of rigor in analyzing different blocks of business (include in the rationale the level of "materiality" that was used in determining how rigorously to analyze different blocks of business); (4-6-23)
   
   iv. Criteria for determining asset adequacy (include in the criteria the precise basis for determining if assets are adequate to cover reserves under "moderately adverse conditions" or other conditions as specified in relevant actuarial standards of practice); (4-6-23)
   
   v. Whether the impact of federal income taxes was considered and the method of treating reinsurance in the asset adequacy analysis. (4-6-23)
   

   f. Summary of material changes in methods, procedures, or assumptions from prior year's asset adequacy analysis; (4-6-23)

   g. Summary of Results; (4-6-23)

   h. Conclusion(s). (4-6-23)

   i. The regulatory asset adequacy issues summary will include: (4-6-23)
   
   i. Descriptions of the tested scenarios (including whether they are stochastic or deterministic) and the sensitivity testing done relative to those scenarios. If negative-ending surplus results under certain tests in the aggregate, the actuary should describe those tests and the amount of additional reserve as of the valuation date which, if held, would eliminate the negative aggregate surplus values. Ending surplus values will be determined by extending the projection period until the in force and associated assets and liabilities at the end of the projection period are immaterial, or by adjusting the surplus amount at the end of the projection period by an amount that appropriately estimates the value that can reasonably be expected to arise from the assets and liabilities remaining in force; (4-6-23)
   
   ii. The extent to which the appointed actuary uses assumptions in the asset adequacy analysis that materially differ from assumptions in the previous asset adequacy analysis; (4-6-23)
   
   iii. The amount of reserves and the identity of the product lines that were subjected to asset adequacy analysis in the prior opinion but that were not analyzed for the current opinion; (4-6-23)
   
   iv. Comments on any interim results that significantly concern the appointed actuary. For example, the impact of the insufficiency of assets to support the payment of benefits and expenses and the establishment of statutory reserves during one or more interim periods; (4-6-23)
   
   v. The actuary's methods for recognizing how reinsurance impacts the company's cash flows, including both assets and liabilities, under each tested scenario; and (4-6-23)
   
   vi. Whether the actuary is satisfied that the asset adequacy analysis appropriately considered all options explicit or embedded in any asset or liability (including those affecting cash flows embedded in fixed income securities) and equity-like features in any investments. (4-6-23) Idaho Department of Insurance Actuarial Opinion & Memorandum Rule
   

   j. The regulatory asset adequacy issues summary will name the company for which the regulatory asset adequacy issues summary is being supplied and be signed and dated by the appointed actuary rendering the actuarial opinion. (4-6-23)

3. Conformity to Standards of Practice. The memorandum will state: "Actuarial methods, considerations and analyses used in the preparation of this memorandum conform to the appropriate Standards of Practice as promulgated by the Actuarial Standards Board, which standards form the basis for this memorandum." (4-6-23)

4. Use of Assets Supporting the Interest Maintenance Reserve and the Asset Valuation Reserve. An appropriate allocation of assets in the amount of the Interest Maintenance Reserve (IMR), whether positive or negative, needs to be used in any asset adequacy analysis. Analysis of risks regarding asset default may include an appropriate allocation of assets supporting the Asset Valuation Reserve (AVR); these AVR assets cannot be applied for other risks with respect to reserve adequacy. Analysis of these and other risks may include assets supporting other mandatory or voluntary reserves available to the extent not used for risk analysis and reserve support. The Table of Reserves and Liabilities of the opinion and in the memorandum will disclose the amount of the assets used for the AVR. The memorandum will also disclose the method for selecting particular assets or allocated portions of assets. (4-6-23)

5. Documentation. The appointed actuary will retain, for at least seven (7) years, sufficient documentation from which to determine the procedures followed, the analyses performed, the bases for assumptions and the results obtained. (4-6-23)

IDAPA 18.07.10¶

IDAPA 18.07.10.000 - Legal Authority¶

Sections 41-211 and 41-6404(2), Idaho Code. (7-1-24)

IDAPA 18.07.10.001 - Scope¶

This rule establishes procedures for filing the contents of the Corporate Governance Annual Disclosure (CGAD) per Title 41, Chapter 64, Idaho Code. (7-1-24)

IDAPA 18.07.10.010 - Definitions¶

1. Senior Management. Any corporate officer responsible for reporting information to the board of directors at regular intervals or providing this information to shareholders or regulators, including, without limitation, all chief" level executives. (7-1-24)

IDAPA 18.07.10.011 - Filing Procedures¶

1. Format. The insurer or insurance group has discretion to appropriately format the CGAD and may customize the CGAD to provide the most relevant information necessary for the director to understand the corporate governance structure, policies and practices they utilize. (7-1-24)

2. Completion on Insurance Group Level. Per Section 41-6403(1), Idaho Code, if Idaho is not the lead state and the CGAD is filed with the lead state for the group, a copy of the CGAD will also be provided to the chief regulatory official of any state in which the insurance group has a domestic insurer, upon request. (7-1-24)

3. Referencing. An insurer or insurance group may comply with this section by referencing other existing documents if the documents provide information that is comparable to the contents described in Section 012. The insurer or insurance group will clearly reference the location of the relevant information within the CGAD and attach the referenced document if it is not already filed or available to the director. (7-1-24)

IDAPA 18.07.10.012 - Contents Of Corporate Governance Annual Disclosure¶

The CGAD content will: (7-1-24)

1. Detail. Be as descriptive as possible in completing the CGAD, with inclusion of attachments or example documents that are used in the governance process that may demonstrate the strengths of their governance framework and practices. (7-1-24)

2. CGAD Considerations. Describe the insurer's or insurance group's corporate governance framework and structure including consideration of the following: (7-1-24)

   a. The board and various committees thereof ultimately responsible for overseeing the insurer or insurance group and the level(s) at which that oversight occurs (e.g., ultimate control level, intermediate holding company, legal entity, etc.). The insurer or insurance group will describe and discuss the rationale for the current board size and structure; and (7-1-24)

   b. The duties of the board and each of its significant committees and how they are governed (e.g., bylaws, charters, informal mandates, etc.), as well as how the board's leadership is structured, including a discussion of the roles of CEO and chairman of the board within the organization. (7-1-24)

3. Factors. Describe the policies and practices of the most senior governing entity and significant committees thereof, including a discussion of the following factors: (7-1-24)

   a. How the qualifications, expertise and experience of each board member meet the needs of the insurer or insurance group. (7-1-24)

   b. How an appropriate amount of independence is maintained on the board and its significant committees. (7-1-24)

   c. The number of meetings held by the board and its significant committees over the past year including information on board member attendance. (7-1-24)

   d. How the insurer or insurance group identifies, nominates and elects members to the board and its committees. The discussion should include: (7-1-24)

   i. Whether a nomination committee identifies and select individuals for consideration. (7-1-24)
   
   ii. Whether term limits are placed on board members. (7-1-24)
   
   iii. How the election and re-election processes function. (7-1-24)
   
   iv. Whether a board diversity policy is in place and if so, how it functions. (7-1-24)
   

   e. The processes in place for the board to evaluate its performance and the performance of its committees, as well as any recent measures taken to improve performance (including any board or committee training programs that have been put in place). (7-1-24)

4. Additional Factors. Describe the policies and practices for directing senior management, including the following factors: (7-1-24)

   a. Any processes or practices (i.e., suitability standards) to determine whether officers and key persons in control functions have the appropriate background, experience and integrity to fulfill their prospective roles, including: (7-1-24)

   i. Identification of the specific positions for which suitability standards have been developed and a description of the standards employed. (7-1-24)
   
   ii. Any changes in an officer's or key person's suitability as outlined by the insurer's or insurance group's standards and procedures to monitor and evaluate such changes. (7-1-24)
   

   b. The insurer's or insurance group's code of business conduct and ethics, the discussion of which considers: (7-1-24)

   i. Compliance with laws, rules, and regulations; and (7-1-24)
   
   ii. Proactive reporting of any illegal or unethical behavior. (7-1-24)
   

   c. The insurer's or insurance group's processes for performance evaluation, compensation and corrective action to ensure effective senior management throughout the organization, including a description of the general objectives of significant compensation programs and what the programs are designed to reward. The description will include sufficient detail to allow the director to understand how the organization ensures that compensation programs do not encourage and/or reward excessive risk taking. This may include: (7-1-24)

   i. The board's role in overseeing management compensation programs and practices. (7-1-24)
   
   ii. The various elements of compensation awarded in the insurer's or insurance group's compensation programs and how the insurer or insurance group determines and calculates the amount of each element of compensation paid; (7-1-24)
   
   iii. How compensation programs are related to both company and individual performance over time; (7-1-24)
   
   iv. Whether compensation programs include risk adjustments and how those adjustments are incorporated into the programs for employees at different levels; (7-1-24)
   
   v. Any clawback provisions built into the programs to recover awards or payments if the performance measures upon which they are based are restated or otherwise adjusted; (7-1-24)
   
   vi. Any other factors relevant in understanding how the insurer or insurance group monitors its compensation policies to determine whether its risk management objectives are met by incentivizing its employees. (7-1-24)
   

   d. The insurer's or insurance group's plans for CEO and senior management succession. (7-1-24)

5. Oversight. Describe the processes by which the board, its committees and senior management ensure an appropriate amount of oversight to the critical risk areas impacting the insurer's business activities, including a discussion of: (7-1-24)

   a. How oversight and management responsibilities are delegated between the board, its committees and senior management; (7-1-24)

   b. How the board is kept informed of the insurer's strategic plans, the associated risks, and steps that senior management is taking to monitor and manage those risks; (7-1-24)

   c. How reporting responsibilities are organized for each critical risk area. The description should allow the director to understand the frequency at which information on each critical risk area is reported to and reviewed by senior management and the board. This description may include the following critical risk areas of the insurer: (7-1-24)

   i. Risk management processes (An ORSA summary report, if filed under Title 41, Chapter 63, Idaho Code, may be referenced per Subsection 011.01 of these rules); (7-1-24)
   
   ii. Actuarial function; (7-1-24)
   
   iii. Investment decision-making processes; (7-1-24)
   
   iv. Reinsurance decision-making processes; (7-1-24)
   
   v. Business strategy/finance decision-making processes; (7-1-24)
   
   vi. Compliance function; (7-1-24)
   
   vii. Financial reporting/internal auditing; and (7-1-24)
   
   viii. Market conduct decision-making processes. (7-1-24)