SENATE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 2649

The Commonwealth of Massachusetts

_______________

In the One Hundred and Ninetieth General Court
(2017-2018)

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by inserting the following sections:-

SECTION XX.  Chapter 40M of the General Laws is hereby amended by adding the following section:-

"Section 18.  Notwithstanding any general or special law to the contrary, chapter 176W shall apply to groups governed by this chapter."

SECTION XX.  Section 25E of chapter 152 of the General Laws, as so appearing, is hereby amended by striking out, in lines 1, 14 and 16, the words “twenty-five V,” and inserting in place thereof, in each instance, the following figure:- "25W".

SECTION XX.  Said chapter 152 is hereby further amended by inserting after section 25V the following section:-

"Section 25W.  Notwithstanding any general or special law to the contrary, chapter 176W shall apply to groups governed by sections 25E to 25U of this chapter."

SECTION XX.  Subsection (1) of section 20A of chapter 175 of the General Laws, as appearing in the 2016 Official Edition, is hereby amended by adding the following 2 paragraphs:-

"(I) If an accredited or certified reinsurer ceases to meet the requirements for accreditation or certification, the commissioner may suspend or revoke the reinsurer’s accreditation or certification.

(i) The commissioner must give the reinsurer notice and opportunity for hearing.  The suspension or revocation may not take effect until after the commissioner’s order on hearing, unless:

(a)  The reinsurer waives its right to hearing;

(b)  The commissioner’s order is based on regulatory action by the reinsurer’s domiciliary jurisdiction or the voluntary surrender or termination of the reinsurer’s eligibility to transact insurance or reinsurance business in its domiciliary jurisdiction or in the primary certifying state of the reinsurer under subparagraph (vi) of paragraph (E) of this subsection; or

(c) the commissioner finds that an emergency requires immediate action and a court of competent jurisdiction has not stayed the commissioner’s action.

(ii)  While a reinsurer’s accreditation or certification is suspended, no reinsurance contract issued or renewed after the effective date of the suspension qualifies for credit except to the extent that the reinsurer’s obligations under the contract are secured in accordance with subsection (2) of this section. If a reinsurer’s accreditation or certification is revoked, no credit for reinsurance may be granted after the effective date of the revocation except to the extent that the reinsurer’s obligations under the contract are secured in accordance with subparagraph (v) of paragraph (E) of this subsection or subsection (2) of this section.

(J)(i)  A ceding insurer shall take steps to manage its reinsurance recoverables proportionate to its own book of business.  A domestic ceding insurer shall notify the commissioner within 30 days after reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, exceeds 50 per cent of the domestic ceding insurer’s last reported surplus to policyholders, or after it is determined that reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, is likely to exceed this limit.  The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.

(ii)  A ceding insurer shall take steps to diversify its reinsurance program.  A domestic ceding insurer shall notify the commissioner within 30 days after ceding to any single assuming insurer, or group of affiliated assuming insurers, more than 20 per cent of the ceding insurer’s gross written premium in the prior calendar year, or after it has determined that the reinsurance ceded to any single assuming insurer, or group of affiliated assuming insurers, is likely to exceed this limit.  The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer."

SECTION XX. Said section 20A of said chapter 175, as so appearing, is hereby further amended by striking out subsection (5) and inserting in place thereof the following subsection:-

"(5)(A) The commissioner may in accordance with the provisions of chapter 30A, after notice and hearing, promulgate reasonable rules and regulations necessary to effectuate the provisions of this section. (B) The commissioner is further authorized to adopt rules and regulations applicable to reinsurance arrangements described in subparagraph (i) of paragraph (B) of this subsection. (i) A regulation adopted pursuant to paragraph (B) of this subsection, may apply only to reinsurance relating to:

(a)  Life insurance policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits;

(b)  Universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period;

(c)  Variable annuities with guaranteed death or living benefits;

(d)  Long-term care insurance policies; or

(e)  Such other life and health insurance and annuity products as to which the NAIC adopts model regulatory requirements with respect to credit for reinsurance.

(ii)  A regulation adopted pursuant to clauses (a) and (b) of subparagraph (i) of paragraph (B) of this subsection may apply to any treaty containing:

(a)  Policies issued on or after January 1, 2015, and/or

(b)  Policies issued prior to January 1, 2015, if risk pertaining to such pre-2015 policies is ceded in connection with the treaty, in whole or in part, on or after January 1, 2015.

(iii)  A regulation adopted pursuant to paragraph (B) of this subsection may require the ceding insurer, in calculating the amounts or forms of security required to be held under regulations promulgated under this authority, to use the Valuation Manual adopted by the NAIC under Section 11B(1) of the NAIC Standard Valuation Law, including all amendments adopted by the NAIC and in effect on the date as of which the calculation is made, to the extent applicable.

(iv)  A regulation adopted pursuant to this paragraph (B) of this subsection shall not apply to cessions to an assuming insurer that:

(a)  Is certified in the commonwealth;

(b)  Maintains at least $250,000,000 in capital and surplus when determined in accordance with the NAIC Accounting Practices and Procedures Manual, including all amendments thereto adopted by the NAIC, excluding the impact of any permitted or prescribed practices; and is (1) licensed in at least 26 states; or (2) licensed in at least 10 states, and licensed or accredited in a total of at least 35 states.

(v)  The authority to adopt regulations pursuant to this paragraph (B) does not limit the commissioner’s general authority to adopt regulations pursuant to paragraph (A) of subsection 5 of this section."

SECTION XX. Section 206 of said chapter 175, as so appearing, is hereby amended by inserting after the definition of “Control” the following definition:-

"“Group-wide supervisor”, the regulatory official authorized to engage in conducting and coordinating group-wide supervision activities who is determined or acknowledged by the commissioner under subsection (y) of section 206C to have sufficient significant contacts with the internationally active insurance group."

SECTION XX. Said section 206 of said chapter 175, as so appearing, is hereby further amended by inserting after the definition of “Insurer” the following definition:-

"“Internationally active insurance group”, an insurance holding company system that (1) includes an insurer registered under section 206C; and (2) meets the following criteria: (a) premiums written in at least 3 countries, (b) the percentage of gross premiums written outside the United States is at least 10 per cent of the insurance holding company system’s total gross written premiums, and (c) based on a 3-year rolling average, the total assets of the insurance holding company system are at least $50,000,000,000 or the total gross written premiums of the insurance holding company system are at least $10,000,000,000."

SECTION XX.  Section 206C of said chapter 175, as so appearing, is hereby amended by inserting, in line 291, after the word “reported,” the following words:-  "or provided to the division of insurance".

SECTION XX.  Said section 206C of said chapter 175, as so appearing, is hereby further amended by adding the following subsection:-

"(y)(1) The commissioner is authorized to act as the group-wide supervisor for any internationally active insurance group in accordance with the provisions of this subsection.  However, the commissioner may otherwise acknowledge another regulatory official as the group-wide supervisor where the internationally active insurance group:

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

(ii) Has substantial insurance operations in the United States, but not the commonwealth; or

(iii) Has substantial insurance operations in the United States and the commonwealth, but the commissioner has determined pursuant to the factors set forth in paragraphs (2) and (6) of this subsection that the other regulatory official is the appropriate group-wide supervisor.

An insurance holding company system that does not qualify as an internationally active insurance group may request that the commissioner make a determination or acknowledgement as to a group-wide supervisor pursuant to this subsection.

(2)  In cooperation with other state, federal and international regulatory agencies, the commissioner shall identify a single group-wide supervisor for an internationally active insurance group.  The commissioner may determine that the commissioner is the appropriate group-wide supervisor for an internationally active insurance group that conducts substantial insurance operations concentrated in the commonwealth.  However, the commissioner may acknowledge that a regulatory official from another jurisdiction is the appropriate group-wide supervisor for the internationally active insurance group. The commissioner shall consider the following factors when making a determination or acknowledgement under this subsection:

(i)  The place of domicile of the insurers within the internationally active insurance group that hold the largest share of the group’s written premiums, assets or liabilities;

(ii)  The place of domicile of the top-tiered insurer(s) in the insurance holding company system of the internationally active insurance group;

(iii)  The location of the executive offices or largest operational offices of the internationally active insurance group;

(iv)  Whether another regulatory official is acting or is seeking to act as the group-wide supervisor under a regulatory system that the commissioner determines to be substantially similar to the system of regulation provided under the laws of the commonwealth, or otherwise sufficient in terms of providing for group-wide supervision, enterprise risk analysis, and cooperation with other regulatory officials; and

(v)  Whether another regulatory official acting or seeking to act as the group-wide supervisor provides the commissioner with reasonably reciprocal recognition and cooperation.

However, a commissioner identified under this subsection as the group-wide supervisor may determine that it is appropriate to acknowledge another supervisor to serve as the group-wide supervisor. The acknowledgement of the group-wide supervisor shall be made after consideration of the factors listed in subparagraphs (i) through (v), and 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 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 commissioner 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: (i) the internationally active insurance group’s insurers domiciled in the commonwealth holding the largest share of the group’s premiums, assets or liabilities; or (ii) the commonwealth being the place of domicile of the top-tiered insurer(s) in the insurance holding company system of the internationally active insurance group, the commissioner shall make a determination or acknowledgment as to the appropriate group-wide supervisor for such an internationally active insurance group pursuant to paragraph (2) of this subsection.

(4)  Pursuant to subsection (u), the commissioner is authorized to collect from any insurer registered pursuant to subsection (a) all information necessary to determine whether the commissioner may act as the group-wide supervisor of an internationally active insurance group or if the commissioner 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 commissioner, the commissioner shall notify the insurer registered pursuant to subsection (a) and the ultimate controlling person within the internationally active insurance group.  The internationally active insurance group shall have not less than 30 days to provide the commissioner with additional information pertinent to the pending determination.  The commissioner shall publish on the division of insurance’s website the identity of internationally active insurance groups that the commissioner has determined are subject to group-wide supervision by the commissioner.

(5)If the commissioner is the group-wide supervisor for an internationally active insurance group, the commissioner is authorized to engage in any of the following group-wide supervision activities:

(i)  Assess the enterprise risks within the internationally active insurance group to ensure that the material financial condition and liquidity risks to the members of the internationally active insurance group that are engaged in the business of insurance are identified by management, and reasonable and effective mitigation measures are in place;

(ii)  Request, from any member of an internationally active insurance group subject to the commissioner’s supervision, information necessary and appropriate to assess enterprise risk, including but not limited to, information about the members of the internationally active insurance group regarding governance, risk assessment and management; capital adequacy, and material intercompany transactions;

(iii)  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 that are engaged in the business of insurance;

(iv) 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 subsection (v), through supervisory colleges as set forth in subsection (x) or otherwise;

(v)  Enter into agreements with or obtain documentation from any insurer registered under subsection (a), 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 commissioner’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 the commonwealth is doing business in the commonwealth or is otherwise subject to jurisdiction in this state; and

(vi)  Other group-wide supervision activities, consistent with the authorities and purposes enumerated in this paragraph, as considered necessary by the commissioner.

(6)  If the commissioner acknowledges that another regulatory official from a jurisdiction that is not accredited by the NAIC is the group-wide supervisor, the commissioner is authorized to reasonably cooperate, through supervisory colleges or otherwise, with group-wide supervision undertaken by the group-wide supervisor, provided that (i) the commissioner’s cooperation is in compliance with the laws of the commonwealth; and (ii) the regulatory official acknowledged as the group-wide supervisor also recognizes and cooperates with the commissioner’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 commissioner is authorized to refuse recognition and cooperation.

(7)  The commissioner is authorized to enter into agreements with or obtain documentation from any insurer registered under subsection (a), 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)  A registered insurer subject to this subsection shall be liable for and shall pay the reasonable expenses of the commissioner’s participation in the administration of this subsection, including the engagement of attorneys, actuaries and any other professionals and all reasonable travel expenses."

SECTION XX.  Chapter 175 of the General Laws is hereby amended by adding the following section:-

"Section 230.  Notwithstanding any general or special law to the contrary, chapter 176W shall apply to insurers governed by this chapter."

SECTION XX.  Chapter 176 of the General Laws is hereby amended by inserting after section 1A the following section:-

"Section 1B.  Notwithstanding any general or special law to the contrary, chapter 176W shall apply to fraternal benefit societies governed by this chapter."

SECTION XX.  Section 18 of chapter 176A of the General Laws, as appearing in the 2016 Official Edition, is hereby amended by adding the following paragraph:-

"Notwithstanding any general or special law to the contrary, chapter 176W shall apply to every corporation subject to this chapter."

SECTION XX.  Chapter 176B of the General Laws is hereby amended by inserting after section 8B the following section:-

"Section 8C.  Notwithstanding any general or special law to the contrary, chapter 176W shall apply to a medical service corporation governed by this chapter."

SECTION XX.  Chapter 176E of the General Laws is hereby amended by inserting after section 8B the following section:-

"Section 8C.  Notwithstanding any general or special law to the contrary, chapter 176W shall apply to a dental service corporation governed by this chapter."

SECTION XX.  Chapter 176F of the General Laws is hereby amended by inserting after section 8A the following section:-

"Section 8B.  Notwithstanding any general or special law to the contrary, chapter 176W shall apply to an optometric service corporation governed by this chapter."

SECTION XX.  Chapter 176G of the General Laws is hereby amended by inserting after section 10A the following section:-

"Section 10B.  Notwithstanding any general or special law to the contrary, chapter 176W shall apply to a health maintenance organization governed by this chapter."

SECTION XX.  Chapter 176H of the General Laws is hereby amended by inserting after section 13A the following section:- 

"Section 13B.  Notwithstanding any general or special law to the contrary, chapter 176W shall apply to legal services plans governed by this chapter."

SECTION XX.  Chapter 176P of the General Laws is hereby amended by inserting after section 38A the following section:-

"Section 38B.  Notwithstanding any general or special law to the contrary, chapter 176W shall apply to a limited society governed by this chapter."

SECTION XX.  The General Laws, as appearing in the 2016 Official Edition, are hereby amended by inserting after chapter 176V the following chapter:

"CHAPTER 176W

CORPORATE GOVERNANCE ANNUAL DISCLOSURE

Section 1.  As used in this chapter, the following words shall, unless the context clearly requires otherwise, have the following meanings:

“Commissioner”, the commissioner of insurance.

“Corporate Governance Annual Disclosure (CGAD)”, a confidential report filed by the insurer or insurance group made in accordance with the requirements of this chapter.

“Corporate Governance Annual Disclosure Model Regulation”, the current version of the Corporate Governance Annual Disclosure Model Regulation developed and adopted by the NAIC and as amended from time to time. A change in the Corporate Governance Annual Disclosure Model Regulation shall be effective on the January 1 following the calendar year in which the changes have been adopted by the NAIC.

“Division”, the division of insurance.

“Insurance group”, those insurers and affiliates included within an insurance holding company system as defined in section 206 of chapter 175; health maintenance organizations and affiliates included within a health maintenance organization holding company system, as defined in section 1 of chapter 176G; public employer self-insurance groups and their affiliates organized pursuant to chapter 40M; workers compensation self-insurance groups and their affiliates organized pursuant to sections 25E to 25U, inclusive, of chapter 152; fraternal benefit societies and their affiliates organized pursuant to chapter 176; non-profit hospital service corporations and their affiliates organized pursuant to chapter 176A; medical service corporations and their affiliates organized pursuant to chapter 176B; dental service corporations and their affiliates organized pursuant to chapter 176E; optometric service corporations and their affiliates organized pursuant to chapter 176F; insured legal services plans and their affiliates organized pursuant to chapter 176H; and limited societies and their affiliates organized pursuant to chapter 176P.

“Insurer”, the same meaning as in section 1 of chapter 175 and shall also include public employer self-insurance groups organized pursuant to chapter 40M; workers compensation self-insurance groups organized pursuant to sections 25E to 25U, inclusive, of chapter 152; fraternal benefit societies organized pursuant to chapter 176; non-profit hospital service corporations organized pursuant to chapter 176A; medical service corporations organized pursuant to chapter 176B; dental services corporations organized pursuant to chapter 176E; optometric service corporations organized pursuant to chapter 176F; health maintenance organizations organized pursuant to chapter 176G; insured legal services plans organized pursuant to chapter 176H; and limited societies organized pursuant to chapter 176P; except that “insurer” 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. 

“NAIC”, the National Association of Insurance Commissioners.

“ORSA summary report”, the report filed in accordance with chapter 176V.

Section 2. (a) An insurer, or the insurance group of which the insurer is a member, shall, no later than June 1 of each calendar year, submit to the commissioner a CGAD that contains the information described in section 4(b). Notwithstanding any request from the commissioner made pursuant to subsection (c), if the insurer is a member of an insurance group, the insurer shall submit the report required by this section to the commissioner of the lead state for the insurance group, in accordance with the laws of the lead state, as determined by the procedures outlined in the most recent Financial Analysis Handbook adopted by the NAIC.

(b)  The CGAD must include a signature of the insurer’s or insurance group’s chief executive officer or corporate secretary attesting to the best of that individual’s belief and knowledge that the insurer has implemented the corporate governance practices and that a copy of the disclosure has been provided to the insurer’s board of directors or the appropriate committee thereof.

(c)  An insurer not required to submit a CGAD under this section shall do so upon the commissioner’s request.

(d)  For purposes of completing the CGAD, the insurer or insurance group may provide information regarding corporate governance at the ultimate controlling parent level, an intermediate holding company level or the individual legal entity level, depending upon how the insurer or insurance group has structured its system of corporate governance. The insurer or insurance group is encouraged to make the CGAD disclosures at the level at which the insurer’s or insurance group’s risk appetite is determined, or at which the earnings, capital, liquidity, operations, and reputation of the insurer are overseen collectively and at which the supervision of those factors are coordinated and exercised, or the level at which legal liability for failure of general corporate governance duties would be placed. If the insurer or insurance group determines the level of reporting based on these criteria, it shall indicate which of the three criteria was used to determine the level of reporting and explain any subsequent changes in level of reporting.

(e)  The review of the CGAD and any additional requests for information shall be made through the lead state as determined by the procedures within the most recent Financial Analysis Handbook referenced in subsection (a).

(f)  Insurers providing information substantially similar to the information required by this chapter in other documents provided to the commissioner, including proxy statements filed in conjunction with Form B requirements pursuant to section 206C of chapter 175, or other state or federal filings provided to the Division shall not be required to duplicate that information in the CGAD, but shall only be required to cross reference the document in which the information is included.

Section 3. The commissioner may, upon notice and opportunity for all interested persons to be heard, issue such rules, regulations and orders as shall be necessary to carry out the provisions of this chapter.

Section 4. (a) The insurer or insurance group shall have discretion over the responses to the CGAD inquiries, provided the CGAD shall contain the material information necessary to permit the commissioner to gain an understanding of the insurer's or group's corporate governance structure, policies, and practices. The commissioner may request additional information that he or she deems material and necessary to provide the commissioner with a clear understanding of the corporate governance policies, the reporting or information system or controls implementing those policies.

(b)  Notwithstanding subsection (a) of this section, the CGAD shall be prepared consistent with the NAIC Corporate Governance Annual Disclosure Model Regulation, subject to the requirements of this chapter. Documentation and supporting information shall be maintained and made available upon examination or upon request of the commissioner.

Section 5. (a) Documents, materials or other information including the CGAD, in the possession or control of the Division that are obtained by, created by or disclosed to the commissioner or any other person under this chapter shall be proprietary and recognized to contain trade secrets.  All such documents, materials or other information shall be kept confidential, shall not be considered a public record pursuant to section 10 of chapter 66, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. However, the commissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner’s official duties. The commissioner shall not otherwise make the documents, materials or other information public without the prior written consent of the insurer. Nothing in this section shall be construed to require written consent of the insurer before the commissioner may share or receive confidential documents, materials or other CGAD-related information pursuant to subsection (c) to assist in the performance of the commissioner’s regular duties.

(b) Neither the commissioner nor any person who received documents, materials or other CGAD-related information, through examination or otherwise, while acting under the authority of the commissioner, or with whom such documents, materials or other information are 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 paragraph (a).

(c)  In order to assist in the performance of the commissioner’s regulatory duties, the commissioner:

(i) May, upon request, share documents, materials or other CGAD-related information including the confidential and privileged documents, materials or information subject to subsection (a), including proprietary and trade secret documents and materials with other state, federal and international financial regulatory agencies, including members of any supervisory college as defined in subsection (x) of section 206C of chapter 175, with the NAIC, and with third party consultants pursuant to section 6, provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the CGAD-related documents, material or other information and has verified in writing the legal authority to maintain confidentiality; and

(ii) May receive documents, materials or other CGAD-related information, including otherwise confidential and privileged documents, materials or information, including proprietary and trade-secret information or documents, from regulatory officials of other state, federal and international financial regulatory agencies, including members of any supervisory college as defined in subsection (x) of section 206C of chapter 175, and from the NAIC, and shall maintain as confidential or privileged any documents, materials 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.

(d)  The sharing of information and documents by the commissioner pursuant to this chapter shall not constitute a delegation of regulatory authority or rulemaking, and the commissioner is solely responsible for the administration, execution and enforcement of the provisions of this chapter.

(e)  No waiver of any applicable privilege or claim of confidentiality in the documents, proprietary and trade-secret materials or other CGAD-related information shall occur as a result of disclosure of such CGAD-related information or documents to the commissioner under this section or as a result of sharing as authorized in this chapter.

Section 6. (a) The commissioner may retain, at the insurer's expense, third-party consultants, including attorneys, actuaries, accountants and other experts not otherwise a part of the commissioner's staff as may be reasonably necessary to assist the commissioner in reviewing the CGAD and related information or the insurer's compliance with this chapter.

(b)  Any persons retained under subsection (a) shall be under the direction and control of the commissioner and shall act in a purely advisory capacity.

(c)  The NAIC and third-party consultants shall be subject to the same confidentiality standards and requirements as the commissioner.

(d)  As part of the retention process, a third-party consultant shall verify to the commissioner, with notice to the insurer, that it is free of a conflict of interest and that it has internal procedures in place to monitor compliance with a conflict and to comply with the confidentiality standards and requirements of this chapter.

(e)  A written agreement with the NAIC or a third-party consultant governing sharing and use of information provided pursuant to this chapter shall contain the following provisions and expressly require the written consent of the insurer prior to making public information provided under this chapter:

(i)  Specific procedures and protocols for maintaining the confidentiality and security of CGAD-related information shared with the NAIC or a third-party consultant pursuant to this chapter;

(ii)  Procedures and protocols for sharing by the NAIC only with other state regulators from states in which the insurance group has domiciled insurers. The agreement shall provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the CGAD-related documents, materials or other information and has verified in writing the legal authority to maintain confidentiality;

(iii)  A provision specifying that ownership of the CGAD-related information shared with the NAIC or a third-party consultant remains with the Division and the NAIC’s or third-party consultant’s use of the information is subject to the direction of the commissioner;

(iv)  A provision that prohibits the NAIC or a third-party consultant from storing the information shared pursuant to this chapter in a permanent database after the underlying analysis is completed;

(v)  A provision requiring the NAIC or third-party consultant to provide prompt notice to the commissioner and to the insurer or insurance group regarding any subpoena, request for disclosure, or request for production of the insurer’s CGAD-related information; and

(vi)  A requirement that the NAIC or a third-party consultant  consent to intervention by an insurer in any judicial or administrative action in which the NAIC or a third-party consultant may be required to disclose confidential information about the insurer shared with the NAIC or a third-party consultant pursuant to this chapter.

Section 7. Any insurer failing, without just cause, to timely file the CGAD as required in this chapter shall be required, after notice and hearing, to pay a penalty of $500 for each day of delay, to be recovered by the commissioner.  The maximum penalty under this section is $10,000. The commissioner may reduce the penalty if the insurer demonstrates to the commissioner that the imposition of the penalty would constitute a financial hardship to the insurer.

Section 8. If any provision of this chapter other than Section 5, or the application thereof to any person or circumstance, is held invalid, such determination shall not affect the provisions or applications of this chapter which can be given effect without the invalid provision or application, and to that end the provisions of this chapter, with the exception of Section 5, are severable."