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Session Law

2004

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Chapter 123 AN ACT PROVIDING FOR UNIFORM REGULATORY STANDARDS FOR CERTAIN INSURANCE COMPANIES.

Whereas , The deferred operation of this act would tend to defeat its purpose, which is to provide forthwith for uniform regulatory standards for certain insurance companies, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 1 of chapter 175 of the General Laws, as appearing in the 2002 Official Edition, is hereby amended by striking out the definition of "Compensation".

SECTION 2. Said section 1 of said chapter 175, as so appearing, is hereby further amended by striking out the definition of "Earned premiums".

SECTION 3. Said section 1 of said chapter 175, as so appearing, is hereby further amended by striking out the definition of "Liability".

SECTION 4. Said section 1 of said chapter 175, as so appearing, is hereby further amended by striking out the definition of "Loss payments".

SECTION 5. Said section 1 of said chapter 175, as so appearing, is hereby further amended by striking out the definition of "Net assets" and inserting in place thereof the following definition:-

"Net assets", the assets of a company, less the total liabilities of the company, both as shown on the latest statement of financial condition prepared in accordance with section 25.

SECTION 6. Said section 1 of said chapter 175, as so appearing, is hereby further amended by striking out the definition of "Unearned premium" and inserting in place thereof the following definition:-

"Unearned premiums", as defined in the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, unless modified by the commissioner as the commissioner considers appropriate.

SECTION 7. Said Chapter 175 is hereby further amended by striking out section 10, as so appearing, and inserting in place thereof the following section:-

Section 10. The commissioner shall determine the liability of a company other than a life company or a health maintenance organization as defined in chapter 176G, upon its contracts of insurance. The determination shall be prepared in accordance with accounting practices and procedures prescribed or allowed by the commissioner. The commissioner shall require that they be maintained and prepared in accordance with the Annual Statement Instructions and Accounting Practices and Procedures Manual adopted by the National Association of Insurance Commissioners unless further modified by the commissioner as he considers appropriate.

SECTION 8. Said chapter 175 is hereby further amended by striking out section 11, as so appearing, and inserting in place thereof the following section:-

Section 11. In addition to the reserve provided for in sections 9 and 10, the commissioner shall charge to each company the liabilities, and allow to the credit of each company in the account of its financial condition only the assets, as are chargeable or allowable, respectively, under accounting practices and procedures prescribed or allowed by the commissioner. Notwithstanding any general or special law to the contrary, the commissioner shall require that value of the liabilities and assets be computed in accordance with the Annual Statement Instructions and Accounting Practices and Procedures Manual adopted by the National Association of Insurance Commissioners, unless modified by the commissioner as the commissioner considers appropriate.

SECTION 9. Said chapter 175 is hereby further amended by striking out section 11A, as so appearing, and inserting in place thereof the following section:-

Section 11A. Investments shall be valued in accordance with the published valuation standards of the National Association of Insurance Commissioners and in accordance with accounting practices and procedures prescribed or allowed by the commissioner. The commissioner shall require that the value of the investments be computed in accordance with the Accounting Practices and Procedures Manual and the Purposes and Procedures Manual of the Securities Valuation Office of the National Association of Insurance Commissioners, unless modified by the commissioner as the commissioner considers appropriate.

SECTION 10. Said chapter 175 is hereby further amended by striking out section 12, as so appearing, and inserting in place thereof the following section:-

Section 12. The commissioner shall each year compute the reserve required of liability companies for outstanding losses under insurance against loss or damage from accident to or injuries suffered by an employee or other person, for which the insured is liable, in accordance with accounting practices and procedures prescribed or allowed by the commissioner. The commissioner shall require that value of the reserves be computed in accordance with the Accounting Practices and Procedures Manual of the National Association of Insurance Commissioners, unless modified by the commissioner as the commissioner considers appropriate.

SECTION 11. Section 12A of said chapter 175 is hereby repealed.

SECTION 12. The first paragraph of paragraph (C) of subsection (2) of section 20A of said chapter 175, as appearing in the 2002 Official Edition, is hereby amended by adding the following sentence:- Any such letter of credit shall have a term of at least 1 year and shall contain a clause which prevents the expiration of the letter of credit without notice from the issuer not less than 30 days notice before the end of the term.

SECTION 13. Said subsection (2) of said section 20A of said chapter 175, as so appearing, is hereby further amended by striking out paragraph (D).

SECTION 14. Section 64 of said chapter 175, as so appearing, is hereby amended by striking out, in lines 52 to 54, inclusive, the words "deemed to be the book value at the time of election or the appraised value at such time, whichever is less" and inserting in place thereof the following words:- valued in accordance with the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, unless modified by the commissioner as the commissioner considers appropriate.

SECTION 15. Section 66B of said chapter 175, as so appearing, is hereby amended by striking out the fifth, sixth and seventh sentences and inserting in place thereof the following sentence:- The property shall be valued in accordance with the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, unless modified by the commissioner as the commissioner considers appropriate.

SECTION 16. The second paragraph of section 94I of said chapter 175, as so appearing, is hereby amended by striking out the second and third sentences and inserting in place thereof the following sentence:- The annual statement shall be prepared in accordance with section 25.

SECTION 17. This act shall take effect as of January 1, 2001.

Approved June 3, 2004.

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