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304.2-065 Early warning analyst.
(1)
(2)
(3)
(4)
(5)
There is created within the Department of Insurance the position of early
warning analyst.
The commissioner shall appoint a qualified person to serve as early warning
analyst.
The early warning analyst shall detect domiciled companies and companies
doing a significant amount of business in the Commonwealth that are in a
hazardous or potentially hazardous financial condition.
The early warning analyst shall be part of the Financial Standards and
Examination Division.
The early warning analyst shall:
(a) Take advantage of the information available through the Insurance
Regulatory Information System and use the information to monitor
insurers;
(b) Seek information from other states' detection programs;
(c) Work with other Department of Insurance employees representing key
regulatory areas of the department;
(d) Coordinate and develop the use of an indicator list to determine if an
insurer is in a hazardous condition. The indicator list shall include but is
not limited to the following indicators:
1.
An insurer fails to file a timely financial statement as established in
KRS Chapter 304;
2.
An insurer files financial information which is false or misleading;
3.
An insurer overstates its surplus by twenty-five percent (25%) or
more;
4.
An insurer fails to grant authorization to amend its financial
statement when requested;
5.
An insurer's financial ratios are outside of the usual range
established by the National Association of Insurance Commissioners
in the Insurance Regulatory Information System;
6.
A projection by the department of an insurer's current financial
condition indicates that the sum of its paid-in capital, paid-in surplus,
and contributed surplus will be reduced within the next twelve (12)
months;
7.
An insurer's aggregate net retained risk, direct or assumed, under
any one (1) insurance policy or certificate of insurance under a
group policy is more than ten percent (10%) of the insurer's surplus,
except where otherwise permitted by law;
8.
An insurer's reserves for losses and loss adjustment expenses are
discounted more than ten percent (10%) of the surplus;
9.
An affiliate or subsidiary of an insurer is unable to pay its obligations
as the obligations become due and payable;
10. A life, accident, and health insurer has premium writings that result
in the surplus being less than five percent (5%) of the aggregate
(e)
(f)
general account reserves for the life insurance in force plus
twenty-five percent (25%) of the new annualized accident and health
premium writing;
11. An insurer has reinsurance reserve credits, recoverable or
receivable, that are disputed by the reinsurer, or are due and
payable and remain unpaid, and the reinsurance credits,
recoverables, and receivables are more than ten percent (10%) of
an insurer's surplus;
12. An insurer consistently issues subordinate premium or surplus
debentures to finance its operations;
13. An insurer fails to adequately maintain books and records in a
manner that permits examiners to determine the financial condition
of the insurer;
14. An insurer has reinsurance agreements affecting twenty percent
(20%) or more of the insurer's gross written premiums, direct or
assumed, and the assuming insurers are not licensed to do
insurance business in the Commonwealth of Kentucky;
15. An insurer's management does not have the experience,
competence, or trustworthiness to operate the insurer in a safe and
sound manner;
16. An insurer's management engages in unlawful transactions;
17. An insurer fails to have an appraisal made on real estate upon
which the insurer has made a mortgage loan;
18. An insurer fails to comply with the terms of an agreement with an
affiliate;
19. An insurer has a pattern of refusing to settle valid claims within a
reasonable time after due proof of the loss has been received;
20. An insurer fails to follow a policy on rating and underwriting
standards appropriate to the risk;
21. An insurer violates KRS Chapter 304;
22. A final administrative or judicial order, initiated by an insurance
regulatory agency of another state, is issued against an insurer; and
23. An insurer is in any condition that the commissioner finds is a
hazard to policyholders, creditors, or the general public;
Recommend regulatory action and provide status reports to the
commissioner; and
Appear before the Interim Joint Committee on Banking and Insurance or
the Standing Committees on Banking and Insurance annually to report on
the status of domestic insurance companies and insurance companies
doing a substantial amount of business in the Commonwealth of
Kentucky.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 920, effective July 15, 2010. -Amended 2004 Ky. Acts ch. 24, sec. 1, effective July 13, 2004. -- Amended
1998 Ky. Acts ch. 483, sec. 2, effective July 15, 1998. -- Created 1994 Ky. Acts
ch. 496, sec. 4, effective July 15, 1994.
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