Senate committee approves amendments requiring insurer group capital calculations, tighter confidentiality for stress-test data

The Senate Corporations Committee on Tuesday approved Senate File 50, a bill to amend Chapter 44 of the insurance code to require group capital calculations and liquidity stress tests for certain insurance holding companies and to impose stricter confidentiality protections for the resulting data.

The measure, presented by Jeff Root, Commissioner of Insurance, passed on a roll-call vote with five ayes and no recorded no votes. Commissioner Root said the provisions are intended to give state regulators a broader view of the financial condition of insurance groups so they can ensure insurers keep sufficient assets to pay claims.

The bill requires insurers that meet scope criteria to submit a group capital calculation — a consolidated look at capital across affiliated companies — and an NAIC-based liquidity stress test used to model how a group would fare under adverse claim scenarios. "The group capital calculation is sort of like what it sounds like. We're going to look at the capital held by this group of businesses, not just the individual insurer," Root told the committee. He added the liquidity stress test is a "stress test to see how many assets you have." Root also noted the Department of Insurance would treat the reports as confidential, not public documents.

Why it matters: The committee and staff tied the bill to accreditation standards used nationwide. Committee members said uniformity with the National Association of Insurance Commissioners (NAIC) model and accreditation helps avoid duplicative state exams and reduces the chance of federal intervention. Commissioner Root said all 50 states currently participate in an accreditation program that states expect regulators to meet.

Key provisions and safeguards

- Filing scope and one-year application: The bill sets scope criteria that determine which holding companies must file in a given year; filing requirements apply only to that specific year and can be adjusted in future years. Commissioner Root used an example threshold (discussed during the hearing) to illustrate how a company's filing obligation could change year to year.

- Confidentiality and limited distribution: The statute creates heightened confidentiality for liquidity stress tests and group capital calculations. The lead state commissioner will retain the analysis; recipients such as designated third-party consultants must sign written confidentiality agreements. The bill prohibits recipients (including the NAIC and consultants) from keeping the information in a permanent database and allows the commissioner to correct or rebut any inadvertently released, materially false information.

- Use of third-party consultants and lead-state coordination: The bill expressly permits use of independent (third-party) consultants designated by the commissioner when states lack in-house expertise, but requires the insurer be notified of any consultant selected. If more than one state is involved, a single lead state commissioner will be designated to receive filings and make determinations in consultation with other states.

- Filing exemptions: The statute exempts certain holding companies from filing if the information is already available to the state (for example, if the group files comparable data with the Federal Reserve, a non-U.S. group supervisor or another U.S. regulator). The lead-state commissioner also has limited authority to exempt items or require narrower filings when appropriate.

Public testimony and industry position

Representatives from major insurers told the committee they supported the bill. Mary Ann Shaner of State Farm said the company supports Senate File 50, and Catherine Wilkinson of the American Property Casualty Insurers Association registered support in writing. Commissioner Root said the bill language reflects multi-year work between insurers, consumer advocates and state regulators.

Vote and next steps

Senator Landon moved the bill; no second was required under the committee's procedural practice. The committee recorded ayes from Senators Bonar, Dockstader, Landon, Steinmetz and Chairman Case, and advanced the bill to the floor. The bill's effective date in the text is July 1 (year not specified in the committee explanation).