Subject 120-2-55 ADMINISTRATIVE SUPERVISION
This Regulation is promulgated pursuant to the authority
granted by O.C.G.A. Sections
33-2-9 and
33-3-1.
The purpose of this Regulation is to set forth the rules and
procedural requirements which the Commissioner of Insurance deems necessary to
carry out the provisions of Chapter 3, Title 33 of the Georgia Insurance Code,
relating to administrative supervision.
| (a) |
This Regulation shall not be interpreted
to limit the powers granted the Commissioner by any laws or parts of laws of
this state. |
| (1) |
"Exceeded its
Powers" means, including but not limited to, the following conditions:
| (a) |
The insurer has refused to permit
examination of its books, papers, accounts, records of affairs by the
Commissioner; |
| (b) |
A domestic
insurer has unlawfully removed from this State books, papers, accounts or
records necessary for an examination of the insurer; |
| (c) |
The insurer has failed to promptly comply
with the applicable financial reporting statutes or rules and departmental
requests relating thereto; |
| (d) |
The
insurer has neglected or refused to observe a requirement or order of the
Commissioner to make good, within the time prescribed by law, any prohibited
deficiency in its capital, capital stock, surplus. |
| (e) |
The insurer is continuing to transact
insurance or write business after its license has been revoked or suspended by
the Commissioner; |
| (f) |
The insurer,
by contract or otherwise, has unlawfully or has in violation of a requirement
or order of the Commissioner or has without first having obtained written
approval of the Commissioner if approval is required by law:
| 1. |
Totally reinsured its entire outstanding
business; or |
| 2. |
Merged or
consolidated substantially its entire property or business with another
insurer. |
|
| (g) |
The insurer
engaged in any transaction in which it is not authorized to engage under the
laws of this State; |
| (h) |
The insurer
has failed to comply with a lawful requirement or order of the
Commissioner. |
|
| (2) |
"Consent" means agreement to administrative supervision by the
insurer. |
This Regulation shall apply to all insurers doing business in
this State.
| (1) |
If the Commissioner determines that any
of the conditions exist as set forth in Section
33-3-17
or
33-3-18
of the Official Code of Georgia Annotated relating to administrative
supervision, the Commissioner may proceed with the administrative supervision
of the insurer. |
| (2) |
If placed under
administrative supervision, the insurer shall have such period of time as
deemed necessary by the Commissioner to comply with the requirements of the
Commissioner subject to the provisions of this Regulation. |
| (3) |
If it is determined by the Commissioner
that the conditions giving rise to the supervision still exist at the end of
the supervision period specified above, the Commissioner may extend such
period. |
| (4) |
If it is determined by
the Commissioner that none of the conditions giving rise to the supervision
exist, the Commissioner may release the insurer from supervision. |
The Commissioner may take such action as deemed necessary or
appropriate to reform the insurer under supervision and the expense for such
action shall be borne by the insurer. The Commissioner shall have all the
powers of the shareholders, policyholders, members, subscribers, directors,
committees of the board of directors, officers, managers, and attorneys-in-fact
whose authority shall be subordinate to him. He shall have full power to direct
and manage, to hire and discharge employees, officers and directors,
notwithstanding any by-laws of the insurer or any contracts that may exist. The
Commissioner may deal directly with the property and business affairs of the
insurer.
| (a) |
Administrative
supervision consists of supervision of the actions of the Board of Directors of
the company and the employees of the company. Any resolutions by the board of
Directors shall be subject to the approval of the Commissioner. All actions and
transactions of the employees and officers of the company are subject to the
approval of the Commissioner as the administrator. |
| (b) |
The Commissioner shall have control over
the cash receipts and cash disbursements of the company. All company decisions
shall be subject to the approval of the Commissioner. |
| (c) |
The Commissioner shall be able to act for
the company in connection with any of its custodian agreements. |
| (d) |
The Commissioner may require the insurer
to:
| 1. |
Reduce the total amount of present and
potential liability for policy benefits by reinsurance; |
| 2. |
Reduce, suspend or limit the volume of
business being accepted or renewed; |
| 3. |
Reduce general insurance and commission
expenses by specified methods; |
| 4. |
Increase the insurer's capital and surplus; |
| 5. |
Suspend or limit the declaration and
payment of dividend by an insurer to its stockholders or to its
policyholders; |
| 6. |
File reports in a
form acceptable to the Commissioner concerning the market value of an insurer's
assets; |
| 7. |
Limit or withdraw from
certain investments or discontinue certain investment practices to the extent
the Commissioner deems necessary; |
| 8. |
Document the adequacy of premium rates in
relation to the risks insured; or |
| 9. |
File, in addition to regular annual
statements, interim financial reports on the form adopted by the National
Association of Insurance Commissioners or on such format as promulgated by the
Commissioner. |
|
During the period of supervision, the Commissioner or his
designated appointee shall serve as the Administrator. The Commissioner may
provide that the insurer is prohibited from doing any of the following things
during the period of supervision, without the prior approval of the
Commissioner or his appointed supervisor:
| (a) |
Dispose of; convey or encumber any of its
assets or its business in force; |
| (b) |
Withdraw any of its bank
accounts; |
| (c) |
Lend any of its
funds; |
| (d) |
Invest any of its
funds; |
| (e) |
Transfer any of its
property; |
| (f) |
Incur any debt,
obligation or liability; |
| (g) |
Merge
or consolidate with another company; |
| (h) |
Approve new premiums or renew any
policies; |
| (i) |
Enter into any new
reinsurance contract or treaty; |
| (j) |
Terminate, surrender, forfeit, convey or lapse any insurance policy,
certificate or contract, except for nonpayment of premiums due; |
| (k) |
Release, pay or refund premium deposits,
accrued cash or loan values, unearned premiums, or other reserves on any
insurance policy, certificate or contract; |
| (l) |
Make any material change in
management; |
| (m) |
Increase salaries
and benefits of officers or directors or the preferential payment of bonuses,
dividends or other payments deemed preferential; or |
| (n) |
Any other action the Commissioner deems
may impair the safety or security of the insurer's policyholders or certificate
holders, its creditors, or the public. |
Nothing contained in this Regulation shall preclude the
Commissioner from initiating proceedings to place an insurer in conservation,
rehabilitation or liquidation proceedings or other delinquency proceedings,
however designated under the laws of this State, regardless of whether the
Commissioner has previously initiated administrative supervision proceedings
under this Regulation against the insurer.
If any provision of this Regulation or the application
thereof to any person or circumstance is held invalid by a court of competent
jurisdiction, the remainder of the Regulation or the applicability of such
provision to other persons or circumstances shall not be
affected.
