§ 44-165 — Financial conglomerate; supervision on consolidated basis; director; powers; duties; application fee; violation; enforcement powers; administrative penalty; unfair trade practice; criminal penalty; appeal; expenses of supervision

(1)(a)
A financial conglomerate may submit to the jurisdiction of the Director of
Insurance for supervision on a consolidated basis under this section. Supervision
under this section shall be in addition to all statutory and regulatory requirements
imposed on domestic insurers and shall be for the purpose of determining how
the operations of the financial conglomerate impact insurance operations.
(b) For purposes of this section:
(i) Control has the same meaning as in section 44-2121 ; and
(ii) Financial conglomerate means either an insurance company
domiciled in Nebraska or a person established under the laws of the United
States, any state, or the District of Columbia which directly or indirectly
controls an insurance company domiciled in Nebraska. Financial conglomerate
includes the person applying for supervision under this section and all entities,
whether insurance companies or otherwise, to the extent the entities are controlled
by such person.
(2) The director may approve any application for supervision
under this section that meets the requirements of this section and the rules
and regulations adopted and promulgated under this section.
(3)(a) The director may adopt and promulgate rules
and regulations for supervision of a financial conglomerate, including all
persons controlled by a financial conglomerate, that will permit the director
to assess at the level of the financial conglomerate the financial situation
of the financial conglomerate, including solvency, risk concentration, and
intra-group transactions.
(b) Such rules and regulations shall require the financial
conglomerate to:
(i) Have in place sufficient capital adequacy policies at
the level of the financial conglomerate;
(ii) Report to the director at least annually any significant
risk concentration at the level of the financial conglomerate;
(iii) Report to the director at least annually all significant
intra-group transactions of regulated entities within a financial conglomerate.
Such reporting shall be in addition to all reports required under any other
provision of Chapter 44; and
(iv) Have in place at the level of the financial conglomerate
adequate risk management processes and internal control mechanisms, including
sound administrative and accounting procedures.
(c) In adopting and promulgating the rules and regulations,
the director:
(i) Shall consider the rules and regulations that may be adopted
by a member state of the European Union, the European Union, or any other
country for the supervision of financial conglomerates;
(ii) Shall require the filing of such information as the director
may determine;
(iii) Shall include standards and processes for effective
qualitative group assessment, quantitative group assessment including capital
adequacy, affiliate transaction, and risk concentration assessment, risks
and internal capital assessments, disclosure requirements, and investigation
and enforcement powers;
(iv) Shall state that supervision of financial conglomerates
concerns how the operations of the financial conglomerate impact the insurance
operations;
(v) Shall adopt an application fee in an amount not to exceed
the amount necessary to recover the cost of review and analysis of the application;
and
(vi) May verify information received under this section.
(4)(a) If it appears to the director that a financial conglomerate
that submits to the jurisdiction of the director under this section, or any
director, officer, employee, or agent thereof, willfully violates this section
or the rules and regulations adopted and promulgated under this section, the
director may order the financial conglomerate to cease and desist immediately
any such activity. After notice and hearing, the director may order the financial
conglomerate to void any contracts between the financial conglomerate and
any of its affiliates or among affiliates of the financial conglomerate and
restore the status quo if such action is in the best interest of policyholders,
creditors, or the public.
(b) If it appears to the director that any financial conglomerate
that submits to the jurisdiction of the director under this section, or any
director, officer, employee, or agent thereof, has committed or is about to
commit a violation of this section or the rules and regulations adopted and
promulgated under this section, the director may apply to the district court
of Lancaster County for an order enjoining such financial conglomerate, director,
officer, employee, or agent from violating or continuing to violate this section
or the rules and regulations adopted and promulgated under this section and
for such other equitable relief as the nature of the case and the interest
of the financial conglomerate's policyholders, creditors, or the public may
require.
(c)(i) Any financial conglomerate that fails, without just
cause, to provide information which may be required under the rules and regulations
adopted and promulgated under this section may be required by the director,
after notice and hearing, to pay an administrative penalty of one hundred
dollars for each day's delay not to exceed an aggregate penalty of ten thousand
dollars. The director may reduce the penalty if the financial conglomerate
demonstrates to the director that the imposition of the penalty would constitute
a financial hardship to the financial conglomerate.
(ii) Any financial conglomerate that fails to notify the director
of any action for which such notification may be required under the rules
and regulations adopted and promulgated under this section may be required
by the director, after notice and hearing, to pay an administrative penalty
of not more than two thousand five hundred dollars per violation.
(iii) Any violation of this section or the rules and regulations
adopted and promulgated under this section shall be an unfair trade practice
under the Unfair Insurance Trade Practices Act in addition to any other remedies
and penalties available under the laws of this state.
(d) Any director or officer of a financial conglomerate that
submits to the jurisdiction of the director under this section who knowingly
violates or assents to any officer or agent of the financial conglomerate
to violate this section or the rules and regulations adopted and promulgated
under this section may be required by the director, after notice and hearing,
to pay in his or her individual capacity an administrative penalty of not
more than five thousand dollars per violation. In determining the amount of
the penalty, the director shall take into account the appropriateness of the
penalty with respect to the gravity of the violation, the history of previous
violations, and such other matters as justice may require.
(e) After notice and hearing, the director may terminate the
supervision of any financial conglomerate under this section if it ceases
to qualify as a financial conglomerate under this section or the rules and
regulations adopted and promulgated under this section.
(f) If it appears to the director that any person has committed
a violation of this section or the rules and regulations adopted and promulgated
under this section which so impairs the financial condition of a domestic
insurer that submits to the jurisdiction of the director under this section
as to threaten insolvency or make the further transaction of business by such
financial conglomerate hazardous to its policyholders or the public, the director
may proceed as provided in the Nebraska Insurers Supervision, Rehabilitation,
and Liquidation Act to take possession of the property of such domestic insurer
and to conduct the business thereof.
(g) If it appears to the director that any person that submits
to the jurisdiction of the director under this section has committed a violation
of this section or the rules and regulations adopted and promulgated under
this section which makes the continued operation of an insurer contrary to
the interests of policyholders or the public, the director may, after giving
notice and an opportunity to be heard, suspend, revoke, or refuse to renew
such insurer's license or authority to do business in this state for such
period as the director finds is required for the protection of policyholders
or the public. Any such determination shall be accompanied by specific findings
of fact and conclusions of law.
(h)(i) Any financial conglomerate that submits to the jurisdiction
of the director under this section that willfully violates this section or
the rules and regulations adopted and promulgated under this section shall
be guilty of a Class IV felony.
(ii) Any director, officer, employee, or agent of a financial
conglomerate that submits to the jurisdiction of the director under this section
who willfully violates this section or the rules and regulations adopted and
promulgated under this section or who willfully and knowingly subscribes to
or makes or causes to be made any false statements, false reports, or false
filings with the intent to deceive the director in the performance of his
or her duties under this section or the rules and regulations adopted and
promulgated under this section shall be guilty of a Class IV felony.
(iii) Any person aggrieved by any act, determination, order,
or other action of the director pursuant to this section or the rules and
regulations adopted and promulgated under this section may appeal. The appeal
shall be in accordance with the Administrative Procedure Act.
(iv) Any person aggrieved by any failure of the director to
act or make a determination required by this section or the rules and regulations
adopted and promulgated under this section may petition the district court
of Lancaster County for a writ in the nature of a mandamus or a peremptory
mandamus directing the director to act or make such determination forthwith.
(i) The powers, remedies, procedures, and penalties governing
financial conglomerates under this section shall be in addition to any other
provisions provided by law.
(5)(a) The director may contract with such qualified persons
as the director deems necessary to allow the director to perform any duties
and responsibilities under this section.
(b) The reasonable expenses of supervision of a financial
conglomerate under this section shall be fixed and determined by the director
who shall collect the same from the supervised financial conglomerate. The
financial conglomerate shall reimburse the amount upon presentation of a statement
by the director. All money collected by the director for supervision of financial
conglomerates pursuant to this section shall be remitted in accordance with
section 44-116 .
(c) All information, documents, and copies thereof obtained
by or disclosed to the director pursuant to this section shall be held by
the director in accordance with sections 44-154 and 44-2138 .

Legislative History

Source: Laws 2008, LB855, § 50; Laws 2014, LB700, § 14. Cross References: Administrative Procedure Act, see section 84-920. Nebraska Insurers Supervision, Rehabilitation, and Liquidation Act, see section 44-4862. Unfair Insurance Trade Practices Act, see section 44-1521.