§ 31A-18-102 — Minimum financial security benchmark.

(1) Except as provided in Subsections (2) and (3), the commissioner shall set a minimum financial security benchmark for an insurer that is the greater of:
(1)(a) the authorized control level risk-based capital applicable to the insurer as set forth in Sections 31A-17-601 through 31A-17-613; or
(1)(b) the minimum capital or minimum surplus required by statute or regulation for maintenance of an insurer's certificate of authority.
(2) If an insurer falls below three and one-half times the authorized control level risk capital applicable to the insurer, the commissioner may issue an order, in accordance with the factors described in Subsection (5)(b), specifying a minimum financial security benchmark to apply to the insurer provided the financial security benchmark is at least the applicable amount described in Subsection (1).
(3) The commissioner may establish by rule a minimum financial security benchmark that is a multiple of authorized control level risk-based capital to apply to any class of insurers provided the amount established by the regulation is at least the greater of the applicable amount described in Subsection (1).
(4) The commissioner, when setting an insurer's minimum financial security benchmark as described in Subsection (1), shall set the minimum financial security benchmark at an amount that will provide reasonable security against contingencies affecting the insurer's financial position that are not fully covered by reserves or by reinsurance.
(5) In setting an insurer's minimum financial security benchmark as described in Subsection (1), the commissioner shall consider:
(5)(a) the risks of:
(5)(a)(i) increases in the frequency or severity of losses beyond the levels contemplated by the rates charged;
(5)(a)(ii) increases in expenses beyond those contemplated by the rates charged;
(5)(a)(iii) decreases in the value of or the return on invested assets below the expected values or returns in the insurer's investment plan;
(5)(a)(iv) changes in economic conditions that would modify the insurer's assessment of the need for liquidity and force untimely sale of assets or prevent timely investments;
(5)(a)(v) currency devaluation to which the insurer may be subject; and
(5)(a)(vi) any other contingencies the commissioner identifies that may affect the insurer's operations; and
(5)(b) the following factors:
(5)(b)(i) the most reliable information available regarding the magnitude of the risks described in Subsection (5)(a);
(5)(b)(ii) the extent to which the risks in Subsection (5)(a) are related and whether any dependency is direct or inverse;
(5)(b)(iii) the insurer's recent history of profits or losses;
(5)(b)(iv) the extent of the insurer's protections against the contingencies in other ways than the establishment of surplus, including:
(5)(b)(iv)(A) redundancy of premiums;
(5)(b)(iv)(B) adjustability of contracts under the insurer's terms;
(5)(b)(iv)(C) investment valuation reserves, whether voluntary or mandatory;
(5)(b)(iv)(D) appropriate reinsurance;
(5)(b)(iv)(E) the use of conservative actuarial assumptions to provide a margin of security;
(5)(b)(iv)(F) reserve adjustments in recognition of previous rate inadequacies;
(5)(b)(iv)(G) contingency or catastrophe reserves;
(5)(b)(iv)(H) diversification of assets; and
(5)(b)(iv)(I) underwriting risks;
(5)(b)(v) independent judgment of the soundness of the insurer's operations, as evidenced by the ratings of reliable professional financial reporting services; and
(5)(b)(vi) any other factors the commissioner deems relevant.

Legislative History

Repealed and Re-enacted by Chapter 368, 2025 General Session