Section 4: Authority of administrative supervisor
433 words·~2 min read·
/ma/part-i/title-xxii/chapter-175j/4·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Section 4.
(A)During the period of supervision, the commissioner or the commissioner's designee shall serve as the administrative supervisor. The administrative supervisor may impose operating restrictions or requirements on the insurer during the period of administrative supervision which are deemed necessary for the protection of policyholders or the general public. The administrative supervisor may order 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 dividends 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;
(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; or
(10)cease from engaging in certain business practices which are illegal or which the administrative supervisor deems harmful to policyholders or the general public.
(B)In addition to the provisions of subsection (A), the administrative supervisor may provide that the insurer may not do any of the following things during the period of supervision without the prior approval of the administrative supervisor:
(1)dispose of, convey or encumber any of its assets or its business in force;
(2)withdraw any funds from its bank accounts;
(3)lend any of its funds;
(4)invest any of its property;
(5)transfer any of its property;
(6)incur any debt, obligation or liability;
(7)merge or consolidate with any company;
(8)approve new premiums or renew any policies;
(9)enter into any new reinsurance contract or treaty;
(10)terminate, surrender, forfeit, convert, or lapse any insurance policy, certificate or contract, except for nonpayment of premiums due;
(11)release, pay or refund premium deposits, accrued cash or loan values, unearned premiums, or other reserves on any insurance policy, certificate or contract;
(12)make any material change in management; or
(13)increase salaries and benefits of officers or directors or the preferential payment of bonuses, dividends or other payments deemed preferential.
(C)If the insurer is a foreign insurer the administrative supervisor's order may be limited to the extent provided by statute.