hb375_LC_28_2426S_hs

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05 LC 28 2426S

The House Committee on Insurance offers the following substitute to HB 375:

A BILL TO BE ENTITLED
AN ACT

To amend Chapter 35 of Title 33 of the Official Code of Georgia Annotated, relating to prepaid legal services plans, so as to revise the conditions for issuance of a license; to provide for loss reserves, surplus, and security deposit; to provide for related matters; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.

Chapter 35 of Title 33 of the Official Code of Georgia Annotated, relating to prepaid legal services plans, is amended by striking subsection (b) of Code Section 33-35-5, relating to procedure for issuance or denial of licenses generally, and inserting in lieu thereof a new subsection (b) to read as follows:

"(b) The Commissioner shall issue or renew a license as may be applied for when he is satisfied that the person to be licensed:

(1) Is competent and trustworthy and intends to act in good faith as a sponsor of prepaid legal services plans in this state;

(2) Has a good business reputation and has had experience, training, or education so as to be qualified to act as a sponsor of prepaid legal services plans; and

(3) If a corporation, is a corporation incorporated under the laws of this state or a foreign corporation authorized to transact business in this state."

SECTION 2.

Said chapter is further amended by striking Code Section 33-35-6, relating to minimum capital, surplus, and bond requirements, and inserting in lieu thereof a new Code Section 33-35-6 to read as follows:

"33-35-6.

No license or renewal license under this chapter shall be issued to a sponsor other than an insurer as defined in paragraph (2) of Code Section 33-35-2, unless such sponsor:

(1) Shall possess as minimum capital and thereafter maintain a minimum balance of at least $5,000.00 in its capital accounts as shown in its annual report to the Commissioner; provided, however, that the Commissioner shall in his discretion require such higher amounts of capital as he deems necessary for the protection of the public;

(2) Shall deposit with the Commissioner securities acceptable to the Commissioner in the amount of $25,000.00 or shall file with the Commissioner a bond to be approved by the Commissioner and made payable to the Commissioner or his successors in office, which bond is executed by such applicant as principal and by a corporate surety authorized to do business in this state in the penal sum of $25,000.00, conditioned that the sponsor will conduct his business in accordance with this chapter and the laws of this state and that the sponsor will properly account for all moneys collected in connection therewith. The bond shall remain in full force and effect until the surety is released from liability by the Commissioner or until the bond is canceled by the surety and the bond shall not be canceled or terminated unless prior to the cancellation or termination 30 dayś written notice is filed with the Commissioner; and

(3) Shall maintain such minimum surplus as the Commissioner may require, which shall be at least 25 percent of its anticipated income over a two-year period calculated on the basis of estimates of premium writings for two-year and five-year periods which shall be filed with the Commissioner as a part of the sponsorś rate filing required under Code Section 33-35-11.

(a) A person or insurer offering prepaid legal services plans pursuant to this chapter shall establish loss reserves for all incurred losses, both reported and unreported, for expenses, and for unearned premiums in a manner and amount established by the Commissioner by rule or regulation.

(b) A person or insurer offering prepaid legal services plans pursuant to this chapter shall establish and thereafter maintain a surplus account equal to the greater of:

(1) Two times the average paid monthly premium during such person or insureŕs most recent calendar year;

(2) Two times the estimated monthly premium for the next full calendar year for persons or insurers that do not yet have one calendar yeaŕs experience; or

(3) Two hundred fifty thousand dollars.

(c) The Commissioner may require additional surplus for any person or insurer offering prepaid legal services plans pursuant to this chapter as he or she deems appropriate under the circumstances in order for the person or insurer to meet its contractual obligations or to maintain its solvency.

(d) Fifty thousand dollars of the person or insureŕs surplus must be deposited with the Commissioner as a security deposit prior to such person or insurer commencing business in the same manner as is required of licensed insurers pursuant to Code Section 33-3-8, except that such security deposit shall not be subject to the reduction or waiver provisions under paragraph (2) of subsection (b) of Code Section 33-3-8."

SECTION 3.

All laws and parts of laws in conflict with this Act are repealed.