(215 ILCS 5/35A-10)
Sec. 35A-10. RBC Reports.
(a) On or before each March 1 (the "filing date"), every domestic
insurer
shall prepare and submit to the Director a report of its RBC levels as of the
end of the previous calendar year in the form and containing the information
required by the RBC Instructions. Every domestic insurer shall also file its
RBC Report with the NAIC in accordance with the RBC Instructions. In addition,
if requested in writing by the chief insurance regulatory official of any state
in which it
is authorized to do business, every domestic insurer shall file its RBC Report
with that official no later than the later of 15 days after the insurer
receives the written request
or the filing date.
(b) A life, health, or life and health insurer's or fraternal benefit society's RBC shall be
determined under the formula set
forth in the RBC Instructions. The formula shall take into account (and may
adjust for the covariance between):
(1) the risk with respect to the insurer's assets;
(2) the risk of adverse insurance experience with |
| respect to the insurer's liabilities and obligations;
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(3) the interest rate risk with respect to the
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(4) all other business risks and other relevant risks
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| set forth in the RBC Instructions.
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These risks shall be determined in each case by applying
the factors in the
manner set forth in the RBC Instructions. Notwithstanding the foregoing, and notwithstanding the RBC Instructions, health maintenance organizations operating as Medicaid managed care plans under contract with the Department of Healthcare and Family Services shall not be required to include in its RBC calculations any capitation revenue identified by Medicaid managed care plans as authorized under Section 5A-12.6(r) of the Illinois Public Aid Code.
(c) A property and casualty insurer's RBC shall be determined in
accordance
with the formula set forth in the RBC Instructions. The formula shall take
into account (and may adjust for the covariance between):
(1) asset risk;
(2) credit risk;
(3) underwriting risk; and
(4) all other business risks and other relevant risks
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| set forth in the RBC Instructions.
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These risks shall be determined in each case by applying the factors in the
manner
set forth in the RBC Instructions.
(d) A health organization's RBC shall be determined in accordance with the
formula set forth in the RBC Instructions. The formula shall take the
following into account (and may adjust for the covariance between):
(1) asset risk;
(2) credit risk;
(3) underwriting risk; and
(4) all other business risks and other relevant risks
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| set forth in the RBC Instructions.
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These risks shall be determined in each case by applying the factors in the
manner set forth in the RBC Instructions.
(e) An excess of capital over the amount produced by the
risk-based
capital requirements contained in this Code and the formulas, schedules, and
instructions referenced in this Code is desirable in the business of insurance.
Accordingly, insurers should seek to maintain capital above the RBC levels
required by this Code. Additional capital is used and useful in the insurance
business and helps to secure an insurer against various risks inherent in, or
affecting, the business of insurance and not accounted for or only partially
measured by the risk-based capital requirements contained in this Code.
(f) If a domestic insurer files an RBC Report that, in the
judgment of the
Director, is inaccurate, the Director shall adjust the RBC Report to correct
the inaccuracy and shall notify the insurer of the adjustment. The notice
shall contain a statement of the reason for the adjustment.
(Source: P.A. 100-580, eff. 3-12-18.)
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(215 ILCS 5/35A-15)
Sec. 35A-15. Company action level event.
(a) A company action level event means any of the following events:
(1) The filing of an RBC Report by an insurer that |
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(A) the insurer's total adjusted capital is
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| greater than or equal to its regulatory action level RBC, but less than its company action level RBC;
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(B) the insurer, if a life, health, or life and
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| health insurer or a fraternal benefit society, has total adjusted capital that is greater than or equal to its company action level RBC, but less than the product of its authorized control level RBC and 3.0 and has a negative trend;
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(C) the insurer, if a property and casualty
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| insurer, has total adjusted capital that is greater than or equal to its company action level RBC, but less than the product of its authorized control level RBC and 3.0 and triggers the trend test determined in accordance with the trend test calculation included in the property and casualty RBC Instructions; or
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(D) the insurer, if a health organization, has
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| total adjusted capital that is greater than or equal to its company action level RBC but less than the product of its authorized control level RBC and 3.0 and triggers the trend test determined in accordance with the trend test calculation included in the Health RBC Instructions.
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(2) The notification by the Director to the insurer
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| of an Adjusted RBC Report that indicates an event described in paragraph (1), provided the insurer does not challenge the Adjusted RBC Report under Section 35A-35.
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(3) The notification by the Director to the insurer
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| that the Director has, after a hearing, rejected the insurer's challenge under Section 35A-35 to an Adjusted RBC Report that indicates the event described in paragraph (1).
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(b) In the event of a company action level event, the insurer shall prepare
and submit to the Director an RBC Plan that does
all of the following:
(1) Identifies the conditions that contribute to the
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| company action level event.
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(2) Contains proposed corrective actions that the
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| insurer intends to take and that are expected to result in the elimination of the company action level event. A health organization is not prohibited from proposing recognition of a parental guarantee or a letter of credit to eliminate the company action level event; however the Director shall, at his discretion, determine whether or the extent to which the proposed parental guarantee or letter of credit is an acceptable part of a satisfactory RBC Plan or Revised RBC Plan.
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(3) Provides projections of the insurer's financial
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| results in the current year and at least the 4 succeeding years, both in the absence of proposed corrective actions and giving effect to the proposed corrective actions, including projections of statutory operating income, net income, capital, and surplus. The projections for both new and renewal business may include separate projections for each major line of business and separately identify each significant income, expense, and benefit component.
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(4) Identifies the key assumptions affecting the
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| insurer's projections and the sensitivity of the projections to the assumptions.
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(5) Identifies the quality of, and problems
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| associated with, the insurer's business including, but not limited to, its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business, and use of reinsurance, if any, in each case.
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(c) The insurer shall submit the RBC Plan to the Director within 45 days
after the company action
level event occurs or within 45 days after the Director notifies the insurer
that the Director has, after a hearing, rejected its
challenge under Section 35A-35 to an
Adjusted RBC Report.
(d) Within 60 days after an insurer submits an RBC Plan to the
Director, the Director shall notify the insurer whether the RBC Plan shall be
implemented or is, in the judgment of the Director, unsatisfactory. If the
Director determines the RBC Plan is unsatisfactory,
the notification to the insurer shall set forth the reasons for the
determination
and may set forth proposed revisions that will render the RBC Plan satisfactory
in the judgment of the Director. Upon notification from the Director, the
insurer shall prepare a Revised RBC Plan, which may incorporate by reference
any revisions proposed by the Director. The insurer shall submit the Revised
RBC Plan to the Director within 45 days after the Director notifies the insurer
that the RBC Plan is unsatisfactory or within 45 days after the Director
notifies the insurer that the Director has, after a hearing, rejected its
challenge under Section 35A-35 to the determination that the RBC Plan is
unsatisfactory.
(e) In the event the Director notifies an insurer that its
RBC Plan or Revised RBC Plan is unsatisfactory, the Director may, at
the Director's discretion and subject to the insurer's right to a hearing under
Section 35A-35, specify in the notification that the notification constitutes a
regulatory action level event.
(f) Every domestic insurer that files an RBC Plan or Revised RBC Plan with
the Director shall file a copy of the RBC Plan or Revised RBC Plan with the
chief insurance regulatory official in any state in which the insurer is
authorized to do business if that state has a law substantially similar to the
confidentiality provisions in subsection (a) of Section 35A-50 and if that
official requests in writing a copy of the plan. The insurer shall file a copy
of the
RBC Plan or Revised RBC Plan in that state no later than the later of
15 days after receiving the written request for the copy or
the date on which the RBC Plan or Revised RBC Plan is filed under
subsection (c) or (d) of this Section.
(Source: P.A. 99-542, eff. 7-8-16; 100-201, eff. 8-18-17.)
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(215 ILCS 5/35A-20)
Sec. 35A-20.
Regulatory action level event.
(a) A regulatory action level event means any of the following events:
(1) The filing of an RBC Report by the insurer that |
| indicates that the insurer's total adjusted capital is greater than or equal to its authorized control level RBC, but less than its regulatory action level RBC.
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(2) The notification by the Director to an insurer of
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| an Adjusted RBC Report that indicates the event described in paragraph (1), provided the insurer does not challenge the Adjusted RBC Report under Section 35A-35.
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(3) The notification by the Director to the insurer
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| that the Director has, after a hearing, rejected the insurer's challenge under Section 35A-35 to an Adjusted RBC Report that indicates the event described in paragraph (1).
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(4) The failure of the insurer to file an RBC Report
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| by the filing date, unless the insurer has provided an explanation for the failure that is satisfactory to the Director and has cured the failure within 10 days after the filing date.
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(5) The failure of the insurer to submit an RBC Plan
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| to the Director within the time period set forth in subsection (c) of Section 35A-15.
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(6) The notification by the Director to the insurer
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| that the insurer's RBC Plan or revised RBC Plan is, in the judgment of the Director, unsatisfactory and that the notification constitutes a regulatory action level event with respect to the insurer, provided the insurer does not challenge the determination under Section 35A-35.
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(7) The notification by the Director to the insurer
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| that the Director has, after a hearing, rejected the insurer's challenge under Section 35A-35 to the determination made by the Director under paragraph (6).
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(8) The notification by the Director to the insurer
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| that the insurer has failed to adhere to its RBC Plan or Revised RBC Plan, but only if that failure has a substantial adverse effect on the ability of the insurer to eliminate the company action level event in accordance with its RBC Plan or Revised RBC Plan and the Director has so stated in the notification, provided the insurer does not challenge the determination under Section 35A-35.
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(9) The notification by the Director to the insurer
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| that the Director has, after a hearing, rejected the insurer's challenge under Section 35A-35 to the determination made by the Director under paragraph (8).
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(b) In the event of a regulatory action level event, the Director shall do
all of the following:
(1) Require the insurer to prepare and submit an RBC
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| Plan or, if applicable, a Revised RBC Plan to the Director within 45 days after the regulatory action level event occurs or within 45 days after the Director notifies the insurer that the Director has, after a hearing, rejected its challenge under Section 35A-35 to either an Adjusted RBC Report or a Revised RBC Plan. However, if the insurer previously prepared and submitted an RBC Plan or a Revised RBC Plan in accordance with any provision of this Article, the Director may determine that the previously prepared RBC Plan or Revised RBC Plan satisfies the requirement of this subsection (b)(1).
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(2) Perform any examination or analysis of the
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| assets, liabilities, and operations of the insurer, including a review of its RBC Plan or Revised RBC Plan, that the Director deems necessary.
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(3) After the examination or analysis, issue a
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| Corrective Order specifying the corrective actions the Director determines are required.
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(c) In determining corrective actions, the Director may take into account
any factors the Director deems relevant based upon the examination or analysis
of the assets, liabilities, and operations of the insurer including, but not
limited to, the results of any sensitivity tests undertaken under the RBC
Instructions.
The regulatory action level event shall be deemed sufficient grounds for the
Director to issue a Corrective Order in accordance with Article XII 1/2. The
Director shall have rights, powers, and duties with respect to the insurer that
are set forth in Article XII 1/2 and the insurer shall be entitled to the
protections afforded insurers under Article XII 1/2.
(d) The Director may retain actuaries, investment experts, and other
consultants necessary to review an insurer's RBC Plan or Revised RBC Plan,
examine or analyze the assets, liabilities, and operations of the insurer, and
formulate the Corrective Order with respect to the insurer. The fees, costs,
and expenses related to the actuaries, investment experts, and other
consultants shall be reasonable and customary for the nature of the services
provided and shall be borne by the affected insurer or the party designated
by
the Director.
(Source: P.A. 90-794, eff. 8-14-98; 91-549, eff. 8-14-99.)
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(215 ILCS 5/35A-25)
Sec. 35A-25.
Authorized control event.
(a) An authorized control event means any of the following events:
(1) The filing of an RBC Report by the insurer that |
| indicates that the insurer's total adjusted capital is greater than or equal to its mandatory control level RBC, but less than its authorized control level RBC.
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(2) The notification by the Director to the insurer
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| of an Adjusted RBC Report that indicates the event described in paragraph (1), provided the insurer does not challenge the Adjusted RBC Report under Section 35A-35.
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(3) The notification by the Director to the insurer
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| that the Director has, after a hearing, rejected the insurer's challenge under Section 35A-35 to an Adjusted RBC Report that indicates the event described in paragraph (1).
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(4) The insurer's failure to respond to a Corrective
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| Order in a manner satisfactory to the Director, provided the insurer does not challenge the Corrective Order under Section 35A-35.
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(5) The insurer's failure to respond to a challenged
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| or modified Corrective Order in a manner satisfactory to the Director after the Director has, after a hearing, rejected the insurer's challenge under Section 35A-35 or modified the Corrective Order.
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(b) In the event of an authorized control level event, the Director shall
take
the actions required under Section 35A-20 regarding an insurer with respect to
which a regulatory action level event has occurred or, if the Director deems it
to be in the best interests of the insurer's policyholders and creditors and of
the public, take the actions necessary to cause the insurer to be placed in
receivership under Article XIII. In the event the Director determines
that receivership is necessary, the authorized control level event shall be
deemed sufficient grounds for the Director to take action under Article XIII,
and the Director shall have the rights, powers, and duties with respect to the
insurer that are set forth in Article XIII. In the event the Director takes
action under this subsection regarding an Adjusted RBC Report, the insurer
shall be entitled to the protections afforded insurers under Article
XIII.
(Source: P.A. 88-364.)
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(215 ILCS 5/35A-30)
Sec. 35A-30. Mandatory control level event.
(a) A mandatory control level event means any of the following events:
(1) The filing of an RBC Report that indicates that |
| the insurer's total adjusted capital is less than its mandatory control level RBC.
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(2) The notification by the Director to the insurer
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| of an Adjusted RBC Report that indicates the event described in paragraph (1), provided the insurer does not challenge the Adjusted RBC Report under Section 35A-35.
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(3) The notification by the Director to the insurer
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| that the Director has, after a hearing, rejected the insurer's challenge under Section 35A-35 to the Adjusted RBC Report that indicates the event described in paragraph (1).
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(b) In the
event of a mandatory control level event with respect to a life, health, or
life and health insurer or a fraternal benefit society, the Director shall take
actions necessary to place the insurer in
receivership under
Article XIII. In that event, the mandatory control level event shall be deemed
sufficient grounds for the Director to take action under Article XIII, and the
Director shall have the rights, powers, and duties with respect to the insurer
that
are set forth in Article XIII. If the Director takes
action
under this subsection regarding an Adjusted RBC Report, the insurer shall be
entitled to the protections
of Article XIII.
If the Director finds that there is a
reasonable expectation that the mandatory control level event may be eliminated
within 90 days after it occurs, the Director may delay action for not more
than 90 days after the mandatory control level event.
(c) In the case of a mandatory control level event with respect to a
property and casualty insurer, the Director shall
take the actions necessary to place the insurer in receivership under Article
XIII or, in the case of an insurer that is writing no business and that is
running-off its existing business, may allow the insurer to continue its
run-off under the supervision of the Director. In either case, the mandatory
control level event is deemed sufficient grounds for the Director to take
action under Article XIII, and the Director has the rights, powers, and
duties with respect to the insurer that are set forth in Article XIII. If the
Director takes action regarding an Adjusted RBC Report, the insurer shall be
entitled to the protections of Article XIII. If the Director finds that there
is a reasonable expectation that
the mandatory control level event may be eliminated within 90 days after it
occurs, the Director may delay action for not more than 90 days after the
mandatory control level event.
(d) In the case of a mandatory control level event with respect to a
health organization, the Director shall take the actions necessary to place the
insurer in receivership under Article XIII or, in the case of an insurer that
is writing no business and that is running-off its existing business, may allow
the insurer to
continue its run-off under the supervision of the Director. In either case,
the mandatory control level event is deemed sufficient grounds for the Director
to take action under Article XIII, and the Director has the rights, powers, and
duties with respect to the insurer that are set forth in Article XIII. If the
Director takes action regarding an Adjusted RBC Report, the insurer shall be
entitled to the protections of Article XIII. If the Director finds that there
is a reasonable expectation that the mandatory control level event may be
eliminated within 90 days after it occurs, the Director may delay action for
not more than 90 days after the mandatory control level event.
(Source: P.A. 98-157, eff. 8-2-13.)
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(215 ILCS 5/35A-60)
Sec. 35A-60. Phase-in of Article.
(a) For RBC Reports filed
with
respect to
the December 31, 1993 annual statement, instead of the provisions of Sections
35A-15, 35A-20, 35A-25, and 35A-30,
the following provisions apply:
(1) In the event of a company action level event, the |
| Director shall take no action under this Article.
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(2) In the event of a regulatory action level event
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| under paragraph (1), (2), or (3) of subsection (a) of Section 35A-20, the Director shall take the actions required under Section 35A-15.
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(3) In the event of a regulatory action level event
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| under paragraph (4), (5), (6), (7), (8), or (9) of subsection (a) of Section 35A-20 or an authorized control level event, the Director shall take the actions required under Section 35A-20.
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(4) In the event of a mandatory control level event,
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| the Director shall take the actions required under Section 35A-25.
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(b) For RBC Reports required to be filed by property and casualty
insurers with respect to the December 31, 1995 annual statement, instead of the
provisions of Sections 35A-15, 35A-20, 35A-25, and 35A-30,
the following provisions apply:
(1) In the event of a company action level event with
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| respect to a domestic insurer, the Director shall take no regulatory action under this Article.
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(2) In the event of a regulatory action level event
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| under paragraph (1), (2), or (3) of subsection (a) of Section 35A-20, the Director shall take the actions required under Section 35A-15.
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(3) In the event of a regulatory action level event
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| under paragraph (4), (5), (6), (7), (8), or (9) of subsection (a) of Section 35A-20 or an authorized control level event, the Director shall take the actions required under Section 35A-20.
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(4) In the event of a mandatory control level event,
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| the Director shall take the actions required under Section 35A-25.
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(c) For RBC Reports required to be filed by health organizations with
respect to the December 31, 1999 annual statement and the December 31, 2000
annual statement, instead of the provisions of
Sections 35A-15, 35A-20, 35A-25, and 35A-30, the following provisions apply:
(1) In the event of a company action level event with
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| respect to a domestic insurer, the Director shall take no regulatory action under this Article.
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(2) In the event of a regulatory action level event
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| under paragraph (1), (2), or (3) of subsection (a) of Section 35A-20, the Director shall take the actions required under Section 35A-15.
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(3) In the event of a regulatory action level event
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| under paragraph (4), (5), (6), (7), (8), or (9) of subsection (a) of Section 35A-20 or an authorized control level event, the Director shall take the actions required under Section 35A-20.
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(4) In the event of a mandatory control level event,
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| the Director shall take the actions required under Section 35A-25.
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This subsection does not apply to a health organization that provides or
arranges for a health care plan under which enrollees may access health care
services from contracted providers without a referral from their primary care
physician.
Nothing in this subsection shall preclude or limit other powers or duties of
the Director under any other laws.
(d) For RBC Reports required to be filed by fraternal benefit societies with respect to the December 31, 2013 annual
statement and the December 31, 2014 annual statement, instead
of the provisions of Sections 35A-15, 35A-20, 35A-25, and
35A-30, the following provisions apply:
(1) In the event of a company action level event with
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| respect to a domestic insurer, the Director shall take no regulatory action under this Article.
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(2) In the event of a regulatory action level event
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| under paragraph (1), (2), or (3) of subsection (a) of Section 35A-20, the Director shall take the actions required under Section 35A-15.
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(3) In the event of a regulatory action level event
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| under paragraph (4), (5), (6), (7), (8), or (9) of subsection (a) of Section 35A-20 or an authorized control level event, the Director shall take the actions required under Section 35A-20.
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(4) In the event of a mandatory control level event,
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| the Director shall take the actions required under Section 35A-25.
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Nothing in this subsection shall preclude or limit other powers or duties of
the Director under any other laws.
(Source: P.A. 100-201, eff. 8-18-17.)
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