§ 25.21. Transactions subject to prior notice—notice filing.
(a) An insurer required to give notice of a proposed transaction under section 1405(a)(2) of the act (40 P. S. § 991.1405(a)(2)) shall furnish the required information on Form D located in Appendix A as prescribed by this chapter.
(b) The insurer shall file an amendment to Form B reporting changes in the information furnished on Form D, including a change in the effective date of the transaction, within 15 days after the end of a month in which the transaction is effectuated.
(c) An insurer may not enter into a proposed transaction if a material change occurs in the information furnished on Form D unless the insurer has filed an amended Form D with the Department at least 30 days prior to entering into the transaction, or a shorter period the Department may permit, and the Department has not disapproved the amended transaction within that time period.
(d) New or amended management agreements, service contracts, tax allocation agreements, guarantees and cost-sharing arrangements (including leases), involving a domestic insurer and a person in its insurance holding company system must:
(1) Be filed for prior approval under section 1405(a)(2)(v) of the act.
(2) At a minimum and as applicable:
(i) Identify the person providing services and the nature of the services.
(ii) Set forth the methods to allocate costs.
(iii) Require timely settlement, not less frequently than on a quarterly basis, and compliance with the NAIC Accounting Practices and Procedures Manual.
(iv) Prohibit advancement of funds by the insurer to the affiliate except to pay for services defined in the agreement.
(v) State that the insurer shall maintain oversight for functions provided to the insurer by the affiliate and that the insurer shall monitor services annually for quality assurance.
(vi) Define books and records of the insurer to include the books and records developed or maintained under or related to the agreement.
(vii) Specify that the books and records of the insurer are the exclusive property of the insurer, held for the benefit of the insurer and are subject to the control of the insurer.
(viii) Include standards for termination of the agreement with and without cause.
(ix) Include provisions for indemnification of the insurer in the event of gross negligence or willful misconduct on the part of the affiliate providing the services.
(x) Specify that, if the insurer is placed in receivership or seized by the Commissioner under Article V of The Insurance Department Act of 1921 (40 P. S. § § 221.1—221.63):
(A) The rights of the insurer under the agreement extend to the receiver or Commissioner.
(B) The books and records shall immediately be made available to the receiver or Commissioner immediately upon the receiver or the Commissioner’s request.
(xi) Specify that the affiliate does not have an automatic right to terminate the agreement if the insurer is placed in receivership under Article V of The Insurance Department Act of 1921.
(xii) Specify that the affiliate will continue to maintain systems, programs or other infrastructure notwithstanding a seizure by the Commissioner under Article V of The Insurance Department Act of 1921 and shall make them available to the receiver for as long as the affiliate continues to receive timely payment for services rendered.
(e) For purposes of subsection (d), ‘‘amended’’ does not include:
(1) The continuation of an agreement or contract with no specified term or that is automatically renewed if provisions are not altered.
(2) The addition of an affiliate if the filing evidencing the notification of the addition is made with a domiciliary regulator in another state.
Authority The provisions of this § 25.21 issued under Article XIV of The Insurance Company Law of 1921 (40 P. S. § § 991.1401—991.1413); amended under section 337.8 and Article XIV of The Insurance Company Law of 1921 (40 P. S. § § 459.8 and 991.1401—991.1413); and sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. § § 66, 186, 411 and 412).
Source The provisions of this § 25.21 adopted September 3, 1993, effective September 4, 1993, 23 Pa.B. 4216; amended August 10, 2001, effective August 11, 2001, 31 Pa.B. 4406; amended May 16, 2014, effective June 16, 2014, 44 Pa.B. 2851. Immediately preceding text appears at serial page (281690).
Cross References This section cited in 31 Pa. Code § 25.17 (relating to annual registration of insurers—statement of policy); and 31 Pa. Code Appendix A, Form B (relating to insurance holding company system annual registration statement).
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