Regulation 43 — Companies in Hazardous Financial Condition
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Governs standards, definitions, and the Commissioner's authority for identifying and addressing insurers whose continued operation may be hazardous to policyholders, creditors, or the public in Louisiana; applies to insurers transacting business in the state and the Department of Insurance's regulatory actions.
No material clinical or coverage changes in this revision.
Hazardous Financial Condition Standards & Impacts
inv-01: Hazardous condition criteria
Standards that may be considered by the Commissioner singly or in combination to determine hazardous condition include:
ALL of the following
Examples of financial and supervisory findings
- Adverse findings reported in financial condition and market conduct examination reports, audit reports, and actuarial opinions, reports or summaries.
- National Association of Insurance Commissioners Insurance Regulatory Information System and its other financial analysis solvency tools and reports may be considered.
- The ability of an assuming reinsurer to perform and whether the insurer's reinsurance program provides sufficient protection for the insurer's remaining surplus after taking into account the insurer's cash flow and the classes of business written as well as the financial condition of the assuming reinsurer.
Operating loss thresholds (surplus impact)
- Whether the insurer's operating loss in the last twelve-month period or any shorter period of time, including all admitted assets and cash dividends paid to shareholders, is greater than 50 percent of the insurer's remaining surplus as regards policyholders in excess of the minimum required.
- Whether the insurer's operating loss in the last twelve-month period or any shorter period of time, excluding net capital gains, is greater than 20 percent of the insurer's remaining surplus as regards policyholders in excess of the minimum required.
- Whether a reinsurer, obligor or any entity within the insurer's insurance holding company system, is insolvent, threatened with insolvency or delinquent in payment of its monetary or other obligations, and which in the opinion of the commissioner may affect the solvency of the insurer.
- Whether any 'person' in 'control' of an insurer is delinquent in the transmitting to, or payment of, net premiums to the insurer.
- Contingent liabilities, pledges or guaranties which either individually or collectively involve a total amount which in the opinion of the commissioner may affect the solvency of the insurer.
- Whether management has established reserves that do not comply with minimum standards established by state insurance laws, regulations, statutory accounting standards, sound actuarial principles and standards of practice, or whether management persistently engages in material under reserving that results in adverse development.
- Whether transactions among affiliates, subsidiaries or controlling persons for which the insurer receives assets or capital gains, or both, do not provide sufficient value, liquidity or diversity to assure the insurer's ability to meet its outstanding obligations as they mature.
- Whether the insurer has made adequate provision, according to presently accepted actuarial standards of practice, for the anticipated cash flows required by the contractual obligations and related expenses of the insurer, when considered in light of the assets held by the insurer with respect to such reserves and related actuarial items.
- Whether the insurer has failed to meet financial and holding company filing requirements in the absence of a reason satisfactory to the commissioner.
- Any other finding determined by the commissioner to be hazardous to the insurer's policyholders, creditors, or the general public.
inv-02: Impact, Fiscal, and Notice of Intent Provisions
Impact statements, fiscal findings, and the Notice of Intent summary for related registry changes:
ALL of the following
- Family impact: The proposed rule should have no measurable impact upon the stability, functioning, earnings or budget of the family; no impact on parental authority or children's behavior and personal responsibility.
- Poverty impact: The proposed rulemaking will have no impact on poverty as described in R.S. 49:973.
- Small business impact: The proposed rule should have no measurable impact upon small businesses; no measurable reporting, record keeping, or administrative costs for compliance are anticipated.
- Fiscal and economic impact: The proposed administrative rule change will have no anticipated implementation costs or savings to state or local governmental units and will have no impact on state or local governmental revenues; no impact upon competition and employment is expected.
- Notice of Intent — Tumor Registry summary: Amendments require electronic transmission of all cancer reports and remote electronic access to relevant medical records where available; set a two-month deadline for reporting by non-hospital sources; require hospitals to identify new diagnoses among those aged less than twenty years old to the registry within one month; allow the registry to publish its annual report electronically on the LTR website only; and update the address of the registry.
Related Codes and Numeric Thresholds
| Notice of Intent: amendments requiring electronic transmission of cancer reports, remote electronic access to medical records where available, deadlines for reporting by non-hospital and hospital sources, and publishing annual report electronically. |
Commissioner Orders, Remedial Actions & Public Participation
Commissioner may order remedial actions to correct hazardous condition
If the Commissioner finds an insurer's continued operation may be hazardous to policyholders, creditors, or the public, the Commissioner may issue orders requiring corrective measures including: correcting corporate governance deficiencies, requiring the insurer to provide a business plan, increasing liabilities to cover contingent obligations, and adjusting rates for non‑life products as necessary to improve the insurer's financial condition.
- Correct corporate governance practice deficiencies and adopt governance practices acceptable to the Commissioner.
- Provide a business plan to the Commissioner to continue transacting business in the state.
- Increase the insurer's liability by the amount of any contingent liability, pledge, or guarantee if there is a substantial risk it will be called upon within the next 12 months.
- Adjust rates for any non‑life insurance product as the Commissioner considers necessary to improve financial condition.
Submit comments and attend public hearing on proposed amendments
Interested persons may submit written comments on the proposed amendments to Regulation 43 by 5 p.m. on Wednesday, October 30, 2013, and a public hearing will be held on Wednesday, October 30, 2013 at 10 a.m. where attendees may present data, views, or arguments orally or in writing.
- Send written comments by 5 p.m., Wednesday, October 30, 2013 to: Walter Corey, Division of Legal Services, Office of the Commissioner, P.O. Box 94214, Baton Rouge, LA 70804.
- Attend the public hearing: Wednesday, October 30, 2013 at 10 a.m., Poydras Hearing Room, Louisiana Department of Insurance, 1702 N. Third Street, Baton Rouge, LA.
Key Definitions & Administrative Provisions
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