HOUSE BILL No. 5608


     February 25, 1998, Introduced by Reps. Gubow and Llewellyn and referred to the Committee on Insurance.


        A bill to amend 1956 PA 218, entitled

   "The insurance code of 1956,"

   by amending sections 224, 476a, and 5256 (MCL 500.224, 500.476a,

   and 500.5256), section 224 as amended by 1994 PA 228 and sections

   476a and 5256 as amended by 1990 PA 256.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1         Sec. 224.  (1) All actual and necessary expenses incurred in

 2    connection with the examination or other investigation of an

 3    insurer or other person regulated under the commissioner's

 4    authority shall be certified by the commissioner, together with a

 5    statement of the work performed including the number of days

 6    spent by the commissioner and each of the commissioner's depu-

 7    ties, assistants, employees, and others acting under the

 8    commissioner's authority.  , upon the examination or

 9     investigation, to the department of commerce's budget/finance


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 1    division.  If correct,  the department of commerce's

 2     budget/finance division shall approve the expenses and  the

 3    expenses shall be paid to the persons by whom they were incurred,

 4    upon the warrant of the state treasurer payable from appropria-

 5    tions made by the legislature for this purpose.

 6         (2) Except as otherwise provided in subsection (4), the com-

 7    missioner shall prepare and present to the insurer or other

 8    person examined or investigated a statement of the expenses and

 9    reasonable cost incurred for each person engaged upon the exami-

10    nation or investigation, including amounts necessary to cover the

11    pay and allowances granted to the persons by the Michigan civil

12    service commission, and the administration and supervisory

13    expense including an amount necessary to cover fringe benefits in

14    conjunction with the examination or investigation.  Except as

15    otherwise provided in subsection (4), the insurer or other

16    person, upon receiving the statement, shall pay to the commis-

17    sioner the stated amount.  The commissioner shall deposit the

18    funds with the state treasurer as provided in section 225.

19         (3) The commissioner may employ attorneys, actuaries,

20    accountants, investment advisers, and other expert personnel not

21    otherwise employees of this state reasonably necessary to assist

22    in the conduct of the examination or investigation or proceeding

23    with respect to an insurer or other person regulated under the

24    commissioner's authority at the insurer's or other person's

25    expense except as otherwise provided in subsection (4).  Except

26    as otherwise provided in subsection (4), upon certification by

27    the commissioner of the reasonable expenses incurred under this



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 1    section, the insurer or other person examined or investigated

 2    shall pay those expenses directly to the person or firm rendering

 3    assistance to the commissioner.  Expenses paid directly to such

 4    person or firm and the regulatory fees imposed by this section

 5    shall be examination expenses under section 22e of the single

 6    business tax act,  Act No. 228 of the Public Acts of 1975, being

 7     section 208.22e of the Michigan Compiled Laws  1975 PA 228, MCL

 8    208.22E.

 9         (4) An insurer is subject to a regulatory fee instead of the

10    costs and expenses provided for in subsections (2) and (3).  An

11     alien insurer is subject to a regulatory fee and a valuation fee

12     under section 830 through December 31, 1994.  On and after

13     January 1, 1995, an alien insurer is subject to a regulatory fee

14     instead of the valuation fee provided for in section 830.  By

15    June 30 of each year or within 30 days after the enactment into

16    law of any appropriation for the insurance bureau's operation,

17    the commissioner shall impose upon all insurers authorized to do

18    business in this state a regulatory fee calculated as follows:

19         (a) As used in this subsection:

20         (i) "A" means total annuity considerations written in this

21    state in the immediately preceding year.

22         (ii) "B" means base assessment rate.  The base assessment

23    rate shall not exceed .00038 and shall be a fraction the numera-

24    tor of which is the total regulatory fee and the denominator of

25    which is the total amount of direct underwritten premiums written

26    in this state by all insurers for the immediately preceding





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 1    calendar year as reported to the commissioner on the insurer's

 2    annual statements filed with the commissioner.

 3         (iii) "I" means all direct underwritten premiums other than

 4    life insurance premiums and annuity considerations written in

 5    this state in the immediately preceding year by all insurers.

 6         (iv) "L" means all direct underwritten life insurance premi-

 7    ums written in this state in the immediately preceding year by

 8    all life insurers.

 9         (v) Total regulatory fee shall not exceed 80% of the gross

10    appropriations for the insurance bureau's operation for a fiscal

11    year and shall be the difference between the gross appropriations

12    for the insurance bureau's operation for that current fiscal year

13    and any restricted revenues, other than the regulatory fee

14    itself, as identified in the gross appropriation for the insur-

15    ance bureau's operation.  For fiscal year 1993-94, the gross

16     appropriation for the insurance bureau's operation shall be con-

17     sidered to be $15,000,000.00. 

18         (vi) Direct premiums written in this state do not include

19    any amounts that represent claims payments that are made on

20    behalf of, or administrative fees that are paid in connection

21    with, any administrative service contract, cost-plus arrangement,

22    or any other noninsured or self-insured business.

23         (b) Two actual assessment rates shall be calculated so as to

24    distribute 75% of the burden of the regulatory fee shortfall cre-

25    ated by the exclusion of annuity considerations from the assess-

26    ment base to life insurance and 25% to all other insurance.  The

27    2 actual assessment rates shall be determined as follows:



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 1         (i) L x B + .75 x B x A = assessment rate for life
 2                      L            insurance.

 3         (ii) I x B + .25 x B x A = assessment rate for insurance
 4                       I            other than life insurance.

 5         (c) Except as otherwise provided in subdivision (d), each

 6    insurer's regulatory fee shall be a minimum fee of $250.00 and

 7    shall be determined by multiplying the actual assessment rate by

 8    the assessment base of that insurer as determined by the commis-

 9    sioner from the insurer's annual statement for the immediately

10    preceding calendar year filed with the commissioner.

11         (d) The total regulatory fee for all health maintenance

12    organizations in this state shall be determined by multiplying

13    the actual assessment rate by 70% of direct underwritten premiums

14    written by all health maintenance organizations in this state for

15    the immediately preceding calendar year as reported to the com-

16    missioner in the health maintenance organization's annual state-

17    ments filed with the commissioner.  Each health maintenance

18    organization's regulatory fee shall be a minimum fee of $250.00

19    and shall be determined by taking the total regulatory fee for

20    all health maintenance organizations divided by the total number

21    of members of all health maintenance organizations and multiply-

22    ing this quotient by the number of members in the individual

23    health maintenance organization.

24         (5) Not less than 67% of the revenue derived from the regu-

25    latory fee under subsection (4) shall be used for the regulation

26    of financial conduct of persons regulated under the

27    commissioner's authority and for the regulation of persons





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 1    regulated under the commissioner's authority engaged in the

 2    business of health care and health insurance in this state.

 3         (6) The amount, if any, by which amounts credited to the

 4    commissioner pursuant to section 225 exceed actual expenditures

 5    pursuant to appropriations for the insurance bureau's operation

 6    for a fiscal year shall be credited toward the appropriation for

 7    the insurance bureau in the next fiscal year.

 8         (7) All money paid into the state treasury by an insurer

 9    under this section shall be credited as provided under section

10    225.

11         (8) A regulatory fee under this section shall not be treated

12    by an insurer as a levy or excise upon premium but as a regula-

13    tory burden that is apportioned in relation to insurance activity

14    in this state and reflects the insurance regulatory burden on

15    this state as a result of this insurance activity.  A foreign or

16    alien insurer authorized to do business in this state may con-

17    sider the liability required under this section as a burden

18    imposed by the state of Michigan in the calculation of the

19    insurer's liability required under section 476a.

20         (9) An insurer may file with the commissioner a protest to

21    the regulatory fee imposed not later than 15 days after receipt

22    of the regulatory fee.  The commissioner shall review the grounds

23    for the protest and shall hold a conference with the insurer at

24    the insurer's request.  The commissioner shall transmit his or

25    her findings to the insurer with a restatement of the regulatory

26    fee based upon the findings.  Statements of regulatory fees to

27    which protests have not been made and restatements of regulatory



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 1    fees are due and shall be paid not later than 30 days after their

 2    receipt.  Regulatory fees that are not paid when due bear inter-

 3    est on the unpaid fee which shall be calculated at 6-month inter-

 4    vals from the date the fee was due at a rate of interest equal to

 5    1% plus the average interest rate paid at auctions of 5-year

 6    United States treasury notes during the 6 months immediately pre-

 7    ceding July 1 and January 1, as certified by the state treasurer,

 8    and compounded annually, until the assessment is paid in full.

 9    An insurer who fails to pay its regulatory fee within the pre-

10    scribed time limits may have its certificate of authority or

11    license suspended, limited, or revoked as the commissioner con-

12    siders warranted until the regulatory fee is paid.  If the com-

13    missioner determines that a regulatory fee or a part of a regula-

14    tory fee paid by an insurer is in excess of the amount legally

15    due and payable, the amount of the excess shall be refunded or,

16    at the insurer's option, be applied as a credit against the regu-

17    latory fee for the next fiscal year.  An overpayment of $100.00

18    or less shall be applied as a credit against the insurer's regu-

19    latory fee for the next fiscal year unless the insurer had a

20    $100.00 or less overpayment in the immediately preceding fiscal

21    year.  If the insurer had a $100.00 or less overpayment in the

22    immediately preceding fiscal year, at the insurer's option, the

23    current fiscal year overpayment of $100.00 or less shall be

24    refunded.

25         (10) Any amounts stated and presented to or certified,

26    assessed, or imposed upon an insurer as provided in

27    subsections (2), (3), and (4) that are unpaid as of the date that



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 1    the insurer is subjected to a delinquency proceeding pursuant to

 2    chapter 81 shall be regarded as an expense of administering the

 3    delinquency proceeding and shall be payable as such from the gen-

 4    eral assets of the insurer.

 5         (11) Any statements presented to insurers pursuant to sub-

 6    sections (2) and (3)  in respect of  FOR examinations or investi-

 7    gations conducted since October 1, 1993 shall be cancelled as of

 8     the effective date of the amendatory act that added this

 9     subsection  JUNE 30, 1994.  Amounts actually paid by an insurer

10    because of those statements shall be credited against the regula-

11    tory fee levied for the 1993-94 fiscal year and any excess

12    amounts shall be refunded.

13         (12) IN ADDITION TO THE REGULATORY FEE PROVIDED IN SUBSEC-

14    TION (4), EACH INSURER THAT LOCATES RECORDS OR PERSONNEL KNOWL-

15    EDGEABLE ABOUT THOSE RECORDS OUTSIDE THIS STATE PURSUANT TO SEC-

16    TION 5256 SHALL REIMBURSE THE INSURANCE BUREAU FOR EXPENSES AND

17    REASONABLE COSTS INCURRED BY THE INSURANCE BUREAU AS A RESULT OF

18    TRAVEL AND OTHER COSTS RELATED TO EXAMINATIONS OR INVESTIGATIONS

19    OF THOSE RECORDS OR PERSONNEL.  THE REIMBURSEMENT SHALL NOT

20    INCLUDE ANY COSTS THAT THE INSURANCE BUREAU WOULD HAVE INCURRED

21    IF THE EXAMINATION HAD TAKEN PLACE IN THIS STATE.

22         (13)  (12)  As used in this section:

23         (a) "Annuity considerations" means receipts on the sale of

24    annuities as used in section 22a of the single business tax act,

25     being section 208.22a of the Michigan Compiled Laws  1975 PA

26    228, MCL 208.22A.





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 1         (b) "Insurer" means an insurer authorized to do business in

 2    this state and includes nonprofit health care corporations,

 3    dental care corporations, health maintenance organizations, and

 4    the state accident fund.

 5         (14)  (13)  All fees added by the amendatory act that added

 6    this subsection shall not apply on and after January 1, 1996,

 7    unless  all of the following conditions are met:  (a) By

 8     September 1, 1994, the commissioner submits a report to the

 9     senate and house of representatives standing committees on insur-

10     ance issues and to the senate and house of representatives appro-

11     priations regulatory subcommittees on all receivership activities

12     of the commissioner and the insurance bureau pertaining to the

13     liquidation of insolvent insurers for the 1992 and 1993 calendar

14     years.  By  BY September 1, 1995, and annually thereafter, the

15    commissioner submits a report to the senate and house of repre-

16    sentatives standing committees on insurance issues and to the

17    senate and house of representatives appropriations regulatory

18    subcommittees on all receivership activities of the commissioner

19    and the insurance bureau pertaining to the liquidation of insol-

20    vent insurers for the immediately preceding calendar year.  (b)

21     Reports under subdivision (a)  THE REPORT SHALL include all of

22    the following:

23         (A)  (i)  A summary schedule of all insurance bureau expen-

24    ditures for legal, accounting, and administrative expenditures

25    made or incurred for the liquidation of ALL insurers in

26    receivership, INCLUDING BUT NOT LIMITED TO ALIEN INSURERS





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 1    DESCRIBED IN SECTION 431A, and paid for out of the insurer's

 2    assets during the calendar year being reported on.

 3         (B)  (ii)  A detailed schedule of all insurance bureau con-

 4    tractual expenditures for legal, accounting, and administrative

 5    expenditures made or incurred for the liquidation of ALL insurers

 6    in receivership, INCLUDING BUT NOT LIMITED TO ALIEN INSURERS

 7    DESCRIBED IN SECTION 431A, and paid for out of the insurer's

 8    assets during the calendar year being reported on including, but

 9    not limited to, itemization of legal billings, criminal investi-

10    gation expenses, travel, meals, and general office expenses.

11         (C)  (iii)  A statement of the net changes in assets and

12    liabilities of each insurer in receivership, INCLUDING BUT NOT

13    LIMITED TO AN ALIEN INSURER DESCRIBED IN SECTION 431A.  This

14    statement shall include changes due to interest rate changes,

15    real estate values, and other investment activities, including a

16    detailed statement of the sale of assets and the net loss or gain

17    on those assets and a statement of the amount of assets pre-

18    served, gained, or recovered by the receiver.

19         Sec. 476a.  (1) Beginning August 3, 1987, whenever, by a law

20    in force outside of this state or country, a domestic insurer or

21    agent of a domestic insurer is required to make a deposit of

22    securities for the protection of policyholders or otherwise, or

23    to make payment for taxes, fines, penalties, certificates of

24    authority, valuation of policies, or otherwise, or a special

25    burden or other burden is imposed, greater in the aggregate than

26    is required by the laws of this state for a similar alien or

27    foreign insurer or agent of an alien or foreign insurer, the



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 1    alien or foreign insurer of that state or country is required, as

 2    a condition precedent to its transacting business in this state,

 3    to make a like deposit for like purposes with the state treasurer

 4    of this state, and to pay to the revenue commissioner for taxes,

 5    fines, penalties, certificates of authority, valuation of poli-

 6    cies, and otherwise an amount equal in the aggregate to the

 7    charges and payments imposed by the laws of the other state or

 8    country upon a similar domestic insurer and the agents of a

 9    domestic insurer, regardless of whether a domestic insurer or

10    agent of a domestic insurer is actually transacting business in

11    that state or country.  In the case of  FOR fire department or

12    salvage corps taxes or other local taxes the amount shall be com-

13    puted by the revenue commissioner by dividing the total of the

14    payments made by domestic insurers in that state or country by

15    the gross premium received by domestic insurers in that state or

16    country less return premiums.  The commissioner shall revoke the

17    certificate of authority of an alien or foreign insurer refusing

18    for 30 days to make payment of fees or taxes as required by this

19    chapter.  Except as provided in subsections (3) and (4), for pur-

20    poses of this section, an insurer organized under the laws of a

21    state or country other than these United States shall be consid-

22    ered an insurer of the state in which its general deposit for the

23    benefit of its policyholders is made.

24         (2) The purpose of this section is to promote the interstate

25    business of domestic insurers by deterring other states from

26    enacting discriminatory or excessive taxes.





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 1         (3) Before January 1, 1991, for purposes of this section, a

 2    domestic insurer that is owned or controlled, directly or

 3    indirectly, by an alien or foreign insurer and that was not

 4    granted a certificate of authority before December 28, 1987 shall

 5    be considered domiciled in the same state or country as the con-

 6    trolling alien or foreign insurer.

 7         (4) THE COMMISSIONER SHALL INFORM THE STATE TREASURER WHEN A

 8    DOMESTIC INSURER IS NOT IN COMPLIANCE WITH SECTION 5256.

 9    Beginning January 1, 1991, for purposes of this section, the

10     revenue commissioner  STATE TREASURER, after consultation with

11    the commissioner, shall determine that a domestic insurer is an

12    alien or foreign insurer  domiciled in a state or country deter-

13     mined by the revenue commissioner  if the insurer does not comply

14    with SECTION 5256.  all of the following:

15          (a) Maintain its principal place of business in this state.

16          (b) Maintain in this state officers and personnel responsi-

17     ble for and knowledgeable of the company's operation, books,

18     records, administration, and annual statement.

19          (c) Conduct in this state a substantial portion of its

20     underwriting, sales, claims, legal, and, if applicable, medical

21     operations relating to Michigan policyholders and certificate

22     holders.

23          (d) Comply with section 5256. 

24         (5) Taxes collected pursuant to this section are subject to

25    section 22d of the single business tax act,  Act No. 228 of the

26     Public Acts of 1975, being section 208.22d of the Michigan

27     Compiled Laws  1975 PA 228, MCL 208.22D.



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 1         (6) The  revenue commissioner  STATE TREASURER shall

 2    administer the tax prescribed by this section in the manner pro-

 3    vided in  Act No. 122 of the Public Acts of 1941, being sections

 4     205.1 to 205.31 of the Michigan Compiled Laws  1941 PA 122, MCL

 5    205.1 TO 205.31.

 6         (7) The requirements of section 28 of  Act No. 122 of the

 7     Public Acts of 1941, being section 205.28 of the Michigan

 8     Compiled Laws  1941 PA 122, MCL 205.28, that prohibit an employee

 9    or an authorized representative or former employee or authorized

10    representative or anyone connected with the department of trea-

11    sury from divulging any facts or information obtained in connec-

12    tion with the administration of taxes, do not apply to disclosure

13    of the tax return prescribed in this act.

14         Sec. 5256.  (1)  Except as provided in subsection (5), each 

15    EACH domestic insurer shall keep  all of its original books,

16     records, and files, or true copies thereof, at its home office

17     or  UNDER ITS CONTROL ALL RECORDS RELATING TO THE INSURER'S BUSI-

18    NESS OR AFFAIRS AT 1 OR MORE OF THE FOLLOWING LOCATIONS:

19         (A) THE principal place of doing business in this state.  ,

20     and shall keep all of its securities, notes, mortgages, or other

21     evidences of indebtedness, representing investment of funds at

22     its home office or principal place of doing business in this

23     state.  If a domestic insurer was processing and maintaining its

24     books, records, and files in other states on December 17, 1982,

25     it shall be deemed in compliance with this subsection as long as

26     the books, records, and files, or true copies thereof, and





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 1    personnel knowledgeable about the books, records, and files are

 2     made readily available at the 

 3         (B) ONE OR MORE LOCATIONS OUTSIDE THE STATE APPROVED FOR

 4    THAT PURPOSE, IN WRITING, BY THE COMMISSIONER.

 5         (2) A DOMESTIC INSURER SHALL PRODUCE THOSE RECORDS RELATING

 6    TO THE INSURER'S BUSINESS OR AFFAIRS AND PERSONNEL KNOWLEDGEABLE

 7    ABOUT THE RECORDS AT A principal place of doing business in OR

 8    OUTSIDE this state for examination WITHIN A REASONABLE TIME

 9    PERIOD SPECIFIED by  and at the request of  the commissioner.

10         (3)  (2)  A domestic insurer may place for safekeeping all

11    or any part of its securities, notes, mortgages, or other evi-

12    dences of indebtedness, with any national bank, state bank, trust

13    company, or any other UNITED STATES corporation authorized AS A

14    CUSTODIAN to accept and hold personal property for safekeeping.

15     and located in the United States.  A NATIONAL BANK, STATE BANK,

16    TRUST COMPANY, OR UNITED STATES CORPORATION AUTHORIZED TO ACCEPT

17    AND HOLD PERSONAL PROPERTY FOR SAFEKEEPING MAY EMPLOY A SUBCUSTO-

18    DIAN OUTSIDE OF THE UNITED STATES TO HOLD ASSETS THAT ARE NOT IN

19    PHYSICAL FORM OR THAT ARE CUSTOMARILY TRADED OUTSIDE THE UNITED

20    STATES. A statutory deposit required by any state or foreign

21    country shall be excepted and any delivery and pledge or assign-

22    ment of its notes, mortgages, or other securities by any such

23    insurer, as security for money borrowed by it or as required in

24    the regular course of its business by the laws of any state or

25    foreign country, shall also be excepted.  The insurer may hold

26    certificates evidencing shares of stock or other registrable

27    securities in the name of a nominee or nominees employed by the



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 1    insurer and responsible to the insurer.  The nominee or nominees,

 2    on the request of the insurer, shall indorse the certificate rep-

 3    resenting shares of stock or other registrable securities in

 4    blank or by assignment separate from the certificates.  The

 5    insurer at all times shall maintain control or possession of the

 6    certificate representing the share of stock or other registrable

 7    securities, but, if necessary, the nominee or nominees may have

 8    access thereto for the purpose of examination under the supervi-

 9    sion of the corporation.

10         (4) THE RECORDS REQUIRED TO BE RETAINED BY THIS SECTION MAY

11    BE MAINTAINED IN PAPER, PHOTOGRAPH, MICRO PROCESS, MAGNETIC,

12    MECHANICAL OR ELECTRONIC MEDIA, OR BY ANY PROCESS THAT ACCURATELY

13    REPRODUCES OR FORMS A DURABLE MEDIUM FOR THE REPRODUCTION OF A

14    RECORD.  IF THE ORIGINAL DOCUMENT IS UNAVAILABLE, THE DOMESTIC

15    INSURER MAY PRODUCE IN AN ALTERNATIVE FORMAT THE SAME DATA THAT

16    WAS CONTAINED ON THE ORIGINAL DOCUMENT.

17         (5)  (3)  Removal of all or a material part of the records

18    of a domestic insurer from this state, except pursuant to a plan

19    or merger or consolidation approved by the commissioner under

20    this  code  ACT or  for such reasonable purposes and periods of

21     time  as may be approved in writing by the commissioner, is

22    prohibited.  Removal of the records or material part thereof

23     from the home office or other place of business or of safekeeping

24     of the insurer in this state with the intent to remove the

25     records from this state, or concealing or attempting to conceal

26     the records from the commissioner is a violation of this

27     section.  If after a hearing is held pursuant to the



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 1    administrative procedures act of 1969,  Act No. 306 of the Public

 2     Acts of 1969, being sections 24.201 to 24.328 of the Michigan

 3     Compiled Laws  1969 PA 306, MCL 24.201 TO 24.328, the commis-

 4    sioner determines that the insurer has violated this section, the

 5    commissioner shall reduce his or her findings and decision to

 6    writing and shall issue and cause to be served upon the insurer

 7    charged with the violation a copy of the findings and order

 8    requiring the insurer to return the office, records, and assets

 9    to this state.  An insurer that violates this section shall be

10    treated as a foreign insurer for the period of time the records

11    were removed from this state, and the insurer shall be liable for

12    both of the following:

13         (a) The amount of tax prescribed in section 476a and inter-

14    est in the amount of 3% of the amount due and unpaid for each

15    month or part of a month that the insurer was in violation of

16    this section.

17         (b) A penalty of $5,000.00 plus an additional $50.00 for

18    each day that the insurer was not in compliance with this

19    section.  A DOMESTIC INSURER THAT FAILS TO COMPLY WITH AN ORDER

20    OF THE COMMISSIONER ISSUED UNDER THIS SECTION IS PRESUMED TO BE

21    NO LONGER SAFE, RELIABLE, AND ENTITLED TO PUBLIC CONFIDENCE UNDER

22    SECTION 436.

23         (6)  (4)  If an insurer fails to comply with an order issued

24    under this section, as modified or extended, the commissioner

25    shall suspend or revoke the insurer's certificate of authority.

26          (5) A domestic insurer that is a subsidiary of an alien

27     insurer formed within the boundaries of Canada and that uses



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 1    Michigan as its port of entry into the United States through a

 2     branch operation satisfies the requirements of subsection (1) by

 3     maintaining a deposit of not less than the amount of liabilities

 4     with respect to the domestic insurer's business in the United

 5     States and adequate capital and surplus to support its writings

 6     but not less than the amount of capital and surplus required by

 7     statute with the state treasurer, or with trustees resident in

 8     the United States, or with any combination of such persons, under

 9     a trust indenture approved by the commissioner.  The deposit

10     shall be in cash or in securities of the kinds permitted by

11     chapter 9.  The domestic insurer and the persons holding the

12     deposit shall submit to the commissioner a report, under oath, on

13     or before March 1 of each year, of the domestic insurer's depos-

14     its as of December 31 of the preceding year.  The domestic

15     insurer shall pay to the commissioner, as compensation for regu-

16     lating the domestic insurer under this subsection, 3/4 of 1% upon

17     the domestic insurer's gross premiums written in this state

18     excluding considerations for original annuities.  This subsection

19     does not apply in any of the following cases:

20          (a) To a domestic insurer that is a subsidiary of an alien

21     insurer formed within the boundaries of Canada if all of the

22     domestic insurer's books, records, files, securities, notes,

23     mortgages, or other evidences of indebtedness representing

24     investment of funds are not kept at the Canadian parent

25     corporation's home office or at an administrative office located

26     within this state.





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 1         (b) To a domestic insurer that is a subsidiary of an alien

 2     insurer formed within the boundaries of Canada if the alien

 3     insurer terminates its branch operation in the United States.

 4          (c) To a domestic insurer that is a subsidiary of an alien

 5     insurer formed within the boundaries of Canada if the domestic

 6     insurer's aggregate policyholder reserves exceed those of its

 7     parent's United States operation. 

 8         (7) THE COMMISSIONER MAY REQUIRE A DOMESTIC INSURER TO

 9    TRANSFER ITS DOMICILE TO ANOTHER STATE IF THE COMMISSIONER IS NOT

10    SATISFIED WITH THE PRODUCTION OF THE RECORDS AND PERSONNEL KNOWL-

11    EDGEABLE ABOUT THE RECORDS BECAUSE ALL OR PART OF THE RECORDS OR

12    PERSONNEL ARE LOCATED OUTSIDE THIS STATE.
































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